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1996 and 2002 Farm Bills:
Two Recent Agricultural Legislations
Kindra Cassidy
Academic affiliation: Oklahoma State University
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Today in the United States popularity among farm foods is declining. Therefore, the farming economy is losing money and many families are growing deeper into debt. Many families are losing their family farms of 100 years because of this debt. In the past, the government has stepped in and tried to make a difference in these people’s lives through legislation. The last two pieces of farm legislation that the government has passed are the 1996 and 2002 Farm Bills. These particular farm bills were put into effect by the government to help strengthen the farming economy and thus make it independent from government’s help. The issue at hand concerns these two particular farm bills and the strength the economy has gained from them. Many scholars agree and disagree as to if the 1996 and 2002 Farm Bills have helped or hurt America’s economy. This essay will explore the different scholar’s views and relate their articles among each other. It will discuss farming’s popularity and the impact that the 1996 and 2002 Farm Bills have placed on American farmers.

Farming’s popularity is on decline and its relationship with the United States’ general economy “… has contributed to a decline in the prices of farm products-by as much as two-thirds since 1910” (Zulauf 36). The demand for farm food is growing at a slow rate, because people are not buying farm food; Maren Anderson agrees with this statement. He suggests; “… the total number of U.S. farms has declined from 6.8 million in 1935 to 1.8 million today” (9). This unpopularity among farming has forced the government to come up with ways to help make farming successful and to also help make it independent from government funding thus, calling it a free-market industry.

The 1996 Farm Bill tried to accomplish a free-market industry by allowing farmers the ability that they could produce whatever and however much that they felt they needed to produce in order to prosper and be able to compete with other producers. By doing this, the government hoped that someday farmers would be able to have no government aid. Although this increase in production tried to prove that the farmers could sell their products at lower prices, thus selling more and further profiting; this was not proven. “In reality, plummeting prices have brought hard times for family farmers” (Anderson 9). Prices of products have continued to decrease and Congress has been forced to supply relief funds to these farmers. These relief funds have added to the aid of farmers and “… the federal government is now spending more money on agriculture than before 1996” (Anderson 10). “Experience with the 1996 farm legislation also suggests that it may not be politically feasible to eliminate government subsidies to farmers without an explicit policy to assist those left behind by the market place” (Lamb 14). Russell L. Lamb agrees with Maren Anderson by stating in his article “Un-fair to Small Farmers” that the 1996 Farm Bill was wrong about trying to decrease market prices by increasing production. This was so farmers could sell more of their produce. The economy had the reverse effect; Government aid increased because of the fall of market prices, so government aid cannot be stopped. The goals of the 1996 Farm Bill were not reached. “The next farm bill must face the fact that there are too many farm producers who depend on government subsidies for their economic survival” (Lamb 14).

David Orden, in his article “Reform’s Stunted Crop”, provides another reason as to why market prices dropped. The early 1990’s was a “reasonably prosperous period for agriculture, with world demand growth exceeding that of world supply” (Orden 28). This means that there was more demand than there was supply, which sent prices of farm products soaring in 1995-1996. Since the prices of U.S. farm products increased, global markets fell with the financial crisis in Asia. “After nine years of relative stability during 1988-1996, the U.S. dollar has appreciated broadly for four consecutive years relative to the currencies of competitors and customers in global agricultural markets” (Orden 28). Since the market had stayed stable for so long it caused commodity prices to decrease and U.S. export values to fall, due to the fact that the U.S. dollar has not changed.

Lamb sums up the reasons behind agricultural policy. He states that the “U.S. agricultural policy rests on two critical assumptions: farm producers … need income subsidies to increase living standards to levels comparable with the rest of the country; and farm output and income are inherently ‘unstable’ and requires government intervention in farm markets to stabilize them” (12). The government wants farm families the chance to enjoy the same life as the average American, so subsidy payments from the government have been implemented. These payments were made possible through the 1996 and 2002 Farm Bills. “… farm incomes are on par with those in the rest of America …” (Anderson 14).

Much consideration was put into the 1996 and 2002 Farm Bills. Before signing the 1996 Farm Bill, earlier farm bills were taken into respect. Just as the 1996 Farm Bill was taken into respect before signing the 2002 Farm Bill (Mittal 1). It took President Bush 14 months of hearing hearings, conferences, and deliberations before he signed the 2002 Farm Bill; “Representative Larry Combest, the House Agriculture Committee Chairman hailed American farmers as the Bill’s winners” (Mittal 1). This proves that the aim of the 2002 Farm Bill was directed toward American Farmers, that they will be the ones to benefit from this particular bill. The Natural Resources Conservation Service (NRCS) website states; “The 2002 Farm Bill enhances the long-term quality of our environment and conservation of our natural resources” (Farm Bill 2002). The NRCS agrees with Mittal in saying that the 2002 Farm Bill was a positive step in trying to help with the economic farming issue.

