Each industry has its place in our nation’s fabric, both figuratively and physically. But there is one industry that is unique in this way. Transcending time and place, it is as relevant to our economy today as it was 200 years ago, and it calls each state home.

U.S. agriculture is truly in a league of its own. An industry that directly affects each person on a daily basis—at least three times a day for most, and more times for many of us—agriculture picked up the slack when the rest of the economy relied on CPR from a government that’s already overextended.

Recognizing the country’s challenges and its own successes, agriculture added to its uniqueness by being arguably the only industry willing to help Washington get its financial house in order.

In recent years, agriculture has accepted more than $15 billion in funding cuts.  Considering farm policies make up just one-quarter of one percent of federal spending, that cut is a much higher percentage than other industries.  But agriculture wasn’t done and has supported proposed cuts of another $23 billion in the next Farm Bill.

Keep in mind that agriculture was already coming in under budget (yet another thing that makes it so unique).

Financial sacrifice isn’t the only way agriculture leads in Washington, either.  It largely transcends political bickering.

In 1870, you would have been hard-pressed to find a member of Congress who wouldn’t have thrown his support behind agriculture. Since 70 to 80 percent of the U.S. population was employed by the industry, it would have been political suicide to do otherwise.

Today, far fewer folks call rural America home, yet even as Congress becomes more fragmented, agriculture remains a testament to bipartisanship and was just about the only consensus builder during last year’s Super Committee exercise.

So why have so many special interests on the far left and far right set their sites on agriculture?  Maybe it is the industry’s own uniqueness that scares some.

Take crop insurance as an example, which modernized the way farm policy operated by introducing efficient private business into the equation and has become one of the industry’s top legislative priorities.

Risks in agriculture are much higher than in other businesses, whether it is unpredictable weather, volatile markets, or heavily subsidized foreign competitors.

These risks may be high, but now they are managed well. In the past, there were complaints about the inefficiencies of government and the cost that taxpayers incurred during a crisis. So in a unique collaboration, Congress and agricultural leaders turned to the private sector to improve efficiency, curb waste, and shift burden from taxpayers to private insurance companies.

The current public-private crop insurance partnership is working well and excelled in what could otherwise have been a disastrous 2011.

Yet, look at the recent calls for “reform” to the successful system by burdening it with more government.

Some want to push private industry aside and hand the reigns back to an inefficient government-run system that would shift risk exposure back to taxpayers.

Others hope to restrict some farmers’ ability to purchase coverage, leaving some cropland uninsured and picking winners and losers among the very people who feed and clothe us every day.  Still others hope to add to the mountains of paperwork and regulatory burdens already faced.

And a few extremists want America to become the first government in history to turn its back on production agriculture all together.

Luckily these attempts have been beat back so far, but attacks will only intensify.

U.S. agriculture has always been unique and, in so many ways, it’s what keeps this country going. We have the most affordable, most abundant, most available and safest food supply in the world. When agriculture has a problem, we have proved we can solve it, but if it’s not broke—don’t attempt to fix it.

In this video, aptly titled “Crop Insurance 101,” Tom Zacharias, president of NCIS, reviews the history of the program, why it was created, and why Congress should “do no harm” to it in the upcoming Farm Bill.

Before crop insurance existed, Zacharias explains, disaster would strike and farmers would be forced to go to Congress for help. Congress would then have to pass disaster legislation and appropriate funds, which would then be passed on to the USDA where a program would be put in place to finally, pay the farmers whose crop had been destroyed.

But this whole process would take anywhere from one to three years, Zacharias explained, burdening not only the farmers who waited for the money to start planting again, but the taxpayers who had to pick up the pieces. And so, the public-private crop insurance program was born.

Today, farmers purchase crop insurance and, when disaster strikes, private insurance companies pay out indemnities within 30 days.

In 2011, Zacharias said, crop insurance companies had 265 million acres insured, 1.15 million policies issued and more than 125 different crops covered—resulting in $114 billion worth of protection for U.S. farmers.

