A Fair Farm Bill for Conservation Around the World Through Research and Education, Science and Technology, and Advocacy
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The Institute for Agriculture and Trade Policy promotes About this publication resilient family farms, rural communities and ecosystems A Fair Farm Bill for Conservation around the world through research and education, science and technology, and advocacy. Written by Dennis Keeney, Mark Muller and Heather Schoonover, 2105 First Avenue South IATP Environment and Agriculture Program Minneapolis, Minnesota 55404 U.S.A. Tel.: (612) 870-0453 Part of a series on the 2007 United States Farm Bill Fax: (612) 870-4846 [email protected] Published July 2007 iatp.org agobservatory.org IATP thanks the McKnight Foundation for their generous tradeobservatory.org support of our policy work on the Farm Bill Jim Harkness, President © 2007 Institute for Agriculture and Trade Policy. All rights reserved. Cover: Artwork based on a poster for the Works Progress Administration, Illinois WPA Art Project, circa 1936-1940. For the Prairie States Forestry Project, Lincoln, Nebraska. By J. Dusek. Library of Congress, Prints and Photographs Division, WPA Poster Collection, LC-USZC2-815 DLC. INTRODUCTION The landscape of the upper Midwest is one of the most altered in the world. Iowa, for example, ranks last of all states in public lands and has lost almost all of its native prairies and wetlands.1 Much of the Midwest landscape is in row crops, dominated by ubiquitous corn and soybean. This came about from a progression of technologies, markets and national and state farm policies. Instead of promoting a diversity of crops that generate more ecological benefits, most public re- search and policy initiatives have focused on expanding the uses of the same row crop commodi- ties. The recent emphasis on corn-based ethanol, for example, may further reduce crop diversity by shifting land out of hay, grazing, and conservation set-aside programs and into corn. This row crop dominated landscape correlates with high rates of soil erosion, overabundance of nutrients in waters, loss of biodiversity, and rural depopulation with a subsequent economic col- lapse of rural communities. Farms have become larger, while farmers have declined in number.2 This paper analyzes the effectiveness of agricultural policy for providing clean water, healthy lakes and rivers, and enhanced biodiversity. We summarize the influences of technology, market devel- opment, and historic policies that have influenced the agricultural landscape. Finally, using data collected from a survey of farm policy experts, we recommend ways that the 2007 Farm Bill can better enhance conservation benefits while lowering taxpayer costs. I�titute for Agriculture and Trade Policy 3 The first conservation initiatives were designed to get CONSTRAINTS ON AGRICULTURE around the tax issue through the Soil Conservation Act of 1935. The Soil Conservation Service (SCS) was created, griculture is a high-risk enterprise. Just as in previ- and the legislation had strong public support because of the ous generations, changing markets, plant diseases, disastrous affect on agriculture caused by the Dust Bowl. insects, and especially weather give farm planners A The funding was significant (See Table 1 below). In con- pause when making cropping decisions. However, unlike stant dollars, nearly twice as much funding was available for previous generations, farm income is subject to greater vola- conservation programs in 1937 as in 1999. tility because many farming regions specialize in just a few crops or livestock. Poor corn yields or low corn prices, for example, are devastating for Iowa farmers because so much TABLE 1. CONSERVATION EXPENDITURES 3 of their farm’s economic viability is based on corn produc- (IN MILLIONS OF CONSTANT 1996 DOLLARS) tion. Further, chronic overproduction of corn and other feed grains often leads to prices below the costs of producing and Year 1937 1999 Ratio, harvesting the crop. ’37/’99 Financial $5,041.7 $231.4 21.8 Yet the farmer is offered few alternative production models assistance that provide an adequate economic return while assuring protection of the long-range environmental and social goals Technical $261.9 $799.6 0.32 desired for agriculture. Farmers have used many approach- assistance es to minimize risk and increase income, such as expanding Land reserve $17.7 $1,711.2 0.01 acreage, mechanization, irrigation, high-yielding varieties, and the liberal use of fertilizers and pesticides. Policymakers Total $5,321.2 $2,742.1 1.9 have attempted to address these farm income and economic risk issues through agricultural payments, opening interna- tional markets through trade agreements, and subsidies for CONSERVATION PROGRAMS EXPAND, irrigation, storage and transportation. These policies that FACE CHRONIC FUNDING CHALLENGES drive down commodity prices have actually been more ben- orld War II and the ensuing Cold War result- eficial to agribusiness than to farmers, as they substantially ed in a substantial shift in agricultural policy, reduce the cost of purchasing commodities for confinement partly in response to new international