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Former Senior USDA Officials and Members of Congress, Farm Group Leaders, Economists and Policy Experts Call on Congress to End Trade-Distorting Subsidies, Redefine the Farm Safety Net, Transform the Food Stamp Program, and Reinvest in U.S. Agriculture’s Future.

(Sept. 27 - Washington, DC)—This afternoon, at a special session hosted by the Institute for International Economics, The Chicago Council on Global Affairs released a report by its prestigious Agriculture Task Force containing a balanced set of recommendations for reform of the nation’s farm bill policies. The report was designed to turn the 2007 Farm Bill debate toward a new generation of food and agriculture policies that would be consistent with market-oriented global trading objectives, advance urgent public health and environmental objectives, and provide a formula for economic prosperity in U.S. agriculture and rural America. To read the full report or executive summary, click here.

 “The Farm Bill budget will likely be a smaller, zero-sum game in 2007,” said Robert Thompson, Task Force co-chair and former USDA Assistant Secretary for Economics. “Now more than ever, spending decisions must be driven by investments in the future of U.S. agriculture, the real needs of rural America, the national economy, public health, and the environment.”

At the cornerstone of the report are recommendations to end trade-distorting farm subsidies, such as countercyclical payments, loan deficiency payments, and marketing loans and replace them with potentially less-costly programs to help farmers weather the ups and downs of prices and yields. “If the European Union and the United States don’t take the lead in ending trade-distorting subsidies, developing countries and  the WTO legal system will do it for both of us,” said Gus Schumacher, Task Force co-chair and former USDA undersecretary in charge of farm subsidy programs.  “We’ll lose control of critical farm policies and miss the worldwide export expansion opportunities, particularly in emerging markets, that a successful Doha Round could bring. These emerging markets, such as India, China and competitors such as Brazil also need to step up and offer improved market access” stated Schumacher. “The subsidies delay trade deals that expand farm exports, starve critical research, conservation and infrastructure investment and distort planting incentives.”

The report recommended an integrated set of new programs to provide a farm financial safety net, advance environmental goals, and avoid affecting supplies and prices of farm commodities, including: 1) Revenue insurance covering all commodities – farmers would purchase coverage at subsidized rates to protect against losses from drops in price and production; 2) Land stewardship rewards that pay producers according to the kind and amount of environmental goods and services they provide; and 3) farmer savings accounts, similar in structure to tax-deferred 401(k) accounts, backed by government matching contributions that could be tapped for a variety of uses. As these programs are being phased in, the Task Force recommends transitional direct payments that are consistent with WTO “green box” rules and compensation for farmers and other landowners for any decline in land prices that might result from elimination of trade-distorting subsidies.

“Ending subsidies that conflict with our trade obligations doesn’t have to mean an end to the farm safety net,” remarked Thompson. “Traditional subsidies can be replaced by programs recommended in this report that help farmers cope with business risks while complying with our trade obligations and advancing future trade objectives.”

To ensure the future competitiveness and profitability of U.S. agriculture, the report also recommends that at least 20 percent of funds currently used for trade-distorting supports be redirected to rural public goods, such as infrastructure and agricultural research. “Our trade-distorting farm subsidies represent a grossly inefficient use of funds,” said Mike Espy, former Secretary of Agriculture. “A wiser use of our budget dollars would be for recommendations in this report.”

The Task Force also proposes a dramatic first-ever reform of food stamp policy to bring the program in line with national public health goals and address the nation’s growing epidemic of diet-related diseases. The recommendations include eliminating non-nutritious products, such as candy, from eligible food purchases and providing financial incentives to food stamp users to purchase foods highly recommended by federal dietary guidelines and disincentives for “empty calorie” foods. Other feeding program changes include: 1) adding fruits and vegetables as an eligible category for the Women Infants and Children (WIC) 2) reducing foods, such as those high in fat, in the WIC program while increasing others that should be more-frequently eaten; and 3) purchases for school feeding programs should be refocused using nutritional goals instead of commodity support criteria.

“U.S. taxpayers deserve a bigger public health return on their $51 billion a year investment in feeding programs,” said Catherine Bertini, Task Force co-chair and former Under-Secretary responsible for USDA’s feeding programs. “Providing healthy foods is the first step towards better health for all Americans.” 

The report also contains recommendations that would improve the effectiveness of renewable energy development programs, rural infrastructure development, conservation programs, and federal global food relief initiatives.

 The Chicago Council on Global Affairs, founded in 1922 as The Chicago Council on Foreign Relations, is a leading independent, nonpartisan organization committed to influencing the discourse on global issues through contributions to opinion and policy formation, leadership dialogue, and public learning (www.thechicagocouncil.org/).

The Chicago Council Agriculture Task Force includes among others: ten former high-level USDA officials; four former members of Congress; five economists; five executives from large food and agribusiness related companies, leaders of three farmer organizations; and two conservation group leaders.