“The place of food and agriculture on the American national policy agenda has rarely been more critical than it is today. Agriculture affects regional economies throughout heartland America, and food policy affects our health, our safety, our environment, our culture, and our global relationships. While less than 2% of the American labor force is today engaged directly in farm production, the food and agriculture sector overall—production, farm support, food processing, distribution, and retail—not only feeds the nation but provides up to 12% of American jobs and approximately 12% of the nation’s gross domestic product.” And with that preamble, an esteemed collection of agricultural economists, researchers, academicians, agribusiness executives, and former USDA administrators issued their thoughts about what the 2007 Farm Bill should include. Let’s take a peek at what they have in mind for US agriculture.

The comprehensive farm policy proposal, entitled, “Modernizing America’s Food and Farm Policy: Vision for a New Direction” was issued by the non-partisan Chicago Council on Global Affairs.

The report looks back at the economic environment when farm programs were initiated, explores the changes, and compares the early justification with today’s structure of agriculture. Regarding that change over time, the report says, “Today, however, farm concentration has accelerated to that point that in 2003 the largest 9% of operations generated 73% of all U.S. farm output. Unsurprisingly, these largest producers received 51% of federal farm program payments. At the other end of the spectrum, the majority of “rural residency farms”—67% of the total—produce only a small share of national output. Many show negative farm income for tax purposes, and they receive 17% of federal payments.”

The report is not short on praise for the American farmer. It says farmers have “provided our country with the most ample, safe, and affordable food supply in the world.” Farmers have kept the support of Congress, but the report says trade, technology, markets and shifting demand has “exposed many inadequacies.”

Today’s farmers export two times as much as other businesses, and those markets will grow for farmers. With world population growing by 50% in the next 45 years, global food demand will double. This creates the potential for trade conflicts that have already begun. The report suggests the need for a new international trade agreement, or US farmers will be constantly defending themselves against international challenges to US farm policy.

The report says farm programs were designed to keep farmers on the land, but that is no longer an issue with continued consolidation, productivity growth, and the development of larger, higher-tech machinery. Another trend is the emergence of bio-products, including biofuels, all in need of extensive research investment that will not only serve the demand, but stabilize the supply for the American farm market.

While trade conflict occurs, the structure of the industry changes, and the need for research increases, the report says the US government will not be able to afford the necessary investment. Budgets are being proposed for cutting, but while agriculture has resisted prior demands, the report authors suggest that may not always be guaranteed.

So what should be done? The report advocates many policy changes, including trade and commodity policy:

The Task Force believes that trade liberalization is in the strong interest of U.S. agriculture and that agricultural leaders need to support U.S. efforts to restart the Doha Round.

The Task Force believes that Trade Promotion Authority should be renewed by Congress.

The Task Force believes it is in our interest to reform export assistance programs to comply with WTO rules.

The Task Force believes that public investment in research should be increased and that funds should be provided on a competitive basis rather than distributed on a formula basis or earmarked for specific institutions or research projects.

The Task Force urges reform of immigration laws that affect the farm and food sectors.

To address the transportation infrastructure, the Task Force urges better coordination of both national policy and investment, particularly in waterways. Public sector investment will play a critical role in addressing gaps in our transportation infrastructure, particularly as demands on our river locks and rail system continue to increase.

The Task Force believes the current trade-distorting domestic support programs must be eliminated in favor of a new blend of green box approaches.

The report says, “We propose that the entire grouping of product-specific, trade-distorting income and support programs, including countercyclical and loan deficiency payments, price supports, and federal crop insurance and disaster payments, be replaced with a new portfolio of approaches that are non-distorting and compliant with (the World Trade Organization.)” Under such a proposal:

1. Direct payments would be uncoupled from production and market forces and only serve in transition until new programs were implemented.
2. Implement a multi-commodity revenue insurance program for all farmers that becomes a financial safety net and encourages production.
3. Conservation incentives that would reward environmental stewardship and soften the downward pressure on land values, resulting from the diminished program payments.
4. Implement a government sponsored, farmer savings account program similar to a 401(k) that could be used for risk management needs, including education, health, and retirement.
5. Establish a guarantee that 20% of the federal resources for agriculture be allocated for the good of all of agriculture.
6. Establish a transition program that might include buy-outs, land diversification, and other signals that would incorporate change in the structure of agriculture.

Additionally, the Task Force addressed a number of other issues that are traditionally included in the Farm Bill, such as nutrition, conservation, and rural development. Among those position statements are:

The Task Force recommends linking the major federal feeding programs to nutritional goals as outlined in USDA’s dietary guidelines in order to improve health.

The Task Force recommends that a secure resource base be provided for USDA’s Emergency Food Assistance Program (TEFAP) and other feeding programs that move through private voluntary organizations (PVOs).

The Task Force urges the creation of a stewardship program to help reward farmers for their environmental contributions.

The farm bill should mandate ambitious goals for environmental performance.

The Task Force recommends that other conservation programs be consolidated and streamlined, with a goal of keeping the best land in production.

The Task Force recommends increased spending on research, education, and technical assistance for environmental mitigation. In appropriate cases where these programs are designed to support the farm community as a whole, the Task Force proposes that a share of the 20 percent of funds devoted to public goods specified in our plan for modernizing domestic support programs be dedicated to them.

The Task Force believes the farm bill must enable the federal government to support and encourage effective land use planning. This should be executed in part through the provision of funding incentives in support of local land use planning.

The Task Force recommends that the 2007 farm bill lay out clear objectives for rural development policy around two core concepts: (1) diversifying rural economies through non-farm investment, creating non-farm jobs, and encouraging entrepreneurship, and (2) improving the quality of rural life.

The Task Force believes that an opportunity exists to revitalize cooperative activity among producers, encouraging its expansion through formation of cooperatives, limited liability companies (LLCs), or other collaborative institutional structures through which small-to-medium-sized farmers can work together to increase income.

The Task Force urges a renewed emphasis on the traditional partnership between land-grant institutions and rural communities. It should include stronger linkages with community colleges and attention to rural economic development beyond agriculture.

Summary:
The Task Force, commissioned by the Chicago Council on Global Affairs, is a high octane group which deliberated on a wide variety of issues that it felt needed to be included in the next Farm Bill, and changed within the current context of farm programs. Of greatest interest to Cornbelt farmers would be the replacement of the current price support programs, with such programs as revenue insurance, a 401(k) program, and conservation programs that would gain the attention of the rest of the world which is closely watching for trade violations.