Research Reports
Prospects for the 2012 U.S. Farm Bill and Implications for Korea
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AuthorSong, Jooho
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Publication Date2012.12.30
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Original
Since 1949 many provisions of U.S. agricultural policy have been reauthorized every few years as primarily as temporary amendments of Agriculture Adjustment Act of 1938 and the Agricultural Act of 1949. Many provisions of the 2008 Farm Bill expired on September 30, 2012 (the end of the fiscal years for the U.S. federal government). Others will expire on December 31, 2012.
The House of Representatives Committee on Agriculture passed a bill out of their committee in the middle of the summer, 2012 that was much like the Bill that passed the full U.S. Senate in the early summer. However, the leadership of the House refused to schedule the bill for consideration. This delay was in part because many members of the House objected to high spending on food programs and some objected to farm subsidy provisions as well.
The two bills continued food subsidy programs with little change and authorized continuing environmental and conservation programs. The commodity programs would be modified by eliminating $5 billion per year in direct payments to those with a product history in grains, oilseeds and cotton and replacing that (and ineffective prices supports and price-based income supplements) with “shallow loss” payments that apply when revenue (or price) fall below recent high levels. The new programs could be excessively expensive or have no budget cost depending on yields and prices for major covered commodities. These “shallow loss” subsidies are designed to supplement on top of heavily subsidized crop insurance programs that cover deeper revenue and yield losses. A special provision for the dairy industry would add a supply management quota program requiring periodic cuts in milk producers.
Many policy advocates who favor the provisions of the farm bills under consideration argued for passage of the new legislation as soon as possible. They are concerned that in a lame duck session and especially in a new 2013 congressional session, budget pressures will dominate and the budget for farm and food subsidies will be cut substantially. There is a chance that with more time and less election pressure, the farm subsidies will be cut rather than readjusted to spend less on direct payments and more of revenue-based insurance-like support. More pressure to cut crop insurance subsidy rates may also develop as the budget exposure of these program becomes more apparent.
Farm Bills are commonly delayed. The 1985 farm bill became law on December 23, 1985, the “1995 Farm Bill” actually became law in the spring of 1996, and the 2007 farm bill did not actually take effect until June of 2008. So, the current impasse was more like business as usual than an aberration. Nonetheless, there is much policy and political concern on the part of advocates of specific policy provisions. Generally those who favor the policies included in the Bill that passed the U.S. Senate and the similar bill that passed the House Agriculture committee express the most concern about the farm bill delay. Others such as Washington Post and other farm subsidy skeptics are pleased that more time has been allotted to debate the course of farm and food subsidies and regulations.
Researchers: JooHo Song, JeongBin Im, HyunOk Lee, Daniel Sumner, Hanul Park
Research period: 2012. 8. - 2012. 12.
E-mail address: jhsong@krei.re.kr
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