By Alla Jezmir
KANSAS CITY (B)--With the efficacy of the 1996 Freedom to Farm Act up for reassessment in 2002, the party that sweeps Congress and gains control of the White House in November may spearhead a new direction for the nation's agricultural sector.
Faced with declining commodity prices, unrest in markets abroad and two years of record-high spending on emergency farm aid, the new leadership will determine the magnitude of revisions to the 1996 legislation.
"From a broad perspective, neither candidate is talking about abandoning the farm program," said Barry Flinchbaugh, professor of agricultural economics at Kansas State University.
"Bush will tend to support extending the 1996 farm bill, at least with less modifications than Gore. The main difference is in the mechanism that will provide the safety net. Gore would hang his hat on increasing loan rates and supporting prices, where Bush will be more supportive of income assistance."
At first glance, policy proposals on both sides appear to converge in principle. Both parties pledge to ensure a strong safety net to manage economic downturns and to expand foreign markets for U.S. farm products.
But while Texas Gov. George Bush salutes the reversal of supply control management that he says has permeated agriculture for decades and supports planting flexibility granted by the Freedom to Farm Act, Vice President Al Gore intends to add ress the shortcomings of the legislation, which was inadequately equipped to handle the 1998 Asian economic crisis.
To advance the transition toward a market-oriented farm policy, Bush advocates tax-deferred accounts that farmers could draw upon during difficult times as well as emergency assistance in the form of fixed annual payments consistent with the provisions of the 1996 Farm Act.
Gore champions counter-cyclical support through payments based on net farm income measured against commodity-specific five-year averages. His plan aims to stabilize farm income on a year-to-year basis, helping farmers pay off the costs of production when crop prices fall or weather conditions predicate low yields.
But despite the usual partisan dissension, most agricultural economists agree that the basic premises of present policy will stand.
"The one area where there's very strong agreement is planting flexibility," Flinchbaugh said. "There's little support to go back to farming according to a government base."
The 1996 farm legislation reduced the role of government in agriculture, leaving planting decisions contingent on the whims of the market. The objective was to allow farmers to cultivate more of their acres and grant producers greater flexibility in choosing what crops to plant.
And in an attempt to deregulate decades of dependence on government support, a set of annual payments to farmers, scheduled to phase out in 2002, replaced the system of price supports that fluctuated with commodity prices in the market.
"Worldwide supply, except when affected by the weather, was never really managed by our domestic farm program," said Dick Newpher, executive director at the Washington office of the American Farm Bureau Federation, endorsing the move away from controlled production.
"As a result of the void we tried to create, some other competitor produced more. If we're going to be in a situation with new trade agreements, then our agricultural programs will have to realize that the day is over when we can manage supply."
But throughout the past four years, the 1996 provisions have faced fierce scrutiny. Neil Harl, agricultural economist at Iowa State University, has observed very little change in cropping acres despite dramatic drops in grain prices.
"Uncontrolled production has caused what many of us have thought would happen: overproduction and depressed prices," Harl said. "A significant number of farmers had remained in business only because of huge infusions of cash beginning in 1998."
Harl, an avid critic of the 1996 act, which he branded "the second most irresponsible act of the past century" after the tax cuts of 1981, has repeatedly urged legislators to promote initiatives that manage supply.
Harl encourages market-oriented land-idling in peripheral areas and promoting a return to farm-owned storage programs.
"Every corporation in the world occasionally has excess inventory," he said. "When a corporation encounters that problem, it nearly always idles supply and lays off workers. Between 1938 and 1996, the Secretary of Agriculture was a surrogate CEO of agriculture and had the authority to do much of the same. This authority was swept away in 1996, and in my opinion should be restored."
Other experts point out that planting flexibility has not worked as prescribed. Tom Buis, policy analyst at the National Farmer's Union, argues that shifts in acreage resulting from producer decisions appear to be modest and to a greater degree reflect incentives provided by the government program.
Moreover, with continued overcapacity and low prices, individual farmers are forced out while aggregate productive land remains the same as growers who produce more efficiently take over.
"It (the 1996 farm bill) has not lived up to the promises it made," Buis said. "Loan rates are so distorted that farmers are planting more oilseeds not because of market signals but because of the government safety net."
Buis does not think the present program will last until 2002. "I wouldn't be surprised to see it rewritten next year," he said.
As the presidential race continues, other issues to look for in agriculture include concentration in agribusiness, crop insurance reform and trade.
So will we see tax-deferred accounts or counter-cyclical payments? The future Administration will oversee the next farm bill, and outcomes in November will dictate the scope of the changes to Freedom to Farm of 1996.