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It affects everything we eat, yet it isn’t getting much attention. Reauthorization of the 2012 Farm Bill passed a Senate committee with bipartisan support. It awaits a full Senate vote, a House bill and conference before reaching President Barack Obama’s desk. The Senate proposal, known as the Agriculture Reform, Food and Jobs Act, eliminates $23 billion in spending. But not everyone is happy. Critics say it should do more to address environmental and nutritional concerns. Diane speaks with Senator Debbie Stabenow, chair of the Senate Agriculture Committee, Congressman Michael Conaway, chair of the House Agriculture General Farm Commodities and Risk Management Subcommittee, and a panel of experts about the changes ahead in U.S. agricultural policy.
- Scott Faber Vice President for Government Affairs, Environmental Working Group; former vice president, the Grocery Manufacturers Association.
- Senator Debbie Stabenow Democratic Senator from Michigan, Chair of the Senate Agriculture Committee
- Congressman Michael Conaway Republican representative of Texas' 11th district, and chair of the House Agriculture General Farm Commodities and Risk Management Subcommittee.
- Jerry Hagstrom Founder and executive editor of The Hagstrom Report and columnist, National Journal
- Chandler Goule Vice President of Government Relations, National Farmers Union
MS. DIANE REHMThanks for joining us. I'm Diane Rehm. Congress is debating the 2012 Farm Bill. Among the issues being hashed out, subsidies for farmers, food stamps, and incentives for growing a wider variety of crops. The Senate bill was approved in committee and now awaits a June vote on the Senate floor. Joining me in the studio to talk about what's at stake: Scott Faber of the Environmental Working Group, Jerry Hagstrom of The Hagstrom Report and National Journal, and Chandler Goule of the National Farmers Union.
MS. DIANE REHMI invite you to join us this morning. Call us on 800-433-8850. Send us your email to email@example.com. Join us on Facebook or Twitter. Good morning to all of you.
MR. SCOTT FABERGood morning.
MR. JERRY HAGSTROMGood morning.
MR. CHANDLER GOULEGood morning.
REHMAnd, first, joining us from a studio on Capitol Hill is Sen. Debbie Stabenow. She is chair of the Senate Agriculture Committee. Good morning to you.
SEN. DEBBIE STABENOWGood morning, Diane. It's great to be with you.
REHMAnd glad to have you with us. Tell us what this bill does that's different from past agriculture bills.
STABENOWWell, Diane, I am so proud of what we've been able to do in a -- first of all, in a bipartisan basis at a time when you can't say that about a lot of different issues. But we have brought together a bill on a strong bipartisan basis that has more reforms than we have seen in decades in a climate that is very tough in which to operate. And we provide $23 billion in savings towards our deficit.
STABENOWAnd it is based on eliminating subsidies for farmers, something called direct payments which are given regardless of whether or not you're in good times or bad times. And farmers in the past were getting paid for crops they didn't grow or when they were doing well, and we are ending that and moving to basically what we're calling a risk management program. So if you need help, we don't want a farmer losing the farm because of a few days of bad weather or other conditions outside their control.
STABENOWWe certainly want to be there because 16 million Americans have jobs because of agriculture, and it's the bright spot in our economy. You know, even when things were -- have been really tough in Michigan with the automotive sector, agriculture was going strong. So we need to make sure we support the sector, but we need to do it responsibly.
STABENOWTaxpayers -- you know, taxpayers need to know that we're not going to be providing government payments when it's not needed. So this is very, very important.
REHMAnd some people are concerned about food stamps. Tell me about that.
STABENOWWell, I'm also extremely pleased with what we have been able to do in a very difficult climate. I mean, anyone that looks at what's happening in the House over 10 years, they proposed over $130 billion in cuts and block granting back to states with no commitment to food and nutrition. We have seen the Agriculture Committee take $33 billion from struggling families. We've taken a different approach. We've said we want every dollar to go to families that need it.
STABENOWAnd, again, I feel very strongly about this coming from Michigan where we have people who've never before in their lives needed help that now do. But what we've done is said, we're going to streamline, we're going to focus on accountability. We've had a couple of cases in Michigan where folks that won the lottery got food assistance. Obviously, that doesn't make any sense. It's pretty outrageous. So we eliminate that.
STABENOWWe tighten up some of the abuses and focus on making sure we have a strong nutrition program. And, in addition to that, a real passion for me has been recognizing the diversity of agriculture. You know, over half of what we grow is fruits and vegetables, and we haven't -- up until the last Farm Bill when I authored a new title of the Farm Bill for fruits and vegetables and organics, we have not focused in that area.