This program allowed farmers who, in 2011 for example, sustained one of the worst weather years in history to bounce back and plant again this spring—receiving $10.4 billion in indemnities in 2011 alone.

“Crop insurance is at the forefront of modern-day farm policy,” Zacharias said in a statement released with the video. “For the vast majority of Americans who have very little to do with agriculture, this video could be their introduction to crop insurance.”

So what should be made of this newly energized Coalition for Sugar Reform? Not a lot considering that the coalition, which appears to be solely funded by large food manufacturers seeking to depress farmers’ prices, doesn’t stand behind its own product.  Check out this warning from the group’s website.

“There may be delays, omissions or inaccuracies in information obtained through your use of this Site…Moreover, SUA does not represent or endorse the accuracy or reliability of any advice, opinion, statement, or other information displayed, uploaded, downloaded or distributed through this website.”

And the “coalition” has made good use of this license to misinform.  Here are some examples from just the past two months:

· “The current U.S. sugar program [is] driving consumer prices up.” – April 17

The food manufacturers are implying that if they paid farmers less for sugar then food prices would fall and stores would charge less for bagged sugar.  In reality, farmers’ prices have fallen 15 percent since the summer of 2010, yet the price of sweetened products and sugar at the grocery store has increased over that same period…right along with the profits of food makers and grocers.

· “Washington’s been making mandatory purchases of ‘surplus’ sugar and reselling it — at a loss — to ethanol plants since 2008.” – April 17

Not only does the characterization of sugar “surpluses” directly contradict food manufacturers’ previous statements, but publicly available USDA data shows that the government has not made any of the described purchases.

· “The current U.S. sugar program is costing…thousands of jobs each year.” – April 3

The food manufacturers are still using the tired, disproven theory of candy makers leaving the U.S. for other countries in search of cheap sugar.  However, since sugar policy took hold in 2008, production of candy in the United States has increased 2.5 percent, according to U.S. Census data.  Not to mention, NCA has openly boasted about its industry’s high profit margin, record sales, recession resistance, and recent growth.

· “Canada is reaping the sweet benefits of the outdated U.S. sugar program.” – March 13

The food manufacturers would lead people to believe sugar prices are cheaper in Canada.  According to data from the U.S. and Canadian governments, U.S. grocery shoppers are currently paying 4 cents per pound less for sugar than their Canadian counterparts.

Yes, there are a lot of inaccuracies on the site.  But what about the omissions they mentioned in that earlier disclaimer?  There are too many to count but these seemed particularly important.

· The USDA projects that current no-cost sugar policy will remain no cost to taxpayers through at least 2022.

· These same food makers lobbied for a sugar subsidy plan during the 2008 Farm Bill that would have cost taxpayers an estimated $1.3 billion per year.

· Thanks to U.S. sugar policy, American companies didn’t suffer in 2010 and 2011 from severe global sugar shortages like food manufacturers in many other developed countries.

· U.S. sugar is so inexpensive you can still walk into any restaurant in the country and pick up packets for free.

Considering these food makers’ notorious track records of fuzzy math, double talk, and misrepresentation of market realities, you might be better off getting your sugar news from a source that stands behind its data.

Try www.sugaralliance.org.

A former chairman of and now advisor to the National Cotton Council, Anderson testified at a House Committee on Agriculture farm bill hearing that the high costs of seed, fertilizer, fuel and other inputs coupled with the vagaries of weather has made the risk of producing a crop never greater. He pointed to last season when he was unable to harvest a single acre of cotton due to the prolonged drought in his state – one the Texas Comptroller indicated has resulted in indirect and direct losses approaching $9 billion.

“I also urge the committee to complete the farm bill this year – in advance of the expiration of the current legislation,” Anderson said. “We need some certainty regarding farm programs as we look at the long-term investments necessary to keep our farming operations economically viable.”

He told the panel it is important that budget constraints and farm program critics not be allowed to undermine the farm safety net’s effectiveness. He called for a range of farm programs structured to address the needs of the different commodities and production regions, saying a “one-size-fits-all farm program” cannot address the diversity of American agriculture.

