Domestic Farm Policy for 2007: Forces for Change

The fundamental political rationale of U.S. farm policy, to support and stabilize the incomes of family farmers, has been embodied in farm bills since the early 1930s. U.S. agriculture has changed dramatically since the Great Depression in ways that matter from the perspective of policy makers. In the 1930s, farm household incomes and wealth were lower on average than nonfarm household incomes and wealth. In 2006, that situation has reversed. In the 1930s, the average farm size was much smaller than in 2006, both in land area and value of sales. The types of products being produced were also far less diverse. In the 1930s, more than 75% of all farms raised commodity program crops such as corn and wheat. Today, only about a quarter of all farms grow such crops. In the 1930s, agricultural resource policy was focused on enhancing farmland productivity. In 2006, preserving natural resource attributes of that farmland is also a major policy concern. These changes in structure and focus have created substantive policy issues. Some ideas, such as imposing tighter limitations on government payments to individual farms and proposals to target assistance more towards low income households, have been sources of controversy for several decades. Other issues, such as expanding the scope of government support to be provided to other commodities, including fruits and vegetables and livestock, are relatively new concerns. All are in play in the context of current debate over the likely shape of the 2007 Farm Bill. In addition, since 1994, U.S. farm policy has been constrained to some degree by the U.S. Government’s commitments under the Uruguay Round Agreement on Agriculture (URAA), as implemented through the World Trade Organization (WTO). Further, funding for farm programs, and therefore the scope and structure of those programs, are contingent on the status of the federal budget during the period in which a new farm bill is debated. The next farm bill is also likely to reflect broader societal interests, with particular attention paid to the environmental and energy impact of farm policy.