08/07/19 By Philip Brasher, Agri-Pulse.
Democratic presidential candidate Elizabeth Warren wants to put the federal government back in the business of managing commodity supplies in order to guarantee that farmers won’t lose money on their crops, a long-abandoned policy known as “parity.”
The Massachusetts senator’s plan would build on USDA’s existing loan and conservation programs to take land out of production and ensure that farmers can forfeit crops to the government if necessary to ensure growers can cover their cost of production.
She also is calling for dramatically expanding the Conservation Stewardship Program to pay farmers for practices that keep carbon in the soil and reduce greenhouse gas emissions. CSP is currently funded at about $1 billion a year. Warren wants to spend $15 billion annually.
“Instead of subsidizing industrial agriculture and starving farmers and rural communities, my new approach will guarantee farmers a fair price, reduce overproduction, and pay farmers for environmental conservation,” Warren says in her plan.
Warren is campaigning in Iowa this week and visiting an organic farm on Thursday. The outline of her agricultural policy is part of a series of proposals aimed at rural voters and farmers.
The proposals include a promise to break up unspecified agribusinesses, restrict mergers of rural hospitals and funnel $85 billion into expansion of rural broadband, with the money restricted to local governments and electric and telephone cooperatives. Warren’s plan would pursue a public option for broadband internet and seek to supersede laws in 26 states “hindering or banning municipalities from building their own broadband infrastructure.”
Applicants for the $85 billion in grant money would have to offer at least one plan with 100 Mbps upload and download speeds; the current FCC speed benchmark is 25 Mbps download/3 Mbps upload.
Her farm policy would further break down the free-market approach introduced in 1996 to break the link between subsidies and production.
USDA has had loan programs for decades, but the loan rates, or price guarantees, are now generally well below market prices and below farmers’ cost of production.
Warren’s plan would “save taxpayers billions,” she said. “Because a supply management program only pays for the amount of commodities that it takes off of the market, it would substantially reduce costs for taxpayers who, in the current subsidy approach, can end up paying for every single bushel and bale that farmers grow.”
Under current law, farmers can put a crop under loan and forfeit it to the government, if the price falls below the loan rate, or producers can take a “loan deficiency payment” for the difference between the loan rate and the market price. Current loan rates are $2.20 per bushel for corn, $3.38 a bushel for wheat, $6.20 a bushel for soybeans and 52 cents a pound for cotton.
Based on USDA data, the average total cost of producing corn over the past 10 years has been $3.96 a bushel. A 2012 study that Warren’s plan links to analyzed the impact of loan rates of $3.50 for corn, $5.28 for wheat and $8.97 for soybeans.
To reduce production, Warren says “farmers will have the option of bidding acres of land currently used to produce commodities into conservation programs.” USDA’s main set-aside program, the Conservation Reserve Program, was created in 1985 to reduce supply but was cut to 24 million acres by the 2014 farm bill. The 2018 farm bill gradually raises the limit to 27 million acres.
Warren said she will pay for her new spending by increasing taxes on corporations and her proposed wealth tax on fortunes over $50 million.
Minnesota Sen. Amy Klobuchar, who is running well behind former Vice President Joe Biden, Vermont Sen. Bernie Sanders and Warren in the polls, also talked about farm and rural policy in a visit to an Iowa farm on Wednesday, but she didn’t proposed any major changes.
She talked about the need to end trade disruptions and help farmers reduce carbon emissions, building on programs such as CRP, CSP and the Environmental Quality Incentives Program. “We can do more to improve soil carbon sequestration, which both improves soil health and reduces carbon levels,” she said.