History and Outlook for Farm Bill Conservation Programs Zachary Cain and Stephen Lovejoy
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4th Quarter 2004 A publication of the CHOICES American Agricultural The magazine of food, farm, and resource issues Economics Association History and Outlook for Farm Bill Conservation Programs Zachary Cain and Stephen Lovejoy Over the last 70 years, the United States Congress has The Agricultural Adjustment Act began a time-hon- taken on the task of determining how federal dollars will ored tradition in American agriculture: the notion that it is be invested in agriculture through farm bills.1 The focus of necessary to control supply in order for farmers to receive a this paper is to determine how conservation programs have fair price for their goods. The act attempted to do this by arisen and evolved and to speculate about future direction. setting price supports, or parity prices, to guarantee that Conservation programs have taken a variety of forms since prices did not fall below a set level. This price support was 1933, usually as vehicles for rural investment, income sup- available to producers who participated in voluntary pro- port, and supply control. It was not until the mid-1980s duction reduction programs, such as acreage set aside. In that conservation programs were truly rooted in protecting reality, the program was hardly voluntary—those who did natural resources. Several important environmental gains not participate were subject to the uncertainty of low have been made over the last 70 years, and the future of prices on the open market. The program was financed by conservation programs looks even more promising. levying a processing tax on the commodities. This tax was often passed straight to the consumer, who ended up pay- 1930s—Depression ing more for food and fiber products. In 1936 this tax was The Great Depression of 1929 ushered in hard times for declared unconstitutional on the grounds that Congress all Americans, especially farmers. One out of four Ameri- had passed a tax that was beneficial to one segment of the cans resided on farms at the time; today that figure is less nation—the farmer—while causing detriment to everyone than one out of 50. Between 1929 and 1932 gross farm else. income dropped 52%. In 1933 rural incomes were 40% of This setback ultimately led to the first conservation urban incomes, and there was 30% unemployment in initiatives. Congress needed to infuse cash into rural areas urban areas (Doering, 1997). When FDR was elected in while controlling supply to achieve higher commodity 1933, he promised “definite efforts to raise the values of prices, ultimately in hope of reducing the dependency of agricultural products” (Hurt, 2002). His administration, the American farmer on government subsidies. The Soil under the leadership of Secretary of Agriculture Henry A. Conservation Act of 1935 (PL 74-46) established the Soil Wallace, produced the first farm bill: the 1933 Agricul- Conservation Service and made funding available for tural Adjustment Act (PL 73-10). Wallace understood farmers who established soil conservation practices. This the financial crisis that faced rural Americans; the best way mode of bringing cash to farmers had not been challenged to get cash to rural, predominantly agricultural focused in court, so it became the basis of economic relief in the areas was via farm programs. Direct payments were not an next farm bill: the 1936 Soil Conservation and Domestic option at this point in history; governments giving money Allotment Act (PL 74-461). Congress entitled the bill “an directly to individuals would have been seen as socialistic. Act to provide for the protection of land resources against soil erosion and for other purposes.” These other purposes were to raise the purchasing power of the American 1. “Farm bill” is used throughout this manuscript as a farmer. Soil conservation was a justifiable public expendi- common method for referring to Acts of Congress per- ture; Americans had seen how the Dust Bowl had driven taining to agricultural programs. farmers out of the Great Plains. Economic and social pol- ©1999–2005 CHOICES. All rights reserved. Articles may be reproduced or electronically distributed as long as attribution to Choices and the American Agricultural Economics Association is maintained. Choices subscriptions are free and can be obtained through http://www.choicesmagazine.org. 4th Quarter 2004 CHOICES 37 icy analysts saw that conservation was producers (tenants and sharecrop- Table 1. Conservation expenditures. in the public interest, and therefore pers). The 1938 Act also laid the Year 1937 1999 the public should contribute to the groundwork for soil conservation dis- Financial $5,041,700,000 $231,383,000 farmer’s costs (Helms, 2003). Soil tricts at the county level. assistance conservation had also gained a formi- By providing rural Americans Technical $261,863,000 $799,578,000 dable ally in “Big” Hugh Bennett, the with conservation funding in the late assistance first director of the Soil Conservation 1930s, the administration