STABENOWSo we're strengthening farmer's markets and fruits and vegetable programs for children in school and local food hubs and the ability to have urban community gardens and access, really, to healthier foods for children, for seniors, for people who are on food assistance by helping them be able to get extra value for their food assistance, to be able to buy fruits and vegetables. So, even in a climate where we're cutting $23 billion and reforming traditional commodities, we're actually strengthening the healthy fruit and vegetable sector.
REHMI understand that there are some differences between senators from the North and those from the South on this.
STABENOWWell, there is. I mean, in the past, you know, in agriculture, everything's very regional. Programs affect folks differently in the South. There's been a program that they've used extremely well for years, particularly with rising peanut growers, cotton, where a lot of folks would argue they've gotten more, you know, more help back than their percentage of what they call the baseline, but it's worked well for them in their circumstance.
STABENOWWe're changing that. We're changing the system. And so we have to find something that works for everybody but in a different context. And we have, you know, 98 percent of those involved in agriculture right now that represent 98 percent of what's called the baseline and what's grown are supporting what we've done. What we are saying, though, is that, you know, government's not going to guarantee a price forever or create programs where folks will plant to the program rather than the marketplace.
STABENOWWe're saying market oriented will help as prices go down, help ease that. We'll support when there are disasters, but it's more of a market-oriented system less on subsidies and more focused on supporting farmers who make their own choices about what they want to plant.
REHMAnd what negotiations are we in now to get this passed on the Senate floor?
STABENOWWell, we came out of committee with a very strong vote, 16-to-4 and -- 16-to-5, excuse me. And we have support to move forward on the Senate floor. We -- for me, as chair of the Agricultural Committee, I'd like very much to -- and we will before this is done -- get to a place where folks feel this is, you know, fair for every region of the state, but we have a bill right now that we feel is fair.
STABENOWThat is, it treats every commodity the same as we believe is fair. But there are those -- certainly in the South, our rice and peanut growers in the South -- feel that there needs to be some changes. The House feels differently in terms of where they would like to go. So we'll end up compromising.
REHMAnd that's the question. How closely are you working with the House on this?
STABENOWWell, we are talking with senator -- excuse me -- Congressman Lucas, who chairs the committee, and I have become good friends. We've worked together because of the fact that agriculture was the only one that came up with a $23 billion deficit reduction proposal in the fall with the super committee. The four leaders work well together. We know we have a difference in how to approach the commodity title, and we're working on it.
STABENOWWhether that gets done completely in the Senate or in conference committee, we will come together. But it's also important to know there are other parts of this bill where we have strong agreement, conservation. We have streamlined and refocused conservation. We have four -- 634 different groups supporting the conservation title for the first time. And, by the way, the House and Senate leadership support the conservation approach.
STABENOWFor the first time, we have, actually, more dollars going into conversation than commodities. We maintain the strong link between the commodity title. Any help in the commodity title is tied to conservation practices. We have a new -- what's called Sod Saver program. So if you're on prairie grass, you're grasslands out in the West, we want to protect that, that ground, that grass and have very strong new provisions and conservation.
STABENOWSo once you get beyond the commodity title, which is obviously very important to production and agriculture, and move into conservation, into the specialty crop title, rural development, forestry, energy of -- and we have a great energy title. There's a lot of commonality between the House and the Senate.
REHMAnd yet you know far better than the rest of us how difficult the atmosphere is on Capitol Hill these days. Do you have real expectations that this is going to pass both the Senate and the House and reach conference?
STABENOWDiane, I really am confident because, so far, no one would have ever said we could have gotten this kind of a reform bill out of the Senate committee on a strong bipartisan vote. We're going to pass it in the Senate on a strong bipartisan vote. The House will take a different approach, but I'm confident because of the leadership involved.
STABENOWChairman Lucas understands that, and I understand that, the current policies expire for food assistance as well as conservation and support for production and agriculture on Sept. 30. Farmers need certainty. Families need certainty. We've got to get it done. I'm really confident in the leadership in the House and the Senate. Chairman Lucas, Congressman Peterson, Sen. Roberts and I who have worked hand in hand together on a bipartisan basis in -- even in the midst of everything you're talking about.
STABENOWI mean, it is -- actually, I think a quite extraordinary story in the midst of what is happening here on Capitol Hill, that we've been able to put our head down, listen, work with each other, focus on reform and be able to move it even as far as we have already. So given the fact that we came together in the fall and deficit reduction and were the only committee that did that -- House, Senate, bipartisan -- in the end, we're going to get this done.