Regarding the cotton program, Anderson said it is very important that the new farm legislation includes the cotton industry’s proposal of a new revenue-based crop insurance product, one that will strengthen growers’ ability to manage risk. He said the Stacked Income Protection Plan (STAX) would complement existing products and provide a tool for growers to manage that portion of their risks for which affordable options are not currently available.

“This revenue-based crop insurance safety net would be combined with a modified marketing loan that is adjusted to satisfy the Brazil WTO case,” Anderson testified. “Even with modifications, the marketing loan will remain an important source of cash flow from merchandisers and producers.”

He also emphasized that given the diversity of weather and production practices, the menu of insurance choices should be diverse and customizable, thus allowing for maximum participation and the most effective coverage. He asked that the enterprise unit pricing option, introduced in the 2008 farm bill, be maintained and expanded to allow a producer to apply enterprise unit pricing to acres that are separated by irrigated and non-irrigated practices.

Anderson conveyed the cotton industry’s concerns regarding scrutiny of risk management programs being considered for the farm bill. He said despite the dramatic increase in last year’s indemnities, total crop insurance indemnities remain below total premiums, and thus, “the program is operating at a loss ratio less than 1.0.”  He also expressed concern about a recent General Accountability Office report calling for arbitrary limits on insurance programs.

“My concern is founded in the fact that crop insurance is a basic safety net that only indemnifies a grower when he incurs a loss,” Anderson stated. “Even then, the grower is not made whole and is only compensated for a portion of his loss. The value of crop insurance coverage is based directly on the expected market value as determined in the futures market. For Texas, I can assure this committee that any limits or eligibility requirements that deny farmers the opportunity to purchase affordable insurance products will completely undermine the ability to secure production financing.”

Anderson also called for the continuation of the economic assistance program for U.S. textile mills that was introduced in the 2008 farm bill by stating, “we have seen a revitalization of the U.S. textile manufacturing sector, as evidenced by new investments and additional jobs.” He also pointed out the need for adequately funded export promotion programs such as the Market Access Program and the Foreign Market Development Program.

“Individual farmers and exporters do not have the necessary resources to operate effective promotion programs which maintain and expand markets,” Anderson stated, “but the public-private partnerships, using a cost-share approach, have proven highly effective and have the added advantage of being WTO-compliant.”

The National Cotton Council of America’s mission is to ensure the ability of all U.S. cotton industry segments to compete effectively and profitably in the raw cotton, oilseed and U.S.-manufactured product markets at home and abroad.

In the past, we have printed many letters to the editor and columns responding to an attack on farm policy that were never run in the paper to which they were sent.  Here are two more.

It seems to us that if the media is confident in the policy positions they endorse or want to foster healthy debate, what threat do dissenting opinions pose?

In response to a sharp critique of farm policy in an op-ed appearing in the St. Louis Post-Dispatch.

Dear Editor:

Your opinion piece (New farm bill has growers lining up at the trough) misstates important facts while overlooking others.

The assertion that farm policies being contemplated under the 2012 Farm Bill would cost more than the current set of policies is wrong.  The House and Senate Agriculture Committees are expected to write a Farm Bill – which includes nutrition, conservation, and farm policy – with a level of cuts that would greatly exceed what the Simpson-Bowles deficit reduction commission called for.

It is true that environmental extremists and libertarian think tanks in Washington do not like U.S. farm policy and they twist and turn facts and figures to persuade editorial boards that their cause is just and their motives pure.  I would simply encourage readers to follow the money to gain a clearer sense of what may be driving their positions.  For instance, there has been significant news coverage of the fight by big money interests to control the CATO Institute, a leading critic of farm policy.

We have seen in political campaigns how enough money spent on negative ads could turn a candidate’s own mom against him.  Money can distort but it cannot alter facts:  Agriculture is important to the U.S. economy, farm policy is important to U.S. agriculture, and U.S. farm policy is cost-effective.