pres- livestock, sweeteners, edible oils and other food products. W sures and opportunities. Farm income increased markedly, government programs emphasized production for balance THE START OF CONSERVATION of trade and foreign policy relations, and conservation took IN THE FARM BILL a back seat. The SCS continued its focus on local watershed projects that enhanced the visibility of soil conservation and he economic collapse from 1929 to 1940, often re- habitat protection. ferred to as the “Great Depression,” devastated the T U.S. farm sector. Farm income declined by more The Agricultural Act of 1956 initiated the Soil Bank, which than half and dropped much faster than urban incomes. took 29 million acres out of production. The intent of the To address the economic crisis, President Franklin Delano legislation was to transfer soil bank acres into conservation Roosevelt, with the guidance of Iowa native and Secretary practices and decrease surpluses. The Soil Bank successful- of Agriculture Henry A. Wallace, introduced the first farm ly brought conservation benefits, but the program did not bill, the 1933 Agricultural Adjustment Act (AAA). perform as well in terms of addressing overproduction and was ultimately terminated in 1958.4 When farmers partici- Wallace focused on creating policy mechanisms that re- pate in programs that require land retirement, they astutely stored commodity prices, and he believed that managing set aside their least productive land, and then invest in tech- the domestic supply of commodities provided an effective nologies that increase production on their remaining land. method of raising prices and getting more cash into agri- Land retirement is an effective (although expensive) policy cultural communities. The AAA farm programs were effec- tool for reducing soil erosion and increasing wildlife habi- tive at raising farm income, very popular and placed some tat, but the Soil Bank demonstrated that it is a poor supply requirements on farmers to reduce production and set-aside management tool. The Soil Bank also illustrated the impor- some acreage. The program was funded by a tax on com- tance of limiting retirement on a per-county basis to avoid modities, but the Supreme Court declared the program devastating local economies (a lesson not entirely learned in unconstitutional, and President Roosevelt had to develop the current CRP) as well as the importance of a bid system another method of revitalizing rural agricultural communi- rather than fixed payments. ties. This was when the government entered into conserva- tion contracts with farmers. Surpluses continued in the 1960s, and Wallace’s supply management tools that worked well for 20 years were in- creasingly made ineffectual. Farm productivity grew by 49 4 A Fair Farm Bill for Co�ervation percent between 1950 and 1970, largely through the adop- the Act required the Soil Conservation Service to conduct tion of hybrid corn, improved plant breeding, increased a continuing appraisal of soil, water and related resources, acres of row crops, and improved management, including and to use that appraisal as the basis for developing a na- fertilizers, pesticides and favorable weather.5 tional comprehensive soil and water conservation program under the Food and Agriculture Act of 1977. The Emergency Feed Grain Act of 1961 began a trend that paid farmers to replace production acres with conservation The enhanced productivity of agriculture had a devastat- acres. In 1965, the Act was amended to provide for five- to ing effect on commodity prices (Figure 1). The real price ten-year contracts for farmers to take corn and grain sor- of corn and soybeans has eroded significantly over the past ghum out of production and use the land for conservation three decades, and the market value of these crops is often purposes. Again, farmers removed the least productive land less than what is required to produce the crop. Policymakers from production and used the income for more inputs, thus sometimes assume that low commodity prices send a price commodity supplies continued to increase. signal to farmers to produce less. Yet despite the low prices, the economic reality for many farmers is that they have too In the 1970s, a short-term rainbow turned into a long-term many fixed assets to let the land go idle, and consequently disaster for agriculture. The Soviet Union’s grain supply was the land continues to be farmed.6 dangerously low and forced the Soviet government to go on a grain-buying spree. Grain prices rose dramatically and the infamous “fence row to fence row” policy was established by THE 1985 FARM BILL: the U.S. Secretary of Agriculture, Earl Butz. The positive A NEW ERA FOR CONSERVATION balance of trade in agricultural exports provided the capi- Farm policy in the 1980s moved the conservation debate be- tal to pay for imports of goods and fuel. Consequently, lands yond erosion control and water quantity to issues such as that the government had spent millions helping to establish soil quality, water quality, air quality, biodiversity and wild- in conservation uses went under the plow as soon as the con- life.7 Sustainable agriculture programs were established.