October 25, 2000

Two well known agricultural economists have called for counter-cyclical payments to farmers to offset low prices but targeted to support farm families and "not guaranteed regardless of market conditions or financial position."

"Gains from open agricultural trade policies are inherently slow to develop," said Neil Harl of Iowa State University and John Schnittker, a farm consultant in Santa Ynez, CA. "While continuing to press for access to all world markets, and ending unilateral sanctions affecting food exports, we need to adopt realistic expectations for export expansion. We can export increased, but not unlimited, amounts of farm products in competition with other exporting countries whose crop yields are also rising."

Commodity price and income policies for grains and oilseeds should be amended to end surplus production and high government costs, reduce existing stocks, establish a reserve program, and increase farm prices, they said. Conservation and environmental programs for farms and farmland require renewal and broadening of existing authorities. More money is needed for technical assistance to farmers and for stewardship incentives to increase production of public benefits as well as benefits for farmers and landowners.

"The 600,000 remaining, moderate-sized family farms need to be aided by special income supports not available to larger farms to offset the scale and technological advantages enjoyed by very large farms," said Harl and Schnittker. Other important policy issues affecting farmers deserving early attention include estate taxes, biotechnology, and better global food policies.

"These actions would help achieve universally accepted objectives of farm policy: plentiful supplies, increased export earnings, remunerative prices, limited costs, stronger public support for soil saving, watershed protection, and open-space preservation; increased competition in agricultural markets; and preservation of strong family farms, long the principal but neglected goal of U.S. farm policy," they added.

Harl is a well-known economist and lawyer at Iowa State and a former president of the American Agricultural Economics Association and author of 24 books on farm law and finance. Schnittker was a farmer chief economist at the USDA during the Johnson administration.

They cited five "key problem areas (that) require major improvements in 2001 and 2002 if farmers, consumers and taxpayers are to be better served by federal farm policies": (1) commodity price and income support programs, where present failures include crop surpluses, low prices, high public costs, and conflict with established trade policies; (2) increased funding of conservation programs, to reduce soil loss and improve water quality, and to foster preservation of open space; (3) development of realistic expectations for export expansion via trade policy changes; (4) reestablishment of competition in agricultural supply and product markets; and (5) developing the will and creating the authority to provide special assistance to small family farmers.

Five other issues "also require early attention in the interest of fairness to farmers and recognition of the complex world in which they are competing," they added: (1) amendment of the federal estate tax; (2) increased attention to global food and agricultural policies; (3) rationalization of the role of agricultural biotechnology in domestic and international food affairs; (4) realistic assessment of the impacts of agricultural production technology both at home and abroad, and (5) reconsideration of the potential role of tax-deferred farmer savings accounts in providing a better safety net for farmers.