According to sources ranging from The Wall Street Journal to the Federal Reserve, agriculture has helped drive economic recovery through the past two recessions and is one of the few sectors of our economy that still works to reduce our trade deficit.  U.S. agriculture also ensures that American consumers pay less of their disposable income on food than any other consumer in the world.  We are reminded of the value of a domestic food supply when we read news stories such as the April 4 Bloomberg article citing rising food safety risks associated with imported foods, and the countless articles about the practical as well as national and global security implications of our planet one day in the not-so-distant future needing to feed 9 billion people using less land, water, and other resources.

With that kind of demand, why is farm policy necessary?  Without farm policy, farmers who borrow more money each year to produce a crop than most of us will borrow in a lifetime would have to do so without insurance and, without insurance, a banker is going to be very reluctant to make that farmer a loan.  Because crop losses are highly correlated, without federal involvement, companies could not offer and producers could not buy insurance.  Is crop insurance too rich?  Well, deductibles can run anywhere from 15% to 45%, and if the farmer’s expected production value for the year is understated when a policy is written, that deductible is even higher.  Crop insurance is necessary and it ought to be protected and improved.

Without farm policy, U.S. producers would also be left alone to face foreign subsidies and tariffs that two recent studies, conducted by Texas Tech University and DTB & Associates, say are high and rising even as the cost of U.S. farm policy is at record lows.  Despite this imbalance, a few years ago, U.S. trade negotiators had offered to concede 70% of remaining U.S. farm policy support in exchange for a meaningful reduction in foreign trade barriers, but that offer was rejected outright by huge agriculture-producing countries wishing to hold onto their big subsidies and high tariffs.

For all the ink spilled and money spent to tear down U.S. farm policy, it may surprise readers to know that farm policy amounts to just one quarter of 1% of the total federal budget, that farm policy has been deeply cut in 3 of the past 6 years, and that the 2012 Farm Bill is expected to make a new round of cuts that will exceed the cuts recommended by Simpson-Bowles.

I think it is time for editorial boards and readers to begin asking the tough questions of farm policy critics:  who exactly is funding you, how much are they giving, and how does that money figure into the public policy positions that you take?

Now that would be an editorial to read. After all, sunshine is the best disinfectant.

Sincerely, Larry Combest

Larry Combest, a Republican from West Texas, served in the U.S. House of Representatives from 1985 to 2002, including as Chairman of the Select Committee on Intelligence and the Agriculture Committee.

——————————

In response to an opinion piece critical of crop insurance in the St. Paul Pioneer-Press.

Dear Editor:

Devore’s “The seed money of destruction” column is confused.

Obviously, the value of an insurance policy on a crop is higher than in 1997, the same as the value of a policy on your home.  Homes and crops are worth more.

Devore is right that crop insurance was once straightforward—a straightforward failure with low participation and coverage and supplemented by costly disaster programs.  Improvements that Devore dislikes increased participation and coverage and avoided Congressionally-passed disaster programs.  The revenue coverage I buy ensures that if I lose a crop I can still deliver on a contract if prices increase, just as homeowners increase coverage to match value.

Devore is also mistaken about crop insurance adding environmentally-sensitive land to farming and hurting beginning farmers.  Minnesota crop acreage is lower than in 1997 and, as a beginning farmer, I would not be farming without crop insurance because I could not get a loan (just like people need insurance to get a mortgage).

Devore saying crop insurance is second  in cost is like saying the 49ers eked-out victory over the Broncos in Super Bowl XXIV.  No criticism of nutrition, but it cost 12 times more than crop insurance last year.

Devore’s real point is that if I mess up conservation compliance, even slight and unintentional, I should lose protection under the Farm Bill (which is the law) plus lose my insurance, which means I lose my farm also.

That is extreme.

