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Produce Business

Deli Business

American Food & Ag Exporter

Cheese Connoisseur



Farm Bill Passes House…
Good For Produce,
A Problem For America

Jim Prevor’s Perishable Pundit, May 15, 2008

It is “high five” time among those the produce industry retains to represent its interests in Washington D.C. Whereas traditionally the Farm Bill was succor for program crops and had little or nothing for the fruit and vegetable industry, skilled lobbying and persistent effort brought about $3 billion over the next five years for produce interests. United sings the praises of the bill this way:

For almost three years, the produce industry has supported a common goal to engage in developing U.S. farm policy that recognizes the significance of the fruit and vegetable industry in agriculture and advances key policy initiatives that enhance the competitiveness of our industry in the global marketplace. Today, this vision becomes more of a reality as Congress finalizes its work on the Conference Report. For us, this represents a sea-change on how farm policy in this country will be developed in future farm bills.

In particular, this bill will significantly expand the USDA Fruit and Vegetable School Snack Program, expand state block grants to increase industry competitiveness, purchase more fruits and vegetables for school lunch, continue the DOD Fresh Program for schools, provide technical assistance to address international market access issues, invest in specialty crop research including produce food safety, enhance programs to prevent invasive plant pests and disease, and target funding to address conservation priorities.

Most importantly, this Farm Bill will help all sectors of the produce industry deliver the highest quality, safest and most affordable fresh produce to consumers in the United States and around the world. Bottom line, every dollar spent to increase the competitiveness of U.S. fruit and vegetable producers serves all Americans who desperately need our products for their health and which will come back many times over in better health for our children and reduced long-term health care costs for the next generation.

United Fresh also wants to thank the tireless efforts of Congressman Dennis Cardoza (D-CA) and Congressman Adam Putnam (R-FL) for being our “champions” in the House of Representatives. Their vision and dedication to ensuring that fruits and vegetables would be part of the Farm Bill was monumental.

United, WGA, PMA and the whole Specialty Crop Farm Bill Alliance merit industry praise for tireless effort and intelligent assessment of the situation, prudent strategy development and efficient utilization of industry assets.

From an industry point of view, they played the trade’s cards perfectly. Instead of sitting out the battle or opposing the Farm Bill, both likely to win the industry nothing, our lobbying pros made a deal and brought us into the coalition to pass the Farm Bill in exchange for endorsement of several industry priorities.

So if we played the game so smart and accomplished so much, why does this Pundit feel a little sick? Because when we take off our industry hats and put on our American hats, the whole process reveals deep flaws in our governance structure, flaws that are inflating the budget and weakening our country.

It has all been predictable. In fact a foreign publication, the London-based Financial Times looked in on America almost six months ago and saw what was happening:

Pile-it-high policies likely to win the day

If ever there was a good time to reform America’s widely derided system of farm subsidies, this was the year. The chance came with the renewal of the five-year “farm bill”.

Soaring global commodity prices, partly because of government ethanol subsidies, have lifted many farmers above official support price levels, giving them less to lose.

A new Democratic majority, more dependent on urban and suburban than rural votes, took power in Congress in November. The administration of President George W. Bush wants farm subsidy reform as a legacy. Governments around the world have urged the US to cut subsidies to keep the struggling “Doha round” of global trade talks alive.

A coalition of reformers with a variety of grievances assembled. So-called “specialty crop” farmers (fruit, vegetable and nut growers), who now get almost no federal money, feel excluded. Development campaigns such as Oxfam and Bread for the World complain that US overproduction hurts farmers in poor countries. Food companies such as the Grocery Manufacturers’ Association (GMA) argue that US farmers’ subsidies lose them export markets through gumming up trade negotiations.

Environmentalists say that subsidising large-scale agriculture encourages petrol-guzzling farmers to soak America’s soil with chemical pesticides and fertiliser. Nutritionists worry that the ubiquity of high-fructose corn syrup and other corn products are bad for the nation’s health. Fiscal conservatives think the whole thing is a waste of public money.

The coalition argued, with varying degrees of emphasis, that payments should be limited, spread around more farmers and “decoupled” from output and prices, and that more money should go to protect the environment and promote healthy eating.

Yet the mood across the coalition is close to dismay. The House of Representatives’ version of the farm bill, passed in July, found money from elsewhere in the federal budget — including rescinding some tax cuts — actually to increase the overall size of potential payments. Support prices remain elevated, and the bill set a high income cap of $1m ($2m for a married couple) for eligibility for subsidies, a limit critics say is riddled with loopholes….

So what happened? Disappointed members of the coalition say that some allies were systematically bought off and the rest ignored. Cal Dooley, a former California congressman and chief executive of the GMA, says: “The coalition was predicated on the idea that to increase spending on nutrition, the environment and other priorities, we needed to reduce the commodity [budget] . . . Once they found more money from elsewhere, the impetus for reform lessened.”

When it came to it, for example, the fruit and vegetable and other “specialty crop” growers preferred to be inside the farm community tent, even if they were only given a few carrot sticks of subsidy on which to gnaw, than risk being left outside with only the warm glow of moral superiority for sustenance. Nor were they asking for much.

In fact, although the $3 billion for the produce industry often makes industry releases, the total cost of the bill — in excess of $300 billion — is rarely mentioned.

Don’t be upset that the trade only succeeded in getting 1% of the bill — that was truly a great accomplishment. Trading a particular industry’s support for 1% of the cost of a bill is par for the course. The thing to remember is that exactly what has gone on with this bill goes on with bills all the time.