REHMSen. Debbie Stabenow, she is chair of the Senate Agriculture Committee. Good luck to you. Thanks for joining for us.
REHMAnd we'll take a short break. When we come back, we'll talk with our other guests and take your calls, your email, your postings on Facebook and your tweets.
REHMAnd welcome back. We are talking this morning about the Farm Bill, a version of which has come out of the Senate Agriculture Committee. It has yet to go the full Senate floor, much less to the House and then, of course, to conference. The current agriculture bill expires Sept. 30. And here in the studio: Scott Faber, he is with the Environmental Working Group, Jerry Hagstrom of the National Journal and Hagstrom Report, and Chandler Goule of the National Farmers Union.
REHMHere's a posting on Facebook, Jerry Hagstrom, which comes from Tom, who says, "The Farm Bill is a perennial disaster, rewarding the already overly wealthy at the expense of small farmers and those in countries where it distorts markets and leads to calls for foreign aid. It's a poster child with what's gone wrong with business as usual in the dysfunctional money-driven U.S. system of government." Is this Farm Bill a disaster, or is it an improvement as Sen. Stabenow believes?
HAGSTROMI wouldn't say that the Farm Bill or the farm program over the decades, since the 1930s, has been a disaster because we have established a very strong agricultural supply system in this country, which feeds Americans and also feeds people around the world. And, in terms of this bill, I do think it is a reform bill. It doesn't go as far as some people want, but, for example, getting rid of the direct payments, which crop farmers have been getting every year whether prices are high or low, is a real accomplishment.
REHMSo how will that change precisely?
HAGSTROMOK. All the crop farmers, that is, like, wheat, cotton, barley, these -- the corn, soybeans, the big crops, these farmers, for the last 15 years, have been getting these direct payments. And they just get a check every year. And the idea is that this made up for some other subsidies they got before and that it wouldn't interfere with planting decisions and it was a better system. But in a period of high prices, which we have now because of the exports to China and other places, and also because of the demand for ethanol, the public no longer finds this acceptable.
HAGSTROMSo they just won't get these checks anymore after this year, and they will still get their crop insurance premium subsidized. And in times of really low prices, or low revenues, they would get payment.
REHMSo, Chandler Goule, how does your group, the National Farmers Union, feel about that?
GOULEWell, you know, National Farmers Union, for decades, has long called for reform in agricultural policy. So we are very pleased to see that the elimination of direct payments has taken form in the Senate Farm Bill, as well as payment limitations. To get directly to what your Facebook or your emailer said of how this is distorting larger farmers towards family farmers, which is predominantly who I represent, by putting a payment limit on here, that will kind of level out the playing field better.
GOULEIt'll help our smaller producers still be able to compete and to move forward as this policy is implemented.
REHMAnd to you, Scott Faber, I gather the Environmental Working Group is not so happy with the changes in the bill. Why not?
FABERWell, I think the right way to describe this is not so much a disaster as a major disappointment because of the $50 billion that we save by eliminating these direct payments that were paid regardless. Only $33 billion are going to be plowed into a brand-new entitlement program for the same very large, very profitable farms.
FABERAnd Congress has done nothing to limit crop insurance subsidies, what I call the secret safety net, which will cost $90 billion over the next 10 years, $90 billion unlimited subsidies flowing out to the largest farmers and, as your caller noted, contributing to some of the problems that small farmers are facing and farmers overseas are facing.
REHMHow do you respond to that, Jerry Hagstrom?
HAGSTROMI respond that reform and agriculture is slow. But the major point that Scott is making about there being no caps on crop insurance subsidies is accurate. But it's a very difficult program in which to have a cap because of the fact that what would you do, have a farmer get premium subsidies for some portion of his crop and not for the rest? It is -- it's a hard one. That's a hard one to cap.
FABERBut because of the absence of any kind of cap, you have extremely successful businesses collecting, in some cases, more than $2 million in a single year for a single farm operation. I mean, that's the kind of subsidization that no American thinks makes sense at a time when we're asking lots of Americans to tighten their belts in other ways.
GOULEWell, I think one of the things that we need to take into consideration is that agriculture has so many variable risks that other businesses don't. We can't control the weather. We can't control foreign markets. We can't control our commodity prices. And so our producers are pretty much held at the mercy of these uncontrollable variables. Crop insurance is -- unlike your homeowners insurance, usually, there's a -- when there's a loss, it's thousands of farmers in a large area that suffer a loss.
