Been there done that; it was called Freedom to Farm

Edwards writes, “President Donald Trump proposed cuts to farm programs in the 2019 federal budget, but the longer term goal should be to fully repeal all farm subsidies.” Our response to the goal of fully repealing all farm subsidies will be echoed by many of our readers, “Been there, done that, and the result was a very expensive policy disaster.”In reviewing the 1996 Farm Bill, the Cato bulletin glosses over the impact of “Freedom to Farm” with a simple statement: “But Congress reversed course in the late 1990s, and it passed a series of supplemental farm subsidy bills.”What they don’t tell their readers is that by 1998, farm income had fallen dramatically, crop prices were below the full cost of production, and things stayed that way for four years. In some years and some states, net farm income was less that direct government farm program payments even though the net farm income numbers include the profits being earned by the livestock sector. Crop farmers were using part of their government payments just to pay for production costs.Edwards then writes, “As a result, subsidies over the seven years of the 1996 Farm Bill ended up costing more than double what had been promised.” There is no surprise there. Daryll, in his analysis of the 1996 legislation written at the time, predicted that the legislation would be costly.As we look at the current string of low-price years, there is no evidence that eliminating sensible farm programs would produce different results.The truth is that whenever we write farm programs that do not take account of the economic characteristics of crop agriculture, they will almost always be significantly more expensive than the Congressional Budget Office projections made at the time the legislation is passed.