American farmers did profit from the 2002 Farm Bill, but most of the bill’s money went towards larger commercial farms. These larger farms are dominating smaller family farms. Anuradha Mittal states; “The 2002 Farm Bill can be best described as agribusiness welfare” (2). - Smaller farms are not receiving the majority of the Farm Bill’s subsidy payments; larger American corporations, such as Chevron, billionaire David Rockefeller, Time-Warner entertainment executive Ted Turner, etc. are receiving these payments instead. “The top ten percent of farm-subsidy recipients collect two-thirds of the money, and the bottom 80 percent get just one-sixth” (Mittal 2). This was also the problem with the 1996 Farm Bill. Anderson states; “According to the Government Accounting Office, the top 7% of all farms received nearly half the subsidies in 1999” (45). Anderson and Mittal have discovered the same issues with the 1996 and 2002 Farm Bills. Although in the 2002 Farm Bill, “The Adjusted Gross Income (AGI) provision of the Farm Security and Rural Investment Act of 2002 (Farm Bill) limits the eligibility of certain individuals and certain entities for USDA commodity and conservation program benefits” (Farm Bill 2002). But of these certain individuals and entities, the wealthier ones are receiving more money. This problem is being repeated in the 2002 Farm Bill and has not been stopped.

Vincent H. Smith and Joseph W. Glauber discuss in their article “The Effects of 1996 Farm Legislation on Feed and Food Grains” that in the 1996 Farm Bill; “Gone are restrictive and inefficient regulatory set aside and base acreage controls over farm planting decisions. But gone, too, are long standing deficiency payment programs that provided producers of major commodities … with protection against downward movements in prices” (69). This bill took money away from the farmers. Then in the 2002 Farm Bill, the government tried to make up for this action, but instead gave the money to larger corporations instead of the smaller farms where it was needed.

Stefan Tangermann takes it to the next level; he relates American subsidy payments to foreign subsidy payments. Mittal talks of how America disbursed its payments, but Tangermann talks of how these payments compare to foreign countries and he further explains the importance of tariff protection and export subsidies. “As much as 31 cents in each dollar of revenue for the average farmer in the world’s richest countries comes from government support” (Tangermann 39). The rest of the money farmers receive comes from the market; “If that is the price society want to pay in pursuit of goals that market are not delivering, then such policies may make sense” (39). Tangermann believes in a free market economy, but many disagree with him such as Mittal. Mittal writes that many countries will argue against the U.S. if it implements a free market economy, because this will cause other countries to lose money. $40 billion in the U.S. was disbursed among farmers of which, $15 billion came from consumers and the rest came from taxpayers. In Japan 5.5 billion dollars was disbursed among farmers of which five billion came from consumers and the rest from taxpayers. America needs to reduce the taxes on tariffs, because it is costing America more in the long run. (Tangermann)

Success stories have come from the 2002 Farm Bill. The NRCS has provided information about the new 2002 Farm Legislation. Also, this site informs the reader about the success stories of people who have benefited from the 2002 Farm Bill. The NRCS site states, “The conservation provisions will assist farmers and ranchers in meeting environmental challenges on their land.” This site goes on to explain; “This legislation simplifies existing programs and creates new programs to address high priority environmental and production goals” (NRCS). Mittal agrees with this site, because he thinks that the 2002 Farm Bill has provided positive effects to the U.S. economy.

From many different views, this essay discusses different aspects of the 1996 and 2002 Farm Bills. Many authors agree and disagree on various portions of the 1996 and 2002 Farm Bills and the ways that these two pieces of legislation have helped the farming economy. Lamb suggests many things that the 1996 Farm Bill contained that needed to be fixed, so the 2002 Farm Bill tried to fix what was wrong in the 1996 Farm Bill (Mittal). Orden provides the reason as to why the commodity markets fell so badly; It was due to prices staying the same and farming becoming unpopular among U.S. citizens. Zulauf and Anderson agree with Orden that farming has become increasingly unpopular the past century. Lamb and the NRCS agree that the 1996 and 2002 Farm Bills have provided decent outcomes for farmers. While, Smith and Glauber discuss how some subsidy payment plans were taken away in the 1996 Farm Bill to try and help farmers, but in the 2002 Farm Bill the government had to reinstate these subsidy payments to help farmers out financially. Although farmers were receiving these payments, Tangermann and Mittal explain how subsidy payments are disbursed and that the majority of these payments are received by the wealthier farming individuals and not by the average income farming individual. This essay demonstrates what the 1996 and 2002 Farm Bills entailed and in what ways they had positive and negative effects on farming in the U.S.

Works Cited

Anderson, Maren. “Un-fair to Small Farmers.” Dollars & Sense (2001): 9-10. “Farm Bill 2002.” Natural Resources Conservation Service. 9 Sept. 2004 <http://www.nrcs.usda.gov/programs/farmbill/2002/>.

Lamb, Russell L. “The New Farm Economy.” Regulation 26.4 (2003): 10-15.

Mittal, Anuradha. “Giving Away the Farm: The 2002 Farm Bill.” Backgrounder 8.3 (2002): 1-6.

Orden, David. “Reform’s Stunted Crop.” Regulation 25.1 (2002): 26-32.

Smith, Vincent H. and Joseph W. Glauber. “The Effects of 1996 Farm Legislation of Feed and Food Grains.” Contemporary Economic Policy 16.1 (1998): 69-76.

Tangermann, Stefan. “Farming Support: The Truth behind the Numbers.” Organization for Economic Cooperation and Development: The OECD Observer 243 (2004): 39-40.

Zulauf, Carl. “Farming’s Changing.” The Futurist 37.5 (2003): 36-38.

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