GOULEAnd so it is a fundamental part of our toolbox and safety net to keep our producers producing low-cost food for our consumers.
REHMAnd, Jerry Hagstrom, what are the differences in thought about this bill between the northern farmers and those in the South and certainly, senators, members of Congress who represent them?
HAGSTROMYes. Most of the major northern farm groups, people who grow things like corn and soybeans, are in favor of the Senate provision, which would make payments to farmers when they have a loss of revenue, not when the prices go down. But the rise in peanut growers and some of the other groups are saying that's a dangerous system because if prices go down for several years, the base from which these payments would be made would also go down.
HAGSTROMAnd so they still want to have target prices and payments based on those target prices. That means if the price of wheat reaches a certain level, the farmer automatically gets a payment.
REHMWhat about food stamps?
HAGSTROMWell, on the food stamp issue, Sen. Stabenow very eloquently explained the changes. Now, the anti-hunger groups don't like any of the changes, except possibly to cut the program to control that lottery winners would not be able to get any food stamps. They don't think you should cut off any money, but...
REHMBecause it currently -- what does the food stamp program pay out from this Farm Bill, and how will it be reduced?
HAGSTROMOh, well, it pays out about $80 billion a year at the...
HAGSTROM...to 46 million people.
HAGSTROMAnd this would only cut the food -- the Senate proposal would only cut the food stamp program by $4 billion over 10 years. On the House side, they want to cut it by much more, as much as, I think, $33 billion. So the House proposal, so far, is much more onerous for food stamp beneficiaries.
FABERAnd I think it's worth noting that if the Farm Bill that consumers want, the one that doesn't cut food stamps, that invest far more in healthy diets, could have been funded, if we had reasonable limits on crop insurance subsidies, but also stop subsidizing large insurance companies to sell these policies to farmers. We're...
REHMHow are we doing that?
FABERWell, just in the last five years, we've given more than $7 billion to some of the most successful, wealthiest companies in the world. Half of the companies...
FABERInsurance companies, half of which are not even based in the U.S.
REHMAnd why are we doing that?
FABERWe're doing it in part because we're -- decade ago, we thought we needed to get farmers to buy insurance. We were going to do whatever it takes. So we not only subsidized farmers to buy insurance, we subsidized insurance companies to sell them these policies. And now, they are enjoying extraordinary profits. Over the next 10 years, we are slated to give these companies, some of the extremely wealthy companies, many based in tax havens, $15 billion.
FABERWe could avoid all these nutrition cuts, cuts to the environment and invest even more in healthy diets if we were able to just say no to big insurance companies.
REHMNow, what happened with the insurance companies, Jerry Hagstrom?
HAGSTROMWell, the insurance companies obviously lobbied to keep their programs. And since the system has been put in place, that the insurance is sold by private companies, you have had these agents who go out there, and they're aggressive about selling to it, selling to the farmers. And the farmers seemed very happy with the program. The difficulty in the cutback is then, if these crops are not insured, would then the farmers come to Congress for a special bailout if there were a really big weather problem in one part of the country or the other?
REHMBut why should the U.S. government be funding these insurance companies?
FABERYou know, let me just say that if you look at how much profit they've taken in the last few years and compare that to the subsidies that the government is providing them, if you eliminated those subsidies, these companies would still do extraordinarily well. They would still have lots of incentive to sell policies to farmers. Nobody wants to discourage farmers to buy insurance. That makes great sense. Continuing to essentially subsidize Microsoft to sell me software doesn't make sense when they're selling a product that earns them a profit.
GOULEYeah. We've left out a major point here. Crop insurance and the farm safety net is what allows the United States to provide the safest food supply at the lowest cost to our consumers. If we eliminate those two programs, we're going to end up just like the EU where our consumers are spending 30 percent of their gross income to purchase food. Now, if our individual consumers are having to spend that much, imagine what that would do to our nutrition programs. We'd be able to provide less service to fewer people because the cost of our food would increase.
REHMAll right. I'm going to move on because joining us now by phone from Texas is Republican Congressman Michael Conaway. He's chair of the House Agriculture General Farm Commodities and Risk Management Subcommittee. Good morning to you, sir.
REP. MICHAEL CONAWAYWell, good morning, Diane. Good to be with you.
REHMThank you. And having talked with Sen. Debbie Stabenow about her optimism in regard to the Senate Farm Bill, what's the House likely to do with that bill?
