Johanns says true safety net must reach beyond ag subsidies

Agriculture Secretary Mike Johanns says that a true safety net for farmers must reach beyond subsidies and bring growers “real and substantial market access” if they are to continue to lead the nation and the world in agriculture.

As he has at USDA Farm Bill Forums around the country, Johanns again claimed the current farm bill is contributing to agriculture's problems because farm payments are being capitalized into increased land values and benefits are not being distributed equitably.

Those were some of the secretary's comments as he spoke to farm organization representatives at a Commodity Club luncheon in Washington. The speech was billed as a progress report on what Johanns has learned during the 17 farm bill listening sessions he has hosted since July.

His remarks were delivered two days before U.S. Trade Representative Rob Portman offered to reduce U.S. farm subsidies by more than half and eliminate U.S. export subsidies to help get the Doha Round of WTO negotiations back on track.

Johanns acknowledged that many Farm Forum participants have been calling for extending the current farm bill to maintain the “safety net” that many growers say has made the difference in their ability to continue to farm. But Johanns questioned that term.

“I ask you to contemplate the purpose of a safety net, and whether current farm programs truly fulfill that purpose for American agriculture,” he said. “Consider the concerns our producers have raised, including: The WTO cotton case and other potential program challenges, the inability of young people to enter agriculture, government payments capitalizing into higher land value and rising cash rent, large farms getting the lion's share of payments, and two thirds of farmers being provided little protection by our farm programs.

“Now I ask you, is that the best we can do? Certainly it is not. We must become more inclusive and effective in the delivery of support to our farmers and ranchers.”

During the 17 forums he's participated in, the secretary said he heard “some very strong opinions expressed by some very passionate people” that have caused him to think beyond the boundaries of current farm policy.

Saying his thoughts should not be considered an outline of farm policy for the next farm bill, Johanns said he's beginning to see consensus among producers and other stakeholders on some policies — and a definite diversity of opinion about others.

“We've heard a lot about the importance of competitiveness and opening doors to new and expanded markets for U.S. agricultural products,” he said. “Farmers and ranchers believe in trade, but they believe it must be fair trade, and I share their view. Producers understand that more than one-quarter of farm cash receipts come from trade.

“On the other hand, we are hearing a range of opinions when it comes to our farm support programs. Some predicted that all we would hear is a desire for more of the same. We have heard that, but clearly we have also heard from producers advocating for change.”

The responses have varied by region of the country and by program with many in the Midwest, for example, urging stronger payment limits, while in the South, farmers strongly oppose the idea.

“On a broader scale, concerns have been expressed about farm payments being capitalized into increased land values, farm program support being directed toward one third of all producers, and the greatest benefits going to the largest farms,” he said.

“As I have said before, I believe the 2002 farm bill was the right policy for the economic conditions at the time, but I also recognize that times are changing. Soon, we must decide as a nation whether to embrace a new age of agriculture or continue relying on a policy structure that was conceived 75 years ago.”

Johanns said he's heard “very compelling” stories from young people who want to carry-on the tradition of farming but are financially unable to do so because of high land values and cash rent.

Other USDA Farm Bill forum participants have said that when farm support programs are tied to production, they translate into more land being acquired to continually produce more crops in an effort to obtain more support.

“When farm policy encourages farms to become bigger and produce more — regardless of market demand — we should not be surprised when prices for our commodities are low,” Johanns noted. “Another message I am consistently hearing is small and minority farmers expressing frustration about the lion's share of federal farm support being focused on large operations.”

Farmers have also expressed frustration with the fact that some crops are offered more protection than others by price support programs, including fruits and vegetables, Johanns said.

As a result of the listening tour, the secretary asked for data relating to the distribution of support payments.

“Clearly, we do not have uniformity in the level of support offered by current farm policy,” he noted. “In fiscal year 2005, we spent an estimated “$15.2 billion on program crops and less than one half of $1 billion on all other commodities covered by price and income support programs.”

Johanns said the World Trade Organization's decision against the Step 2 competitiveness program for cotton “shook the confidence many felt in the ability of current farm policy to provide a true safety net.

“Add to that the potential challenge to our rice program and Canada's investigation into our corn program, and you can understand why I describe the current farm bill as perhaps the most high-risk approach we could take for our nation's farmers and ranchers in the future.

Farmers can sit back and watch as “our farm policy is disassembled piece by piece or we can begin a discussion about how to craft farm policy that provides a low-risk, meaningful safety net for our farmers and ranchers,” he said. “We must choose wisely, remembering that a quarter of farm cash receipts depends on trade.”

Johanns said the United States must use the WTO to force open markets for U.S. products. “Let me be clear that the WTO will not write our next farm bill, but we must show leadership in the area of support program policy to gain market access in other countries.

“There is absolutely no doubt in my mind that we can show tremendous support of agriculture without trade-distorting subsidies. I am confident that America's farmers and ranchers can compete with any farmer or rancher in the world if given a fair opportunity.”

He said that a true safety net for all of agriculture is much more than subsidies. “It is good farm policy that opens real and substantial market access. A true safety net is also good tax policy, trade policy, sanitary and phytosanitary policies, and investment in new markets. I believe in providing a safety net for farmers and ranchers, but it must be inclusive, predictable, and beyond challenge.”

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