In this case, we got a little for the home team — most of the time, the money is going to coal mine owners or used car lot dealers or some other industry that traded its support for cash. It usually isn’t even on the radar screen of most in the produce industry.

Maybe there is enough “time we got ours” sentiment to make this all seem great. But it is worth noting who pays for all these payoffs to buy industry support for every law. We call those payers taxpayers, like all of us. And this whole process impoverishes us all.

What happens is that some small group — say sugar cane growers — gets a subsidy, and because the subsidy is large and the number of sugar cane growers are few, they are intently focused on the subsidy. So they work for candidates who support the subsidy, donate money to the politicians who support the subsidy, etc.

In contrast, the subsidy is paid for by hundreds of millions of people paying a little more for the sugar in their coffee. Most voters won’t even know they are paying more, and if they did, the amount would be so small it wouldn’t be determinative in their vote, much less motivate them to campaign and donate to candidates who oppose sugar subsidies.

So, in the end, politics becomes all about politicians looking for special interest groups whose support they can buy off at the expense of the general welfare.

The Wall Street Journal editorialized on the bill:

Who Wants to Be a Millionaire?

We can’t wait to hear how Members of Congress explain their vote this week for the new $300 billion farm bill. At a time when Americans are squeezed at the grocery store, they will now see more of their taxes flow to the very farmers profiting from these high food prices.

This year farm income is expected to reach an all-time high of $92.3 billion, an increase of 56% in two years, making growers perhaps the most undeserving welfare recipients in American history. But that won’t stop this bill from passing the House and Senate by wide margins. Speaker Nancy Pelosi was once a farm subsidy skeptic, but she now has some 30 freshman Democrats from battleground rural districts to protect. So more than $10 billion a year in giveaways to agribusiness is a necessary taxpayer sacrifice to keep her majority.

Ms. Pelosi calls the bill “real reform,” which is like calling Lindsay Lohan born again. For example: The bill perpetuates the so-called Hurricane Katrina gambit that allows farmers to lock in price-support payments at the lowest possible market price, and then sell their crops later at the highest possible price, and then pocket the high price and a payment from the government for the difference between the two. They in effect get paid twice for the same bushel of wheat.

A bigger scam is the new income limit to qualify for subsidies. Mr. Bush sought a $200,000 annual income cap, but Congress can’t bring itself to go below $750,000. Even that is a farce, because it doesn’t include loan programs and disaster payments, and it allows spouses to qualify for payments too. The White House and liberal reformers calculate that farm owners with clever accountants can have incomes of up to $2.5 million and still get a taxpayer handout.

Several weeks ago, Senate Agriculture Chairman Tom Harkin was asked by the Des Moines Register how many farmers in Iowa would be excluded under the new income cap. His answer: “two or three.” On tax policy Mr. Harkin and his fellow Democrats talk endlessly about soaking the rich, but on farm policy they favor soaking the middle class to pay the rich.

Nearly every crop — corn, wheat, sugar — has won increases in subsidy payments even as farm commodity prices explode. Of the 17 most subsidized commodities, only rice and cotton will get a slight reduction in payments, while the bill extends the farm welfare net to lentils, chick peas, fruits and vegetables, and even organic foods. There are new programs for Kentucky horse breeders and Pacific Coast salmon fishermen, and your tax dollars will help finance the dairy industry’s “Got Milk?” campaign. Oh, and you still don’t even have to farm to cash in. Hundreds of millions of dollars will go to landowners based on their “historical planting average” even if they haven’t planted a seed in years.

And once again, the big sugar plantation owners in Florida walk away with the sweetest deal: Big Sugar bagged an increase in price supports and a guarantee of 85% of the domestic sugar market at these guaranteed prices. So taxpayers are on the hook for buying surplus domestically produced sugar at 23 cents a pound and selling it for ethanol for closer to three cents a pound.

If you wonder why urban Democrats would vote for this rural giveaway, the answer is they have been bought off with roughly $10 billion in extra funding for food stamps and nutrition welfare programs. Someone should tell them that their constituents might not need this cash if the farm bill didn’t help keep food prices high. And let’s not forget the Blue Dog Democrats who are supposed to be spending hawks. The farm bill busts the budget caps by at least $10 billion, but the Blue Dogs get $5.9 billion in handouts for their districts. So they will put their fiscal sermonizing on hold and vote “aye.”

Mr. Bush is promising a veto, to his credit, but the White House expects even many Republicans to vote to override. The House GOP swears it has learned its spending lesson after 2006. Yet House Minority Leader John Boehner, who opposes the bill himself, isn’t rallying GOP opposition. Perhaps there are too many Republicans who crave the handouts too.

Meanwhile, John McCain says “I would veto that bill” and will vote against it in the Senate. Strangely silent is Barack Obama. A major theme of his campaign is to battle corporate special interests in Washington on behalf of the “middle class.” Here is one of his first tests, and it’ll be fascinating to see if he sides with the well-funded commodity lobby over consumers and taxpayers.

In this election year, both parties are fighting to win the farm vote. But even in Chicago and New Jersey, it doesn’t cost $300 billion to buy an election.

With President Bush poised to veto the bill, the bill can only become law with Republican votes to override the veto. That looks very possible.

Losses in elections are not necessarily bad for parties. They cause introspection, and politics is so often a case where intellectual outgo is non-stop, whereas a chance to read, think and recharge the intellectual batteries is very rare.

A very high percentage of the lobbyists and trade association CEOs who worked on this bill, as well as a very high percentage of the Republicans who will vote to override the President’s veto, are self-professed conservative Republicans.

If this is the type of law that can be expected to come out of such a coalition, it is not surprising that many conservative Republican voters seem unmotivated this election cycle.

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