John Block Reports from Washington

Hello everybody out there in farm country. This radio commentary is brought to you by the Renewable Fuels Association, Monsanto, and John Deere. They are all friends, supporters, and allies of a healthy farm economy and prosperous rural America. Thank you.

And now for today’s commentary—

This is the year that we are supposed to write a new farm bill. Every 5 years, we write a farm bill. Over the years, farm programs and supports have evolved, driven by a series of changes in the U.S. and global environment. One of the biggest changes is that 75 years ago, 1/3 of Americans were farmers. Today, barely 3% are farmers.

Let’s look back to the 1950s. The 1954 ag bill re-established price supports and authorized commodity set-asides. The problem was the price support level could not be reached without cutting production. So the government took 60 million acres out of production – set- aside in grass. We had a land bank program buying more farm land out of production.

In the 1960s, we started the Food Stamp Program. We had a lot of excess production capacity. Government warehouses were storing surplus grain. Surplus dairy products were stored in caves in Kansas.

Then came the 1970s and an explosion in global food demand. Prices spiked. Secretary Earl Butz sold grain to the Soviet Union. “Cash on the barrel head.”

In 1981, I came to town as Secretary of Agriculture. We tried to reform the farm programs by making them more market oriented. Get rid of set-asides. It is inefficient to take out of production some of the best land in the world. I proposed the Conservation Reserve Program which idled more fragile land. With lower price supports and less government interference, the market began to work better.

Everything seemed to be going along pretty well until in the mid-1990s and prices crashed. To help support farmers, the government doubled direct payments. The good thing about the farm bill written then is that it eliminated price supports and land set-asides.

In the decade since the bill written in 2002, we have tried counter-cyclical program payments. We still have direct payments. We have programs designed to eliminate the need for disaster payments.

As we write the new farm bill, we are going to see another big step. Direct payments will be gone. We must ensure that any support we provide does not distort planting decisions.

The WTO will not accept that. It looks like some level of crop insurance will be the primary support. Global demand for food is strong, and we don’t have the budget money to spend as much as in the past – nor should we.

In closing, I would encourage you to access my website which archives my radio commentaries dating back 10 years and will go back 20 years when complete. Check on what I said back then. Go to www.johnblockreports.com.

Until next week, I am John Block in Washington.