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Farm Bill: Bailouts, Special Interests, and Pheasants

The infamous “secret farm bill,” negotiated by the leadership of the agriculture committees with little transparency and discussion, will not pass as part of the debt-reduction “supercommittee” recommendations, since discussions between Democrats and Republicans in the committee broke down. This means that the covert farm bill will not enjoy fast-track approval in Congress.

Now the new farm bill negotiations will be made public, and the new bill, expected to be based on the “secret” one, will probably face stiff opposition from both Republicans and Democrats. The contents of that farm bill, negotiated by Senate Agriculture Committee Chairman Debbie Stabenow (D-Mich.) and House Agriculture Chairman Frank Lucas (R-Okla.), are still a mystery. They did not release the full details of their negotiations, even to their own committee members.

The Hill reported that the secret bill eliminated lump sum direct payments to farmers (which in some cases meant that farmers who didn’t produce agricultural goods still received them) and replaced them with a “revenue based supplement to traditional crop insurance.” This type of insurance system would reduce the cost of farm bill programs when prices are sufficiently high. However, if prices fall below a certain threshold, taxpayers will pay for this insurance and costs can rise significantly. Ultimately, this program amounts to a privatization of gains (if prices are good, farmers keep all profits) and a socialization of losses (if crop prices are low, taxpayers are on the hook for federal insurance).

In a way, this program resembles the recent automaker and Wall Street bailouts. The so-called “toxic” assets maligned by commentators and politicians were actually bad investment decisions by banking executives. The bail-outs simply covered their losses. Had the investments panned out, Wall Street banks wouldn’t pay taxpayers back.

We should be thankful that the new farm bill will be closely scrutinized and openly discussed. The hidden negotiations of the bill probably included handouts to close associates and lobbyists of the agricultural committees’ leaderships. In fact, one of the details that leaked out was that pheasant hunters, represented by Pheasants Forever, had “successfully lobbied lawmakers for provisions that would have steered conservation funding to landowners who preserved grassy areas as habitat for the game bird." If the “pheasant lobby” successfully lobbied to receive handouts, who knows what type of guarantees were made to more prominent and politically powerful groups, such as rice and peanut farmers (who supported the secret bill)?

We should expect a farm bill that will pit spending hawks, Corn Belt lawmakers, and welfare supporters against each other. The bill probably won’t change much from its past iterations (with the exception of direct lump payments and an expanded insurance program), but given the current economic climate and debt crisis in the United States, Congress should seriously consider eliminating costly and unnecessary provisions in the Farm Bill (starting with Title I commodity programs).