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Posted January 12, 2007: When the new Congress
convenes in January, one of the tasks they will be faced with
is the passage of a farm bill. Some groups are angling to
extend the current legislation for a couple more years so
they can see what happened with World Trade Organization (WTO)
trade negotiations. Failing an extension of the current legislation,
they are lobbying hard for farm legislation that will include
all of the major elements of the current policy—direct
payments, loan deficiency payments/marketing loan gains and
counter-cyclical payments—with only minor tinkering
around the edges.
In either case they want to use the discussion over subsidies
as leverage to wrest additional concessions out of our agricultural
export competitors. They are loathe to give up what they see
as their best bargaining chip in the WTO negotiations.
Others are calling for the use of the budget allocations
for the current programs in ways they assert will protect
US farmers from WTO trade challenges. The recent cotton case
won by Brazil identified elements of current policy that might
make other crops vulnerable to a trade disputes panel challenge.
In an attempt to preempt potential challenges they are calling
for the use of subsidized revenue insurance programs and/or
green payments as money delivery systems to maintain the current
levels of farm income.
With regard to green payments a recent Congressional Research
Service report said, “A shift from commodity subsidies
to green payments is seen by some as attractive because it
could provide a new mechanism to support farm income, forge
a stronger link between conservation and farm income objectives,
and still comply with WTO obligations if the program is not
considered to be production and trade distorting.”
As we watch the parade of proposals to replace the current
commodity programs, it appears to us that many of these proposals
are variations on a theme. The theme begins by ignoring the
inherently variable nature of crop production with the low
price responsiveness on the part of both food consumers and
farmers. Having ignored the original rationale for farm programs,
they then offer a clever money delivery system that will placate
farmers, will be more appealing to non-farm interest groups,
but will create a huge hole in agriculture’s safety
net. 
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