A Compendium of Facts, Stats, and Opinions for the 1995 Farm Bill
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Prairie Grains is the
official publication of
the Minnesota
Association of
Wheat Growers,
North Dakota Grain
Growers Association,
South Dakota Wheat,
Inc., and the
Minnesota Barley
Growers Association.
Agriculture from farm to retail is America's largest single industry. It employs nearly 21 million people, almost 19 percent of the nation's total workforce and accounts for nearly one-fifth of our Gross Domestic Product. (from a 1990 farm bill bulletin by the U.S. Agricultural Alliance, a group of 14 national farm organizations including the National Association of Wheat Growers)
Alan Bergman, president of the N.D. Farmers Union, said new provisions of the 1990 farm bill that offer planting flexibility but take away price protection on 15 percent of the program acreage bases could cost N.D. farmers $83.4 million. "How far can you shift those acres before you destroy (minor crop) markets too?" Bergman asked. (The Forum, Nov. 13, 1990)
Payments have already fallen to less than half the record $25.8 billion in direct assistance farmers received in 1986 as the result of reforms in farm legislation passed in 1985 and 1990 (Barnaby U. Feder, N.Y. Times News Service, reprinted in Agweek, Dec. 19, 1994)
A unique determinant of the 1990 Act was the budget resolution which...mandated a reduction of $500 billion of a five-year budget of $6,492 billion.
Farm programs took one of the deepest cuts. Protecting the food distribution programs for poverty consumers, farm price and income programs were shrunk by 25 percent or $13.6 billion of their five-year projected funding of $54 billion.
There are 25 titles in the 1990 Act, more than the 18 in the 1985 Act and the 1981 Act. New titles include: Forestry, Fruits and Vegetables; Grain Quality; Organic; Rural Development; and Global Warming (R.G.F. Spitze, ag economics professor, U. of Ill., Urbana, in Choices magazine, Fourth Quarter, 1990)
The deficiency payment calculation change from five to 12 months, mandated by the 1990 budget act, will cost wheat growers $.8 billion ($800 million) for FY 1994-98 (According to Keith Collins, acting asst. economics secretary , USDA, before the House General Farm Commodities Subcommittee, April 22, 1993)
A study conducted by Oklahoma State University showed the average wheat farmer would contribute about $11,500 a year toward reducing the deficit, while the average taxpayer would contribute only about $300 (As a result of the budget resolution attached to the 1990 farm bill) Wheat and corn farmers, who count on price supports to make up for the gap between production costs and commodity prices, will be hardest hit by the plan. Higher fuel costs already are driving up production costs. (Agweek, Nov. 5, 1990)
As a wheat producer, I've always considered 50 bushels to the acre at $4 per bushel to be a sort of gold standard. That's a good crop at a fair price. (David Muske, Berlin, N.D., Agweek, March 14, 1994)
Arguing for continued federal support of agriculture, N.D. Sen. Kent Conrad sent a bag of groceries (paid for by national and ND farm organizations) to each member of Congress, along with a letter explaining that its contents "would cost you about $14.41 at a grocery store. Just $1.40 of that will find its way back to the farmer." "We're trying to make one simple point," says Conrad. "The slide in federal support for agriculture must be stopped in the 1990 farm bill. That's my message to my colleagues, as they think about the seven cents worth of wheat in a loaf of bread, the penny's worth of sugar in a candy bar, the 11 cents worth of corn in a box of corn flakes."
Along with the food, Conrad included a fact sheet with these points (among others):
* Americans spend 10.4 percent of their consumer dollar for food, the lowest percentage of any nation in the world. When farm program costs are added to consumer spending, Americans still spend less to feed themselves than the citizens of any other country.
* When farm income is viewed as a weekly salary, farmers make far less than workers in many occupations. In 1989, a farmer's median weekly "salary" was $246. By comparison, a salesman averaged $368, a refrigerator repairman $466, and an assembly line worker $336. (Agweek, May 21, 1990)
There are approximately 250 million people in this country and 500,000 major producing farmers. That is a 500-to-1 ratio! (Randall and Brian Thalmann, Plato, Minn., in their letter to Agweek, March 26, 1990)
A study by the Agricultural Food Policy Center, Texas A&M University, simulated farms for 1992-2000 with and without program participation under the current target price and a 10 percent lower target price after 1993. Increasing program compliance costs by $15-$20 per acre would be sufficient to make wheat producers drop out of the farm program.
Concluded impacts of eliminating the farm program:
* No mechanism to acquire and hold government stocks so trade and food security would be sacrificed.
* Increased price instability would prevail without loan rate and price support floors, small and medium size farms would suffer most.
* Financial stability of a large number of farms would be jeopardized.
* Environmental conservation compliance benefits would not be achieved.
Study on 1995 farm bill options, Luther Tweeten (Ohio State Univ. economist) and Gail Cramer (Univ. of Arkansas economist): Government outlays for farm programs were $17 billion in 1993 and this amounted to 1.16% of all federal outlays, 8.81% of gross farm cash receipts, and 0.26% of gross domestic product.
