Is the Farm 'Safety Net' Safe?

This blog post is part of a series on the 2018 Farm Bill.

Since the 1930s, Congress has tried to formulate an effective farm “safety net,” oscillating among different schemes in order to protect farmers from the severe economic impacts of the Depression and the Dust Bowl. What started as a New Deal emergency intervention has become an entrenched legislative ritual. Indeed, this perennial Farm Bill debate remains a relic of 20th century policy. It’s designed to perpetuate, not to innovate.

The farm safety net incentivizes commodity producers to maintain a business-as-usual approach because farmers are guaranteed a rate of return by the federal government. In particular, under the current Farm Bill, adopted in 2014, producers are eligible for crop insurance supported by taxpayer-subsidized premiums of 62 percent on average. In addition, corn, soybean, and other commodity producers can receive price and income supports when prices or revenues drop below specific levels. These programs cost billions of public dollars annually.

In most other industries, actors would have to pivot and innovate in response to market changes. In the agricultural sector, by contrast, federal subsidies mute the market signals that otherwise would spur farmer innovation in order to stay in business. If farmers want to change their production, they have to push against policy and infrastructure that is designed to maintain the status quo. Meanwhile, the family farm is an increasingly endangered institution. One just needs to look at the aging of our farmers, cost of land, and consolidation for proof. The farm “safety net” isn’t safe.

By way of example, while conventional commodity prices have steeply declined, organic products command a premium because of the growing organics market in the United States and European Union. According to the USDA Economic Research Service (ERS), organic crop and livestock receipts have enjoyed double-digit growth while conventional receipts have declined. Further, organic commodities like corn and soy command significant price premiums that more than make up for any yield disparity. Despite this, the conversion of conventional to organic for corn and soy, our largest commodities, has been slow. In fact, conversion of commodity crop acres lags well behind dairy and fruits and vegetables.

Of course, the reasons commodity crop producers aren’t seizing this market opportunity are complex – such as the cost of conversion, access to organic inputs, and infrastructure. But federal policy is most certainly central to this state of affairs as it is the glue that holds the conventional commodity crop system together.

If farmers aren’t empowered to respond to market signals, big business will – and in the process control the infrastructure that powers organic commodities. Our national policies are fostering a familiar agriculture business pattern that has all but snuffed out competition and any concept of equity. (Think poultry, beef, hogs, seeds, and pesticides). Farm Bill-subsidized crop insurance and direct payments aren’t exactly “golden handcuffs,” but they are the path of least resistance for conventional crop farmers under the current system.

As we head into the 2018 Farm Bill debate and Congress and interest groups haggle over the policy details of crop insurance and commodity payments, a key question should be: How can the Farm Bill spur innovation and crop transitions to meet growing consumer demand? Fully funding organic transition programs and technical assistance, further improving crop insurance products for diversified organics, and supporting organic commodity crop research would be a good start. It’s the most we can hope for in the current Farm Bill cycle. But ultimately, moving to a sustainable agriculture model requires Congress to reimagine the safety net as an engine of innovation. Otherwise, taxpayers are just buying more of the same – the continued demise of family farming, dependence on federal subsidies, unmet market demand, the steady march of consolidation, and compounded environmental harms.

The United States needs 21st century policy to address 21st century realities. Clinging to the past is a continued recipe for failure. Farmers and Americans deserve and need a progressive farm policy that supports innovation in the face of constrained resources and monopolization. We must move beyond the “safety net” paradigm and move toward a model that rewards innovation and economic and environmental sustainability.