9.25.2015

The 1996 FAIR Act
Food Issues Book Club, The Politics of Food Supply Chapter 7

Hello all!  Welcome to the NOiG Food Issues Book Club, wherein I read books about food stuff, summarize each book by chapter, and then attempt to apply that book chapter's ideas to the New Orleans food environment and my own experiences.  Fun right?!  Check out previous installations here.  I'd love it if you'd read along and join in!  And now, without further ado...

The Politics of Food Supply, Chapter 7:
The 1996 FAIR Act - Changing U.S. Agricultural Policy

Summary:

The Federal Agriculture Improvement and Reform (FAIR) Act of 1996, also known as the "freedom to farm" act, essentially ended governmental efforts at supply management.  It did so by eliminating acreage restrictions entirely. It also moved away from price supports in favor of income supports.  In addition to shifts in political power and a strong market, this profound change in U.S. agricultural policy was made possible by the changing needs of different agricultural segments during the 1990s.

Divisions among segments were clear on the issue of acreage restrictions.  The Corn Belt championed their removal - unsurprising, given the growing market provided by the livestock industry.  "The livestock segment aligned with the corn segment on the issue of {acreage} flexibility.  For instance, the National Cattlemen's Association expressed opposition to production controls.  The livestock segment favored greater flexibility because it would allow farmers already producing corn or other feed grains to produce more, and it would allow producers of other commodities to switch to various feed grains.  This would increase the supply of feed grains and reduce the price of the primary input for livestock producers."

The influence of the coalition between the corn segment and the livestock industry should not be overlooked.  "The importance of livestock production increased dramatically during the twentieth century, as both the qualitative characteristics and the size of the livestock sector changed."  As more grain farmers found livestock producers their main customers, the livestock sector itself became an influential body in matters of policy.  Given that individual consumption of meat rose from 102 to 153 pounds per capita, during a time of quick population growth, it is easy to see how quickly the industry was growing.  Its obtaining greater power was a natural result.

Don't worry - Kid President promised me it's vegan.
Apart from the domestic market for feed grain for livestock, exports for the corn segment were becoming bigger and more attractive.  "[N]ew opportunities for exporting corn, soybeans, and other feed grains during the 1990s strengthened the opposition of the corn segment to production controls."  Large, recently-opened markets included Mexico, with which trade had been liberalized via the North American Free Trade Agreement (NAFTA) in 1994.  Corn sales from the U.S. to Mexico increased as much as four fold, fueling Mexico's growing livestock trade.  Nations forming out of the former Soviet Union were also ripening as new trade customers.  These recent boons meant that in 1996, the corn segment was even more ready to be unrestricted in its potential growth.

Wheat and cotton producers, on the other hand, remained strongly in favor of governmental production control, "but the Corn Belt federations were more influential in the policy proposals of the national Farm Bureau," which still held great sway in Washington.  "The FAIR act eliminated production controls cleanly, without any compromise, buyout, or phasing out."  The needs of wheat and cotton, for the first time in decades, were overshadowed.

Segment divisions were less clear, and FAIR's impact less extraordinary, on the matter of price supports.  Farmers were concerned more with maintaining income than with keeping price supports per se.  What little pushback there was came from the wheat segment.  As such, there was little opposition to a switch toward income supports, particularly in light of the removal of acreage restrictions.

It was important for the government that price supports changed when production controls were removed.
 "[E]liminating production controls significantly increased the danger that the cost of price supports would rise.  As farmers expanded production after the elimination of production controls, market prices would likely fall.  This would lead to greater subsidies through deficiency payments, thereby increasing the budget costs of the farm program.  Decoupling subsidy payments offered a way of eliminating production controls without breaking the budget.  This connection gave further incentive to segments opposed to production controls, in particular the corn segment, to abandon price supports for income supports."
Importantly, "[b]y replacing price supports with fixed payments decoupled from market prices, farmers would actually receive greater subsidies from the government."

The one facet of agricultural supports that remained largely unchanged by FAIR was export subsidies.  This despite the fact that the Export Enhancement Program (EEP) was opposed by part of the corn segment as well as the livestock industry - though both supported other export support programs.  "Providing other nations with subsidized grain that might be used as feed presented the possibility of putting the U.S. livestock industry at a disadvantage by raising the cost of U.S. meat, which does not use subsidized feed."  (?!?!?)  Support from the Farm Bureau and the American Soybean Association was enough to drown out the opposition from other portions of the corn segment, and the policy had strong support from the wheat and cotton segments.  As a result, FAIR not only continued the EEP but even increased its funding.

Discussion:

That the livestock (read: meat) industry has been largely influential in shaping U.S. food policy is old news.  The statement that U.S. mead "does not use subsidized meat," however, threw me for a loop.  Having examined the paragraph at great length, I think maybe it's just awkward phrasing?  The paragraph is discussing livestock's opposition to the EEP, which provides subsidies specifically for commodities being sold for export.  Products sold nationally are subsidized in their production, thus keeping market price down, but the market price itself is not directly subsidized... something like that?  There are oh so many semantics games to be played around food policy.


No comments:

Post a Comment

Note: Only a member of this blog may post a comment.