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I think few of us involved in the 2008 farm bill process would have thought the new farm bill could be even worse, but the agricultural committees seem to have found a way to hijack the supercommittee process to their own ends. If this article is correct, the ag committees are trying to slip one by the American taxpayer and, contrary to what I called for here, impose even more of the costs of adjustment from commodity market volatility onto developing country producers. Committee leaders are apparently proposing to eliminate the direct payments to farmers, saving $50 billion over 10 years, but plow more than half of that back into new trade-distorting subsidies.The real kicker is that they want to attach the package to the supercommittee bill (if there is one) which will be passed without amendment and with limited debate, much less the months of hearings that usually accompany a farm bill.
According to the Reuters article, committee leaders are working on a package that would:
Reverse the modest moves toward making agricultural subsidies fairer at home by removing caps on payments to larger, richer producers; and
make farm policy less fair for our trading partners, especially developing countries, by shifting payments to more trade-distorting forms by…
guaranteeing revenues for farmers, no matter how large or how rich, and do it in a special budget measure that would make sharp cuts to safety nets for the old, the poor, and the sick.
The details of the committee proposal are not publicly available, but the Reuters report also suggests that the leadership is considering creating a separate program for cotton (and rice) that would be relatively more generous than for other commodities (the National Cotton Council denied this.) The World Trade Organization ruled several years ago that the current subsidy level for cotton is in violation of U.S. commitments. If the new program does not reduce subsidies to cotton, Congress will be thumbing its nose at our trading partners and destroying whatever small chance there might be to salvage something from the Doha Round of trade negotiations.
The supercommittee should just say no to being used to shield farm policy from long overdue reform.
CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.