Viability of farm programs depends on program participation. If farms do not participate it compromises the conservation compliance program, supply control programs, and other program provisions.
If inflation continues at 3 percent per year the benefits to program participation will be negative by 2000 for wheat producers.
A 25 percent reduction in target price would cause wheat farmers to not participate, the same result would be observed if ARP increased 26%.
Government payments as a percentage of net cash farm income:
In 1984, 22.5% In 1989, 19.9% In 1994, 13.8% (USDA-ERS, Agricultural Outlook)
"The farm program is not only a farmer's subsidy, it's a consumer subsidy. I don't know any farmer out there who doesn't support... spending cuts across the board. What he objects to is being put on the chopping block, others being exempted, and the savings don't go to the deficit" -- House Ag Committee Chairman, Rep. Pat Roberts, (R-Kan.) in The Washington Post, December 4, 1994.
Trends in crop subsidies, including disaster payments:
1986, $26 billion. 1993, $16 billion. 1994, $10 billion. (USDA numbers, in The Washington Post, Dec. 4, 1994.)
"I don't think you can unilaterally disarm American farmers any more than you'd unilaterally disarm the military" -- U.S. House Speaker Newt Gingrich, commenting on farm program cuts on ABC-TV's "This Week with David Brinkley" after the 1994 elections.
Government spending on farm programs is down by 22% (as a result of the 1990 farm bill). Commodity Credit Corp. outlays (farm program spending) averaged $12 billion in 1991-93, down from $15.5 billion in 1986-90, according to USDA. (Milling and Baking News, May 31, 1994)
USDA PROGRAM OUTLAYS
FOR FISCAL 1995 % of USDA budget
Food and Nutrition Services $38.5 billion (64%)
Farm programs, Intl. trade $12.8 billion (21%)
Nat. resources,environment $ 4.5 billion (8%)
Rural Development $ 2.3 billion (4%)
All others, minus receipts $ 2.1 billion (3%)
The USDA budget estimates CCC net outlays for wheat in fiscal 1995 at $1.892 billion, compared with $1.989 billion in the 1994 fiscal year and $2.185 in fiscal 1993. (Milling & Baking News, Feb. 15, 1994)
In 1993, federal price subsidies accounted for about 16 percent of the average ND farmer's net wages. A study by NDSU ag economics professor F. Larry Leistritz estimated a $100 million cut in federal farm subsidies could cost the state nearly 3,000 off-farm jobs and take away $300 million in revenue generated by agricultural interests in North Dakota. (The Forum, Dec. 20, 1994)
Rural Americans and farmers took a bigger tax hit during the 1980s than urban residents because of regressive federal and state excise levies, according to a study prepared by two Auburn University economists. The study estimated that rural residents bear a 52 percent greater burden from gasoline excise taxes than do urban consumers. The additional burden on rural residents for utility taxes is 26 percent, for insurance taxes 19 percent, and other excise taxes, 8 percent. (Grand Forks Herald, March 4, 1993)
There were several rounds of budget cuts thrown at agriculture in 1993. The Omnibus Budget Reconciliation Act of 1993, signed by President Clinton on Aug. 10, 1993, contained about $3 billion in ag cuts, mostly through reductions in commodity programs, export programs, a cap on CRP enrollment, and federal crop insurance changes from 1994-1998.
The Clinton deficit-reduction plan originally called for an $8.6 billion cut, including an increase in flex acreage and a broad-based energy tax. However, the flex provision was eliminated and the energy tax narrowed significantly. Wool, mohair, and honey price supports were eliminated during appropriations action in October, 1993.
The Penny/Kasich budget reduction plan surfaced in November, 1993, and proposed further ag cuts; among them an increase in flex acreage from 15 percent to 17 percent. This plan was defeated, with the help of protests by NAWG and other commodity organizations. "(We) found repeated efforts to further reduce income support acreage particularly offensive since no other mandatory spending category has been reduced since 1985," said Carl Schwensen, NAWG Executive Vice President, in his Nov. 19, 1993 report from Washington.
Most severe impact (would be) from the 10 percent flex area increase and increased ARPs to offset the return of 0/50/92 land to production. (Expected) lower participant net returns in crop sector of around $15 per acre for corn, $10 per acre for wheat.
Ten percent increased flex area carries less incentives for program participation, complicating the environmental thrust. Elimination of 0/92 and 50/92 programs, without offsetting increase in ARPs, is likely to increase program cost, eliminate long-term conservation options as contracts expire, and reduce the likelihood of cost efficiency in the production of minor oilseeds.
Severe implications for specific regions of the country, with the hardest impact on monoculture regions -- leading candidate will be wheat growing regions. (From an April, 1993 analysis of the Clinton Budget Plan, Center for National Food and Agricultural Policy, Dept. of Ag Economics, U. of Missouri, Columbia.)
The Congressional Budget Office (CBO) has estimated that the cumulative effect of various legislative measures...enacted into law since 1981 have, or will, reduce the federal deficit by more than $57 billion. Most recently, in the Omnibus Budget Reconciliation Act of 1990, projected farm price support spending was cut by 20 percent -- more than any other program.