CONAWAYWell, we will -- Chairman Lucas has said that he wants to try to mark up the House version of this year's Farm Bill in June. And we will be looking at ways to make sure that we're providing producers as many choices as they can as to what kind of risk management tools they want to have in place. We want to make sure that the system, the safety net, is as fair across regions as we can make it and is fair with -- is as fair within the particular products that are being produced.
CONAWAYAnd then, even within those products, we've got regional issues that -- say, rice as an example. The West Coast rice folks have different risk management needs than the folks in Arkansas and Texas. So we're going to be working to do that as a part of our Farm Bill. We'll have fewer resources to work with than we had certainly in '08 and 2002. That's going to be a reality. And with those fewer resources, we're going to try to craft as equitable a Farm Bill safety net as we can.
REHMAnd what about subsidies to both large farms and small independent farmers?
CONAWAYI'm not sure what the question is, Diane.
REHMWhat about -- go ahead.
CONAWAYWell, I guess you're speaking with some sort of a bias towards folks who have economies of scale and have to operate at such large levels that they look like big, you know, big businesses. But, quite frankly, given the economies of the business these days, I represent a bunch of folks in West Texas who have to farm three to 600 acres of cotton in order to be able to spread the cost of production, the cost of harvesting and everything else across that number of acres in order to make it make sense.
CONAWAYAnd so they're not big -- they farm a lot of acres, but they're not big businesses. They're just mom-and-pop operations that -- just like anything else. So what we will try to do is be as fair as we can across, you know, both -- you know, whatever you're producing and try not to be necessarily biased toward the size necessarily of the producer.
REHMAnd, Congressman Conaway, there have been questions about possible cuts to the Supplemental Nutrition Assistance Program or SNAP. How do you see it?
CONAWAYWell, I voted for the $35 billion in cuts that the House voted on as a part of sequestration package, and it seems to make sense to me. What we've said with that, one, we're going to eliminate the stimulus plus-up because that's not necessary. But the bulk of the reductions we're talking about basically tell folks if you qualify on your own, based on your income levels and family sizes for food stamps or SNAP, you get it.
CONAWAYBut if you don't qualify for it because you make too much money but you're in the program because of some categorical qualification through LIHEAP or others, that you don't get it. And so that seems to make no sense to me to provide food stamps to folks who don't meet the criteria. If you don't like the criteria, that's fine. But, right now, we've got people who are qualifying under LIHEAP and other backdoor kind of approaches to food stamps that don't make sense.
CONAWAYSo the cuts that we would propose -- and we did vote on it in the House -- would not vote nor not force anybody who actually qualifies under income levels and family size levels for food stamps off the program. It would simply mean that only those folks who do qualify would be there. So that seems to me to be a rational approach to a program. Our trim, the $35 billion, represents a 4 percent reduction in plant spending over the next 10 years.
CONAWAYAnd it doesn't hammer the -- if you listen to the other side talk about how Draconian these drafts are and how they're in support of this and those kinds of things, quite frankly, the facts are it's 4 percent. And if the millions of people come off the program that -- or talked about only getting 4 percent of the program, then the other, you know, 96 percent is way too rich, obviously. So rhetoric doesn't match the facts.
REHMAnd -- all right. One last question: Is the House in any way resistant to tying crops to the market?
CONAWAYI'm not sure what tying crops to the market is. One of the things we will be looking at is some ways to protect producers against a multi-year deep cuts in the prices they can sell their products for. And I'm not sure what you're talking about there. We'll eliminate -- in all likelihood, direct payments are going to get eliminated, and we'll focus to, one, not spend some of those resources that would have otherwise been spent on direct payments.
CONAWAYAnd the rest of it that would have been spent on it will be plowed back into making sure the safety net is as equitable as we can make it across regions and products.
REHMOK. And one final thought, congressman. When you talk about the 4 percent cut that you're going to propose in the House version...
CONAWAYWell, no, that -- well -- yes. Sorry, Diane. I was referring to the $35 billion that we cut on the sequestration...
CONAWAY...and reconciliation. I'm not sure where the House will start with respect to nutrition when we actually do the Farm Bill itself. It may be that number may be bigger or less, depending on what individual members on the committee direction they want to go.
REHMAnd can you give me the price level or the income level at which that would mean some people would lose food stamp assistance?
CONAWAYWell, we weren't talking about changing the levels at all. We were talking about just forcing folks to -- who are already above the level that's been set on the program off the program.
