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February 2006

U.S. Farm Policy Update
Media Summary

Music to White House Ears; Report Says U.S. Farm Subsidies Outmoded, Deere & Co. Notes Concerns; Short- and Long-Term Benefits for the Nation’s Economy

Farm policy media coverage in recent weeks has focused on the forces shaping the 2007 Farm Bill debate: globalization, the federal budget, WTO talks, farm subsidies, and the number of new players voicing their needs and concerns. In this U.S. Farm Policy Media Summary, we look at the coverage surrounding the issue of farm support payments.

Music to White House Ear
While there is jockeying from all parties in any legislative debate, for now Congressional leaders and President Bush are singing the same tune regarding the 2007 Farm Bill. According to this Financial Times article, Sen. Saxby Chambliss (R-GA), Chairman of the Agriculture Committee, said the farm bill should be reformed to ensure compliance with World Trade Organization rules. Although his district includes heavily subsidized cotton, sugar and tobacco industries, Chambliss said in part, “we’ve got to have programs that we are satisfied are not trade-distorting.” That should be music to the administration’s ears, since they urged Congress to enact deep cuts in commodity support payments in their FY 2007 budget proposal.

Report Says U.S. Farm Subsidies Outmoded
The White House Council of Economic Advisors issued a report stating that U.S. farm subsidies hurt poor farmers around the world while costing $20 billion a year. Agricultural support “can come in many forms, not all of which are equally market-distorting.” Australian newspaper, The Courier-Mail, writes that council advisers raise alternative ideas, such as green payments to reward land stewardship or revenue insurance to protect farm income. “A more economically efficient farm policy would reflect contemporary economic conditions, environmental needs and public values.” You can read the agriculture section of the report here [PDF].

Deere & Co. Notes Concerns
It’s not just Congress, the administration and the World Trade Organization that are worried about the negative effects of farm payments around the world. Farm equipment giant Deere & Co. forecasts a five to ten percent decline in sales in 2006. Wall Street analysts opined on the first quarter earnings report, alerting readers that political concerns over government subsidies in Europe and the United States may hurt “agriculture sentiment” throughout 2006. Read this Houston Chronicle version of the report and analysis.

Short- and Long-Term Benefits for the Nation’s Economy
Keith Good’s February 14, 2006, subscription Webzine, www.farmpolicy.com, previews a paper by Dr. Luther Tweeten, emeritus professor of agricultural marketing and trade at Ohio State University. In his work Eliminating Farm Programs [PDF], Tweeten depicts the effects of eliminating farm price and income support. “The farming economy could recover in as little as five years, depending on the transition program in place. The nation’s economy on the whole is predicted to benefit in both the short and long run from phasing out government farm supports,” he writes.

 


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