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Edward Lotterman: Next farm bill must reflect the changes in agriculture since Roosevelt's price supports

A new farm bill is due in 2007, and the nation needs a good debate to decide what exactly we want to accomplish with federal agriculture programs.

Unfortunately, farming is not an important public issue right now. We probably will get another bill like the one passed in 2002, which is one of the worst pieces of legislation in the last half-century.

(By way of disclosure, I own a 220-acre farm with 18 acres in the federal Conservation Reserve Program.)

Historically, significant legislation is written in response to perceived crises. In 1933, during the depths of the Great Depression, the federal government got into agriculture in a big way for the first time. A third of all Americans farmed, farm incomes were well below the national average and farm prices were low. There was tremendous suffering in rural areas, particularly in the South.

Franklin Delano Roosevelt's Agricultural Adjustment Act established a system of federal price supports that has persisted in one form or another to the present. But the U.S. economy and rural society are not the same as 73 years ago.

"The farm problem" frequently captured headlines in the 1950s. Public discussion focused on the large surpluses of stored farm commodities generated by the legislation enacted two decades earlier.

In the 1970s, farming made headlines when the Soviet Union purchased large amounts of U.S. grain in 1973 and as U.S. farm exports burgeoned after the devaluation of the dollar. Agriculture boomed and farmland prices soared.

The bubble burst in the 1980s. Tens of thousands of farms faced bankruptcy. Hundreds of private banks and the federal Farm Credit System were broke. The 1985 farm bill strove to staunch losses while securing increased conservation.

The 1996 act, billed as "freedom to farm," was supposed to get government out of agriculture. Subsidies under the act were styled as "transition payments" that were to disappear over time. Reflecting the "Contract with America" ethos of the new Republican majority in the House of Representatives, agriculture was supposed to move to a free-market basis.

But just seven years later, those lofty goals went out the window. Bipartisan majorities in Congress agreed to shovel unprecedented amounts of taxpayer money out the door with no specific objective or focus. Historic limits on how much money could go to any individual farmer were tossed away.

The outcome is outrageous. Ten percent of farms now capture 60 percent of all subsidies. Most outlays go to households with average incomes well above the national average. Outlays run from $15 billion per year on up. Farming continues to become more sharply divided with a small minority of large operators producing a high and increasing proportion of all output.

More than at any time in 50 years, we should step back and ask ourselves what we want to accomplish with federal farm programs. But that seems unlikely to happen.

Economist Edward Lotterman teaches and writes in St. Paul, Minnesota.