Sincerely,

Grant Isrealson

Sugarbeet and corn farmer

A central component to that U.S. farm policy is Federal Crop Insurance.  Without Federal involvement, companies could not offer and farmers could not buy affordable insurance.  But with Federal involvement, private companies and independent insurance agents last year alone provided $114 billion in liability coverage, paying a record of more than $10.4 billion in indemnities, and all at a cost to the U.S. treasury of $6.7 billion.  In short, farmers received indemnities on losses quickly, and taxpayer exposure was effectively limited.

Policy Overview:

There are 15 private sector insurance companies and more than 12,000 independent agents that currently sell and service federal crop insurance policies.  These companies and agents, who are overseen and regulated by the Federal Crop Insurance Board of Directors and the Risk Management Agency of the U.S. Department of Agriculture, ensure that insurance coverage is available to any grower who wants to buy coverage.

Altogether, these companies and independent agents sold and serviced more than 1.1 million policies in 2011, covering 263 million acres, or approximately 80 percent of insurable farmland.  The percentage of our nation’s farmland covered by crop insurance has increased from only about 30 percent of eligible land in the early 1990s.

Nationally, there are nearly 5,000 private loss adjusters who work directly with farmers to service each claim, which is quickly followed by policyholders receiving their indemnities in much the same way you and I can expect to receive an indemnity on our home or auto insurance. While indemnities are almost always paid within 30 days of the paperwork being finalized, they are often paid even faster due to private sector competition that gives producers a choice among companies and agents.

Despite this success, federal funding for crop insurance has been drastically cut in recent years, sustaining more than $12 billion in funding reductions in the past 5 years.  Lawmakers, farm groups, producers, companies and agents have all expressed deep concern that additional reductions could seriously impact producer access to crop insurance coverage and threaten private sector delivery.

Policy Strengths:

Crop insurance ensures that producers share in risk management decisions and costs: Because producers pay a premium and purchase the specific type of policy coverage to best address the perils they face on their farms, crop insurance provides a tailored approach to risk management.

Crop insurance is important for securing loans: Banks are careful in making loans to farmers, especially small and beginning farmers, because the risks of farming are inherently high and the loans are big, usually more than most of us would borrow in a life-time.  But banks are particularly reluctant to make a loan to a farmer who does not have insurance in much the same way that a bank would be reluctant to make a mortgage or auto loan to a buyer without insurance.  In short, banks regard a crop insurance policy as necessary collateral in making a loan to a farmer.

Successful Crop Insurance Hinges on Private-Sector Delivery: Crop insurance languished for 42 years when delivered by an inefficient federal government system.  Efficient private sector delivery, private sector policy innovation, and positive public policy worked to make crop insurance the central element to U.S. farm policy that it is today.

Proponents of Crop Insurance:

Crop insurance enjoys strong, bipartisan support in Congress and strong support among farm groups, farmers, and lenders.  Crop insurance is also cost-effective and WTO-compliant.

What They’re Saying:

“As Congress continues work on the next farm bill, our organizations agree that an affordable crop insurance program is our No. 1 priority.”

–        A joint statement issued by the National Corn Growers Association, National Association of Wheat Growers, American Soybean Association and National Sorghum Producers, on March 1, 2012.

“Failure to anticipate an imminent downturn in the agricultural economy by not maintaining farm policies through the farm bill and crop insurance… would, in time, prove penny wise and pound foolish.”

–      A letter to the House Budget Committee from nearly 30 farm groups, March 15, 2011.

“Most farmers now see [crop insurance] as a primary tool for risk management. An important tool for risk management.”

–        USDA Chief Economist Joseph Glauber, June 13, 2011.

“Crop insurance—which is the most important component of the farm safety net for specialty crop producers and growers of most major crops—was specifically created to ensure that private insurance companies, not taxpayers, shoulder the burden of funding payouts following crises.”

–     Roger Johnson, former agriculture commissioner from North Dakota and currently serves as president of the National Farmers Union, in an op-ed that appeared in the Omaha World Herald on May 31, 2011.

“Now I understand that when Congress starts trimming the budget, everyone is going to argue that their specific program deserves protection. While I can’t speak for other aspects of federal spending, I can attest to the fact that crop insurance and other aspects of farm policy work for me. Without a doubt, they are the policies that keep family farms like mine in business and our nation’s food secure.”