REHMAnd what I'm -- and what is that level?
REHMWhat is that level?
CONAWAYDiane, I don't have that number.
REHMOK. All right. Thank you so much, Texas Republican Congressman Michael Conaway. Short break.
REHMAnd one last question about the Farm Bill before we go to the phones. Chandler Goule, what happens if the bill does not pass by Sept. 30?
GOULEWell, Diane, I'm glad you asked me that question. You know, the last three farm bills that we have worked on have required an extension because Congress wasn't able to come together to pass it before the bill expired. Normally, that's been an OK process. There was enough money, so the programs in those bills were able to continue. However, that is not the situation this year. So there are definitely...
GOULEBecause of the budget situation and the fact that they ended programs some time since August of this year or in September of this year. So there's no baseline going forward. So if we just did a straight extension of the 2008 Farm Bill right now, we would automatically lose 37 programs. All of the energy title and a big chunk of the conservation title would completely go away. And I actually have a list here, but there's 37 programs that would no longer be in existence. So there are problems.
REHMChandler. Forgive me, Jerry.
HAGSTROMYes. And, also, you would lose some of the programs that are encouraging healthy eating. And the people who are healthy food advocates and the fruit and vegetable industry is very much behind this bill because they do want people to eat healthier, and they think the new bill would help that.
REHMAnd how likely do you believe, Scott Faber, that this will pass?
FABERIt's very difficult to see how you pass a Farm Bill through the House where there are so many die-hard fiscal conservatives that would ultimately satisfy the Senate, where folks are far more concerned about the SNAP cuts.
REHMEven with the cuts.
FABERThat's right, so...
REHMEven with the cuts.
FABER...it's hard to see how a bill passes the House that includes significantly more cuts to food stamps and the environmental programs in Sen. Stabenow's committee's proposal.
REHMAll right. To Sycamore, Ill. Good morning, Hamish. (sp?) You're on the air.
HAMISHGood morning and thank you.
HAMISHThe farm subsidies were set up back in the Depression to help farmers regain strength to plant food stuffs. Back in the late '50s, early '60s and so on, factory farms started up. And these are farms that are owned by corporations or big business. And they're receiving the same subsidies that the small farmer is. Only, they're receiving more. It's just like the future's market was set up to provide money for the farmers to buy seed and fertilizer to plant, and now it's been taken over by supposedly the commodities market, they call it now.
FABERWell, your caller is exactly right. While there are some limits on some subsidies, like direct payments, which are, of course, about to go away, there are no limits on these crop insurance premium subsidies, which are now far more -- the most costly part of the farm safety net. And so you have farmers, large farmers who are very successful, who are routinely receiving more than $100,000 a year in subsidies while their smaller neighbors are getting a tiny fraction of the...
GOULEWell, I think what we need to also point out is that the Farm Bill's main objective that National Farmers Union supports is that it should only pay out when our producers are facing a natural disaster or an economic price collapse. It should not be paying out in times when the market is returning a profitable margin for their commodities, which is exactly what the market-driven inventory system that the National Farmers Union proposed as the Title I program would do.
REHMTo Frederick, Md. Good morning, Nancy.
REHMHi there. Go right ahead, please.
NANCYWell, we are dairy farmers from Maryland, and we farm 302 acres and milk about 90 cows, have about 125 cows in total. In the last several years, our seed corn has gone up about 500 percent in cost. Our fuel has gone up about 400 percent and our fertilizer cost, probably 1,000 percent. We're not able to pass these costs along, and we had counted on the direct payment. And now they say that they want to eliminate that. I guess my question is how payments are made.
NANCYIs that -- you know, it seems very subjective to me. And who makes that decision? Is there some kid in his first year out of college sitting somewhere, deciding on whether or not, you know, the times are bad enough that we deserve a payment? I mean, how does -- can you explain to me, please, how that works?
REHMJerry Hagstrom, boy, that's a tough situation to be in.
HAGSTROMIt is. And the dairy farmers have had the worst problems in recent years. Much -- most of agriculture is incredibly prosperous. I think it's the most prosperous in American history because of the sales to China, the ethanol program, et cetera, but dairy...
REHMBut the dairy farmers?
HAGSTROMDairy farmers have had a hard time. Now, the bill contains a new program for dairy.
REHMNow, why have the dairy farmers had such a hard time? Isn't it because the price support has gone down on milk?
