Getting rid of the sugar program — buyouts looking sweeter

Yesterday, the Cato Institute hosted a forum on the proposals for a new farm bill detailed in its new monograph, “Freeing the Farm: A Farm Bill for All Americans,” by Sallie James and Dan Griswold. The paper focuses on buyouts of dairy and sugar farmers—not necessarily the “first best solution” but one that may work politically:

Because the first-best solution of completely ending farm programs as of September 30, 2007—with no compensation or transition payments—is politically infeasible, we advocate that the government buy out the damaging and expensive support for farmers by paying them a fixed amount of money, which they would be free to spend as they wish. Although it would require large up-front outlays, a politically expedient buyout of agricultural subsidies and trade barriers, with concrete steps to ensure the changes are permanent, would be a worthwhile investment.

Speakers at the seminar included Cato’s Sallie James, Dr. David Orden, at the International Food Policy Research Institute, and Clayton Yeutter, former Secretary of Agriculture and former U.S. Trade Representative.

CEI, in its own monograph a year ago, “Is the U.S. Sugar Problem Solvable?”offered buyouts as an option for reform—one that has been successfully used with tobacco and peanuts. CEI noted:

While these programs impact taxpayers directly, the costs represent either lumpsum or phased-out payments, which means that the payouts are temporary and transparent.