–     Greg Schwarz, president of the Minnesota Corn Growers Association, in an op-ed that appeared in the Minneapolis Star Tribune, on June 13, 2011.

“Because of the many challenges, all young farmers depend on components contained in the 2008 Farm Bill—most notably crop insurance—to provide lenders with the confidence and collateral they need to extend loans. Politicians continue to put these components to the test, even though without crop insurance, farmers throughout the South, Midwest, and various other parts of the country, would have been left with no crop—and no starting point on which to rebuild—due to the range of floods, droughts, tornadoes and frosts, this year alone.”

–     Matt Huie, a 35-year-old farmer who raises cotton, corn, sorghum, and livestock, in an op-ed that appeared in the Dallas Morning News on August 17, 2011.

“Without crop insurance, I’m not sure that my operation would still exist—and the same goes for many of my neighbors—not just in Kansas but in the Texas panhandle where they haven’t seen a drop of rain since October 17, and Missouri, where flooding has left thousands of acres under water and unproductive.”

–     John C. Thaemert, Vice President & Trust Officer at Citizens State Bank & Trust Co. in Ellsworth, Kansas and past president of the National Association of Wheat Growers, in an op-ed that appeared in Agri-Pulse on September 6, 2011.

“But perhaps most importantly for those of us who farm, the crop insurance program has the efficiency and speed of the private sector when it comes to getting payments into the hands of those who have suffered economic loss. The crop insurance policy recognizes that farmers are often over-extended after planting and will be very short of cash in hand if a crisis hits until the harvest season comes.”

–        Dee Vaughan, the current president of the Southwest Council of Agribusiness and the former president of the National Corn Growers Association, in an op-ed that appeared in the Lubbock Avalanche-Journal on September 11, 2011.

“The speed of delivery of crop insurance - because it’s administered by private-sector companies - makes it a different kind of animal. In fact, if a natural disaster strikes and I’m covered by a crop insurance policy, typically the payment comes to me in one or two weeks, not in one or two years. Because of that speed of delivery, I can quickly recover from the loss and replant the field, garnering myself some needed income for the year and putting some food on the tables for consumers.”

–      Quentin Bowen, who raises corn and soybeans in an op-ed that appeared in the Lincoln Star-Journal on October 31, 2011.

“Now is not the time to weaken crop insurance and put taxpayers – instead of private insurance companies – on the hook for picking up the pieces. If anything, discussions should be centered on ways to strengthen crop insurance and the rest of the safety net. After all, there’s far more at stake than farmers in the next farm bill.”

–     Neil Widner, chairman of the American Crystal Sugar Co. and a sugarbeet, wheat and soybean farmer in an op-ed that appeared in the Fargo Forum on November 30, 2011.

“Crop insurance is the quintessential tool for managing farm risks because it allows each farmer to pay for the plan that makes the most sense for him or her.   Just like car insurance, health insurance or homeowner’s insurance, crop insurance allows the individual to assess his tolerance for risk and loss, and purchase plans to meet those needs.”

–      Jay Armstrong, who farms corn, soybeans, and wheat in an op-ed that appeared in the Garden City Telegram on December 24, 2011.

“Farmers like me need to have access to affordable risk management tools to better mitigate the impact of significant crop losses and sharp price declines. This is why the upcoming farm bill is so important. It is not about providing income to the less than two percent of the American population. It is about insuring that the same two percent can continue to provide affordable food for the other 98% of Americans who rely on them.”

–     Testimony of Clark Gerstacker, a Michigan farmer, before the U.S. Senate Agriculture Committee, on April 9, 2011.

Useful Links:

National Crop Insurance Services

Crop Insurance Professionals Association

Below is a compilation of testimony presented and submitted for the hearing, as well as accompanying press releases.

American Sugar Alliance: Testimony. Press Release.

Crop Insurance Professionals Association: Testimony.

National Association of Wheat Growers: Testimony. Press Release.