We urge the Committee on the Budget to be sensitive to the magnitude of our previous actions. The fact is that farm program spending has decreased even as other entitlement spending -- and the federal deficit -- have increased.
In 1991, farm price supports were ranked as the 12th largest entitlement program. Ten of the other entitlements (excluding deposit insurance) have all experienced increased spending averaging 2.4 percent to 15 percent annually between 1985 and 1991. CBO projected that these 10 entitlement programs will continue to increase at an average of 0.7 percent to 15.8 percent through 1997.
Only farm program spending has declined since 1985 -- by an average of 9 percent per year. Only farm program spending is projected to continue to decline -- by an average of 1.4 percent per year.
Even the savings from completely eliminating federal farm programs in 1994 would not equal the increase in any of the three largest entitlements. (Kansas Rep. Pat Roberts and Texas Rep. E Kika de la Garza, in a letter to MN Rep. Martin Sabo, then Budget Committee Chairman, March 4, 1993)
Agriculture, including food and nutrition programs, represents less than five percent of total federal spending; farm price supports alone less than one percent.
Agriculture spending, unlike other entitlements, does not have a cost of living adjustment. The result is that while other entitlement spending has grown, farm spending has declined. CBO numbers indicate that from 1985-91, farm price supports declined by 9%, while the other top 12 entitlements increased by an average of 2.4 to 15 percent.
Congress voted a $60.5 billion 1993 USDA budget without shouting that farmers get only about 20%; food stamps, $28 billion or 46%. Counting school lunches, 64% went to mandated welfare outlays -- not farmers! Let's tell the story about who gets the funds!
Let's stop shooting ourselves in the foot by aiming at each other. We need to work with USDA staff and the media, too. We must reward those who tell our story with guts, and send "cow pies" to the whiners and gripers!
Especially if they also still pedal that seven-year-old baloney about farmers getting a "too big" share of the budget. Fact: We got nearly 3% in 1986 and the 1960s; now get under 1%. Tell'em! (John Marten, staff economist, Farm Journal, October, 1992)
The prime objective of the farm bill is not to raise prices. In fact, the title of the bill, the Food Security Act of 1985, is quite accurate. The prime objective is to ensure an adequate supply of cheap food for the American consumer, and that is just what it does.
The 1985 Food Security Act did succeed in reducing surplus stocks. It also transferred much of the cost from the federal budget to the marketplace. However, program requirements continue to tie farmers to crop bases that keep them constantly on the verge of renewed (Howard Tice, former executive director of the Kansas Association of Wheat Growers, in a Jan. 30, 1990 editorial)
What we're talking about is a long list of projects nominated for recision last month by President Bush. Recision is a technical term that amounts to asking Congress to voluntarily veto projects it has already funded.
Bush claimed the projects are "pork-barrel" efforts that don't merit federal support... Notably, the 30 ag projects make up almost half of the overall list, but less than 1% of the $3.6 billion in suggested cuts.
Those numbers lead us to believe that there's more going on here than trying to balance the federal budget -- a worthy goal to say the least.
What's going on is politics. Bush and the Democratically controlled Congress are at odds over the budget, plus tax cuts to stimulate the economy.
Our sense is that Bush administration officials knew that telling a largely urban populace about such strange-sounding maladies as eastern filbert blight and leafy spurge would strengthen the case against a "spendthrift" Congress kowtowing to such "special interests" as agriculture. It did so while knowing that Congress was highly unlikely to cut the projects.
It's possible that some of the ag projects are wasteful. But that's not the real issue. Agriculture is being used as a whipping boy, and we resent it. (David Hest, former editor of The Farmer magazine, April 18, 1992)
Farm programs belong to the category of entitlement spending, which will consume about half of the estimated 1995 budget of $1.6 trillion. Within that category, farm commodity programs are minuscule at an annual average of about $10 billion when compared with about $600 billion for Social Security benefits, Medicare and Medicaid (Cargill Bulletin, December, 1994)
"We would have a balanced budget today, if the 11 biggest entitlement programs had taken cuts like agriculture has since 1980" -- Rep. Charles Stenholm (D-Texas), in a January, 1995 speech to the National Council of Farmer Cooperatives.
Fewer farms now than before the Civil War -- The 1992 Census of Agriculture counted 1.925 million farms, making it the first census since 1850 (when there were 1.4 million farms) with fewer than two million farms. U.S. farm numbers peaked in 1935 at 6.8 million.
Total federal budget in 1955: $68.4 billion. In 1990: $1,252 billion. Farm program as percent of federal outlays in 1955: 5.1 percent. In 1990: 0.9 percent. (American Farm Bureau)
Amount U.S. agriculture generates annually in economic activity: $950 billion, or about 16 percent of the nation's gross domestic product. (Former USDA Secretary Mike Espy)
Number of districts represented by U.S. House members that derive 10 percent or more of income from agriculture: 50 out of 435. (Former USDA Secretary Mike Espy)
Net ag exports in fiscal 1992: $18 billion, which helped reduce a $105 billion deficit in nonfarm trade and bring the U.S. trade deficit down to $87 billion. (USDA).