This blog post is part of a series on the 2018 Farm Bill.
Since the 1930s, Congress has tried to formulate an effective farm “safety net,” oscillating among different schemes in order to protect farmers from the severe economic impacts of the Depression and the Dust Bowl. What started as a New Deal emergency intervention has become an entrenched legislative ritual. Indeed, this perennial Farm Bill debate remains a relic of 20th century policy. It’s designed to perpetuate, not to innovate.
The farm safety net incentivizes commodity producers to maintain a business-as-usual approach because farmers are guaranteed a rate of return by the federal government. In particular, under the current Farm Bill, adopted in 2014, producers are eligible for crop insurance supported by taxpayer-subsidized premiums of 62 percent on average. In addition, corn, soybean, and other commodity producers can receive price and income supports when prices or revenues drop below specific levels. These programs cost billions of public dollars annually.
In most other industries, actors would have to pivot and innovate in response to market changes. In the agricultural sector, by contrast, federal subsidies mute the market signals that otherwise would spur farmer innovation in order to stay in business. If farmers want to change their production, they have to push against policy and infrastructure that is designed to maintain the status quo. Meanwhile, the family farm is an increasingly endangered institution. One just needs to look at the aging ...