HAGSTROMWell, I think the root of the problem was that the dairy farmers had started exporting a lot overseas, to China and to other places. And when there was the problem with melamine in China in some dairy products, the Chinese stopped eating all dairy products. And then the 2008 recession in other parts of the world also caused a drop in exports. And so that undermined the industry.
HAGSTROMAnd then they have had a higher cost of inputs like corn and other feed items. But the new bill does contain a program that the dairy farmers really like but that the dairy processors don't like. And so it looks like this new program is going to go forward. So if the bill passes, there might be some more assistance for dairy farmers for more stability.
REHMWell, what -- OK. What is it that the dairy farmers like? What is it that the others don't like?
HAGSTROMWell, the program advanced by the dairy farmers would include something that when prices go really low, they would be discouraged from producing more. And the reason that the dairy processors don't like that is that they say that would interfere with the markets and therefore make it more difficult for them to establish an export industry that could always supply as much as the market would want.
REHMBut how does a small dairy farmer make a living in times like that, Scott Faber?
FABERYeah, it's very -- as Jerry said, it's very difficult right now for dairy farmers, in part, because of these very high feed costs. So good news for farmers who grow corn, they're earning a lot for their corn, bad news for folks who feed livestock or who use that corn to make food. So it's -- I think the other point that Jerry made that's interesting is this -- just how well things are going for most folks in agriculture right now.
FABERWe've seen net farm income increase from about $58 billion five years ago to now to $98 billion. And the household income of some of these large commercial farms is now more than $200,000 a year. So people are doing fairly well.
REHMBut surely, in the face of these kinds of problems, Chandler Goule, you're going to see small farms go out of business.
GOULEYou know, that's something that we continue to see across the agriculture sector as a whole, that we're seeing more consolidation and concentration in agriculture. It's along the lines of get bigger or get out. One of the major problems, though, with dairy is you have to write one policy for 30 to 35 cow dairies up in New England, and it also has to be the same policy that works out West where you have 10,000 cows. And as we all know here in Washington, it's very hard to make one size fit all.
HAGSTROMYou know, I think one of the most exciting and promising ways to help smaller operators is by linking them directly with consumers. And when you look at where some of the most entrepreneurial and successful parts of agriculture right now, it's with smaller farmers serving local markets. I get my milk here in Washington from a farm up near Frederick.
HAGSTROMSo I think there's an extraordinary amount of exciting development that this Farm Bill does a few things but not nearly enough to help make these connections between farmers and urban consumers.
REHMNancy, good luck to you. Now, to Ann Arbor, Mich. Good morning, Lucinda.
LUCINDAGood morning. I'm with the national nonprofit Fair Food Network. And, even though the bill is far from perfect and written under extreme budget duress, I really feel that the committee bill drafted by Chairwoman Debbie Stabenow represents a major achievement as it really delicately balances these powerful agribusiness and the anti-hunger and interest groups representing issues as diverse as crop insurance and conservation to SNAP incentive programs, while saving the taxpayers $23 billion over 10 years.
LUCINDABut what I really think is critical about the current bill that it has so many provisions that will make our food system healthier, such as support for programs allowing SNAP participants to double their benefits while purchasing fruits and vegetables at farmers' markets and stronger farmers' market development programs.
GOULEYou know, I couldn't agree with her -- with the caller more. The Senate farm bill goes the distance in providing healthy foods for our nutrition programs while actually building on local and regionalized food systems. You know, when we look at the bill as a whole compared to status quo, this bill is a major reform and is a positive step.
REHMAll right. Thanks for calling, Lucinda. A number of emails. Here is one from Robert, "Why is sugar from U.S. cane and beet sugar growers twice the price of sugar on the world market?" We could do a whole program on sugar. "Could it be campaign contributions from growers?" Scott.
FABERAbsolutely. We have a system that protects our sugar growers that would be the envy of growers anywhere in the world. We limit the amount of sugar coming into the U.S. That artificially increases the supply. And -- but it -- at very little cost to the government but at significant cost to consumers and especially small businesses, bakers and others who use sugar to make the things we like to eat.
GOULEYou know, I think what we need to focus on here is we're trying to reduce federal spending, and the sugar program is at zero cost to the taxpayer. Now, one of the things you also need to remember is that when you purchase a candy bar, for every dollar that you pay for that candy bar, about one cent goes back to our sugar producers who are in this country.
REHMAnd I used to pay a nickel for that candy bar.
REHMHere's an email from Helen in Clements, N.C.: "Why is it that we support corn, which makes us fat, but not avocados and spinach and carrots and radishes? Can we stop giving support to corn, and, if not, why not?" Chandler.
