Soil-saving practices on Iowa farm. (USDA)
Want to save money on the farm bill? Force farmers to control soil erosion and other environmental problems through regulations and fees rather than continuing to give them subsidies to do so.
That idea comes, believe it or not, courtesy a conservative group. It’s a central idea in a group of proposals released today by the American Enterprise Institute, which is trying to frame the debate on how to restructure U.S. farm policy and cut its cost.
It comes as no surprise that the papers prepared for AEI by agricultural economists argue that the current the system of commodity subsidies and crop insurance is a waste of money should be dismantled. It’s also not surprising that the papers find that existing conservation programs are duplicative and too costly as well. However, the economists go on to argue that in the long run it would penalize farmers who do pollute rather than paying farmers not to pollute.
“A polluter-pays system would achieve conservation and reduce emissions at a benefit to taxpayers and would improve signals about the real cost of agricultural production. Conservation programs should also be integrated, reducing competition among programs for the same land, and farms should be evaluated for program participation based on the whole farm or conservation program.”
One suggested way to do that is to set up a system of tradable pollution permits. If that idea sounds familiar it's because it was the core concept of the cap-and-trade plan for reducing greenhouse gas emissions. To help farmers with the increased costs that they would face from addressing their environmental issues, the existing commodity and conservation programs should be merged into a single program that would provide payments to producers of all crops, argues Tomislav Vukina, an agricultural economist at North Carolina State University.
Vukina does allow that the reordering subsidies in that way “might cause substantial political difficulties on the road to implementation.” You think?
The AEI's ideas come at a time when Congress and the White House are negotiating over deep cuts in federal spending that almost certainly mean steep reductions in funding for farm and conservation programs. Conservative lawmakers who see the AEI proposals as a roadmap for making those cuts in farm spending may want to take a look at the fine print.