House Set to Debate Boondoggle Farm Bill

Washington, D.C., July 25, 2007—The U.S. House will begin debate on the 2007 Farm Bill tomorrow. H.R. 2419 is a $250 billion special-interest package that will mainly benefit the largest and wealthiest agricultural producers and lead to higher food prices for all Americans.

“Defenders of agricultural subsidies claim the program ensures a stable food supply and keeps farmers out of poverty, but the fact is the vast majority of American farmers do well without government aid,” says Fran Smith, a senior scholar at the Competitive Enterprise Institute.

Smith points to sugar prices as one example of the farm bill’s impact on food prices. Americans already pay two to three times the world price for sugar because of price supports and import restrictions mandated by Congress, and the farm bill will raise those prices even more.

Corn is another crop for which farmers receive substantial subsidies. The price of corn has already increased significantly with mandates and subsidies to use more ethanol in gasoline. Now, the farm bill is giving that commodity an extra boost with $2.4 billion in loan guarantees for the expansion of cellulosic ethanol and biodiesel plants.

“Since corn goes into so many foods—from livestock feed to cereals—high prices for corn translate into higher costs for manufacturing a wide array of foods. Those costs are passed on to consumers in the form of higher prices, with the poor suffering the most, since they pay a larger proportion of their incomes on food,” says Smith.

Expert Available for Interviews on 2007 Farm Bill

Fran Smith, Senior Scholar: 202-331-2268

Recent publications:

• Nothing Sweet About It
• Is the U.S. Sugar Problem Solvable?
• Corn-Based Ethanol: A Case Study in the Law of Unintended Consequences
• Ethanol is Budget Buster: Increased Mandate and Subsidies Would Raise Food Prices and Strain Federal Budget