National Cotton Council: Testimony. Press Release.

National Crop Insurance Services: Testimony. Press Release.

USA Rice Federation: Testimony. Press Release.

“The time to complete a farm bill is now. This Congress cannot afford to take another jobs bill down to the wire, throwing a key sector of our economy into uncertainty and disarray.

“The Senate Agriculture Committee will mark up a farm bill this spring. Having a bipartisan bill on the president’s desk by this fall would demonstrate the kind of leadership that the public should expect from its elected officials during these tough economic times.”

–Senator Debbie Stabenow (D-MI), Chairwoman of the Senate Committee on Agriculture, Nutrition and Forestry

“My overall philosophy is quite simple: Give producers the tools to help them do what they do best, which is to produce the safest, most abundant and most affordable food supply in the world.

“As for policy, I believe the federal crop insurance program is the backbone of the safety net we provide producers. At one point last year, more than 25 percent of the continental United States — including my home state of Oklahoma — was experiencing a severe drought, while many other areas of the country were suffering devastating floods. While improvements to crop insurance can and will be made, these events are clearly beyond the control of producers, and helping them manage risk in a fiscally responsible manner is critical.

“The agriculture community stands willing to do its part in addressing the burgeoning federal debt, but deficit reduction cannot be shouldered by America’s farmers and ranchers alone. “

–Representative Frank Lucas Lucas (R-OK), Chairman of the House Agriculture Committee

“Agriculture is not a red or blue issue, but the framework of what built America. Most of our Founding Fathers were farmers, and understood the value of producing goods at home rather than only relying on imports to sustain our young nation.

“Agriculture has been the steady force in our recovery. In the midst of one of the worst economic downturns in American history, net farm income in 2010 and 2011 hit record highs. These gains have insulated our communities from further job losses and kept grocery prices low.

“Because of the basic realities of their livelihood, agriculture is unique in how producers must plan in advance how they wish to run their businesses.  Pushing our work until its politically convenient leaves family farms to guess on the regulations that will govern them down the road. Without a new farm bill, USDA is unable to assist with new difficulties that have arisen since 2008 – such as the expanding citrus diseases – and cut areas that have out lived their usefulness.”

–Representative Henry Cuellar (D-TX), member of the House Agriculture Committee

“Americans enjoy the most abundant, safe and affordable food supply in the world. In fact, Americans spend less than 10 percent of their incomes on food — the lowest in the world. Citizens in many other countries spend over 50 percent of their incomes on food.

“Why is this? Certainly it’s the hard work of American farmers and ranchers, new technology and wise stewardship of our natural resources. But a national farm policy that supports agriculture and provides a safety net for our farmers also plays a role. Agriculture policy has evolved over the years but its primary focus has endured: food security for our nation.

“Serving on the House Agriculture Committee I see the benefits of ensuring a safe, adequate food supply for all Americans. We have seen the vulnerability to our country’s economy and high fuel prices due to our reliance on foreign energy. We must not make the same mistake with our food supply.”

–Representative Vicky Hartzler (R-MO) lives on a working farm, where she and her husband raise corn, soybeans, wheat and cattle

“Likewise, reauthorization of the Farm Bill is occurring during difficult fiscal times. I firmly believe Congress can and should pass a Farm Bill this year, but Congress needs, just like our farmers and ranchers, to roll up its sleeves and deliver a farm safety net that allows our farmers to continue providing our nation’s families with the lowest cost, highest quality food supply in the world.

“Farm programs represent less than one quarter of one percent of federal spending, and yet for that small fraction of the federal budget, the American people get a stable, safe, and affordable food supply. In fact, Americans spend just 9.5 percent of their income on food, less than any other country. In addition, agriculture employs about 14 percent of the U.S. workforce, and agriculture exports generate about 600,000 jobs in the non-farm sector alone.