was able to Land $17,655,000 $1,711,163,000 Service. Bennett used his supreme increase the quality of life and eco- reserve showmanship and scientific knowl- nomic security that was shattered by Total $5,321,218,000 $2,742,124,000 edge to rally Congress and the Amer- the Great Depression. Table 1 pro- Note. Adapted from Doering (2000). ican public to the need for soil vides a comparison between conser- conservation. vation expenditures in 1937 and pluses and less for conservation. The Financial assistance for conserva- 1999 in 2000 constant dollars. Agricultural Act of 1956 (PL 70- tion in the 1936 Act was called the 540) created the Soil Bank, which Agricultural Conservation Program 1940s—Wartime took 29 million acres out of produc- tion. By transferring these acres into (ACP). The ACP sought to reduce World War II brought a hungry conserving practices, the govern- commodity surplus by paying farm- world market to American producers. ment could decrease surplus supply ers to replace seven soil-depleting High demand led to higher prices, as well as deal with (as stated in the crops with soil-conserving crops. The and the government developed great act) “the stifling effects of erosion seven soil-depleting crops included surpluses to ensure national security. that threatened the welfare of every corn, cotton, wheat, and other com- Conservation was put on the back American and disrupted markets and mercial crops the USDA believed to burner as producers scrambled to commerce on the whole.” These acres be in surplus. By planting a grass, cash in on high prices. This was a were to be diverted into soil, water, legume, or cover crop in place of one period of turf wars, where the Soil forest, and wildlife conservation pro- of these soil-depleting crops, the gov- Conservation Service, land-grant col- grams in exchange for government ernment would pay the farmer for leges, Farm Bureau, extension, the rental payments for 10 years. participating in soil-conserving prac- Department of the Interior, and oth- The Soil Bank was made up of tices out of the general revenue fund ers attempted to shape their roles in two specific programs: the acreage instead of assessing a special tax. conservation programs. There devel- reserve and conservation reserve. The Although this program provided oped under Bennett a sense that SCS, acreage reserve program made farm- a constitutional way to get cash to as the keeper of the conservation ers refrain from planting surplus farmers, it failed to reduce sur- flame, had the mandate and mission commodities (corn, wheat, cotton, pluses—surpluses actually grew. This to plan and execute a national pro- rice, peanuts, and several varieties of can be attributed to farmers enrolling gram of soil and water conservation. tobacco) or plow down the crops their poorest ground into conserva- Conservation was defined as what the they had already planted. The con- tion programs while using their guar- SCS decided to do. After World War servation reserve program called for a anteed income via government II, the SCS was project oriented, three-year contract wherein the gov- payments to increase yields with fer- conducting activities like the Small ernment would pay for land tilizers, machinery, and other tech- Watershed Program and Great Plains improvements that increased soil, nology on their best ground. The Conservation Program. These were water, forestry, and wildlife quality if 1938 Agricultural Adjustment Act seen as public works programs that the farmer would agree not to harvest sought to decrease these surpluses by usually were funded to benefit the or graze contracted land. This act using acreage allotments and the home district of some congressional also stated that newly irrigated or development of the ever normal gra- representative (Doering, 1997). nary to handle excess supply, to no drained farmland could not be used avail. The act did continue to build 1950s—Dealing with Surpluses to produce these surplus commodi- on conservation policy by increasing ties, as well as providing matching The war ended, demand shrank, and payments to participants and setting funds to the state for reforestation of rules for how those payments should surpluses grew. Farm bills in 1949 private lands. Land retirement pro- be divided between landowners and and 1954 did little to control sur- grams had several objectives: reduc- 38 CHOICES 4th Quarter 2004 ing erosion, supporting farm ment program, giving the Secretary of 1973 (PL 93-86) authorized long- incomes, and reducing commodity of Agriculture authority to make 5- term contracts (up to 25 years) for price support payments by reducing to 10-year contracts with producers the Rural Environment Conservation the supply and thereby raising mar- who agreed to convert cropland into Program and Water Bank Program. ket prices (Helms, 2003). This uses that would conserve water, soil, There was a push in conservation to period started a trend that would be wildlife, or forest resources, establish increase the “natural beauty” of rural followed until the early 1980s—the or protect open spaces, natural America.