GOULEWell, you know, I think your caller is pointing something out. Now, I'm not going to sit here and say that corn is causing us to get fat. But you will see major reform in the Senate Farm Bill that not only encourages diversity but healthy choices, and it also has additional programs for specialty crops and fruits and vegetables, and also even allows our SNAP participants to use their EBT cards, like they said, at local farmers' markets. So I think you do see a reform in this bill heading in that direction for more healthier choices.
HAGSTROMTo answer the caller's basic question, the reason that the government supports corn and cotton and wheat, et cetera, is that they occupy so many millions of acres and -- or hundreds of thousands -- not millions, hundreds of thousands of acres. And the number of acres on which avocados and fruits and vegetables are grown is actually very small. And that industry has never asked for direct support. They want help for low-income people to buy their products, but they have never asked for direct subsidies.
FABERYeah, I think this has far less to do with how -- who occupies which acres and more to do with who occupies which chairs on the House and Senate agriculture committees. Those are committees that are dominated by representatives of those major commodities that have collected the lion's share of funding for many, many years. And those members are the reason that it's so hard for Sen. Stabenow to produce the Farm Bill that I know she wants and that ultimately consumers want.
REHMScott Faber of the Environmental Working Group, and you're listening to "The Diane Rehm Show." Now, to Georgetown, Ohio. Good morning, Tim. You're on the air.
TIMOh, yes. My wife and I purchased 17 acres about nine years ago with intention, and we have now built a house on it. The acreage was in a farm program when we purchased it. And because the parcel was larger than 10 acres, as we understood, the program went with the land. So we found out we were the beneficiary about $150 payments every year to keep -- to do what I wouldn't know what to do to begin with, not to farm the land.
TIMLearned about a year ago that that program was being changed, that the minimum acreage tillable had to be 10 acres, and, whereas before it could be just the whole property had to be at least 10 acres but the tillable could be less, now, the tillable was -- it had to be at least 10 acres. We only have about five and a half. And so we were told we were out of the program. That was fine with us. Subsequent to that, we get another mailing saying, unless one person is socially disadvantaged, didn't quality by income, by race.
TIMSo, again, we were out. Another letter came, said, well, socially disadvantaged includes females, so at least half -- if at least half the owners are female, you're back in the program. And since my wife and I (unintelligible) on the deed, so we're back in this program. So here we get $150 from the federal government to do what we wouldn't know how to do to begin with because the land we purchased had participated in this program years ago.
TIMNow, we're about 50 miles east of Cincinnati. So we're in something of a (word?) community, and I've got to believe that there are thousands of properties like ours.
REHMYou know, he has just, in that telephone call, outlined the complexities of the way these laws operate, conflict with one another, overlap, don't take in reality.
HAGSTROMAnd it just -- and just imagine how much money, taxpayer money, we spent doing that analysis, writing those letters, writing that check. It's just -- it underscores why we need a real safety net that's very simple, that's ultimately market based and -- but that -- and Scott and Chandler said that helps farmers when they need help.
GOULEI think one of the things, too, though, that you've seen in this Farm Bill is they have strengthened the definition on actively engaged as well, and so that's going to help reduce some of this obscure payments going out to people that definitely don't be needing -- that (unintelligible).
REHMVery interesting. And then Brandy emails. She lives in Austin Texas. They're in a water conflict with rice farmers after years of drought. "The bigger question is why are we growing rice in Texas, which is a completely unsuitable crop for our area? Why should we subsidize this?"
FABERAnd partly because we have so generously subsidized rice farmers in the past and in some years giving them as much as $1,200 per acre in subsidy, it's made it possible to grow rice in places where if you were simply following the signals of the marketplace, you probably wouldn't. And I think one of the challenges for this Farm Bill -- and, again, Sen. Stabenow has produced the best bill that she could give in her committee.
FABERBut one of the challenges for the full Senate is now to find ways to reform the safety nets so that it really provides farmers the help they need when they help and really not more than that.
REHMScott Faber of the Environmental Working Group, and you're listening to "The Diane Rehm Show." Chandler, you wanted to add to that?
GOULEYou know, I just think you -- when we're looking at rice in Texas, though it is hot and humid down there, it is place where you can grow rice very well.
REHMAll right. Chandler Goule, Jerry Hagstrom, Scott Faber, and thank you all for being here. Thanks to our two members of Congress. Thanks to all of you for listening. I'm Diane Rehm.
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