“When you boil the farm safety net down to its most basic function, it really does come down to risk management. North Dakota farmers have reminded me that the only thing that is certain about the high commodity prices that we have today is that they will change. Not to mention that if you do not have a crop to harvest, high prices do not do you any good – almost a quarter of the acres in my state this year could not be planted due to weather. “

–Senator Hoeven (R-ND), member of the Senate Committee on Agriculture, Nutrition, and Forestry

“India’s ban on U.S. poultry is clearly a case of disguising trade restrictions by invoking unjustified animal health concerns,” U.S. Trade Representative Ron Kirk said via a press release. “The United States is the world’s leader in agricultural safety and we are confident that the WTO will confirm that India’s ban is unjustified.”

And this just may be the beginning of India’s WTO woes, according to a study by DTB Associates, a Washington, DC-based trade policy firm that says India’s been steadily increasing its subsidization and running afoul of WTO subsidy limits.

“India has increased support to the agricultural sector sharply over the past several years,” DTB wrote.

Among the increases are higher support prices for wheat and rice, which have risen by 72 percent and 75 percent respectively over the last five years.  India’s support prices “are now well above the U.S. target prices for both commodities,” according to the paper.

In addition, DTB pointed out a massive run-up in input subsidies—meant to offset costs of fertilizer, electricity, irrigation, and seeds—which have climbed 214 percent over the same period to $30 billion.

“In light of such increases, it is not surprising that India would have difficulty respecting its WTO commitments,” the study concluded.  “However, the WTO violations have gone unnoticed, in part because of India’s failure to submit the required WTO notifications and in part because of the methodology India uses to calculate its AMS.”

The AMS, or Aggregate Measure of Support, is the calculation by which the WTO measures subsidies and price supports to a country’s farmers.

WTO member countries are required to maintain subsidization within the AMS cap or certain “de minimis” levels (5 percent for developed countries; 10 percent for developing countries).  Exceeding the caps constitutes a violation of WTO rules and can result in WTO-sanctioned punishments.

“India’s AMS limit is bound at zero,” DTB noted.

The study further found that India has made significant changes in its AMS calculation methodology.  “It is unclear what motivated the changes, but their effect was to hide potential violations of WTO rules.”

By contrast, the United States is well under its AMS cap.

Larry Combest (R-TX), the former chairman of the House Agriculture and Intelligence Committees, says these findings are significant on two fronts.

“Many of our trade partners have attacked U.S. farm policies tongue-in-cheek as they derailed international trade talks through an unwillingness to make any meaningful reforms of their high and rising subsidies and tariffs,” he said.  “As Congress writes the next U.S. farm bill, lawmakers must be aware that while U.S. farm policy funding is at all time lows, our global competitors are aggressively stepping up their subsidies and tariffs to the detriment of U.S. farmers and ranchers and to our nation’s economy.”

The authors note that “[Michael] Pollan…has claimed that subsidies on commodities such as corn and wheat have led to lower prices of high-calorie, processed foods…Likewise, [others] have attributed the growth in US obesity rates to agricultural policies…”

But, the report notes that “[g]iven the relatively small share of the cost of commodities in the cost of retail food products, the effects in markets for food products are even smaller,” further pointing out that “several economic studies suggest that these effects are small or non-existent given the small cost share of agricultural commodities in food products…”

The economists who conducted the study “How Have Agricultural Policies Influenced Caloric Consumption in the United States?” Bradley J. Rickard, Abigail M. Okrent, and Julian M. Alston, measured price supports for 10 commodities from 1988 to 2006, and developed models predicting how consumers would react to price changes given consumption preferences.  The study was funded by a grant from the National Research Initiative and the USDA National Institute for Food and Agriculture.

And contrary to the accusations of critics, the authors note that current farm policies are actually guiding consumers to make healthier, less caloric food choices. “Eliminating all farm [policies] would cause consumption of some food products to decrease but would also cause consumption of other food products to increase and most likely would lead to an increase in overall caloric consumption.”

While the study was wide ranging and included some conclusions that are more controversial, Farm Policy Facts thought it important to bring to readers’ attention that yet another anti-Farm Bill myth has been laid to waste.