Op-Ed, by Stephanie Mercier
Since the first farm bill, the Agricultural Adjustment Act, was enacted in 1933, there have been nine farm bills passed during the administrations of Republican presidents and nine farm bills enacted under Democratic presidents. The upcoming farm bill, to replace the Agricultural Act of 2014 that expires on October 1, 2018, which is expected to be completed during the next few years during the Administration of President Donald Trump, would break that tie.
The new President has made few comments about farm bill policy during his first year in office, although he did promise to ‘support a farm bill that includes crop insurance’ in a recent speech to farmers attending the 2018 American Farm Bureau Federation convention in Nashville, TN.
At the same event, Secretary of Agriculture Sonny Perdue also promised to release a document spelling out USDA’s farm bill principles to Congress, even though both the House and Senate Agriculture Committees have been gathering stakeholder input for about 11 months through public hearings. That document was released on January 24th, and contains five pages of generalities about farm policy. For example, with respect to crop insurance, the main USDA principle stated was “promote a variety of innovative crop insurance products and changes, enabling farmers to make sound production decisions and to manage operational risk.” In addition, Secretary Perdue called for a “fiscally responsible Farm Bill that reflects the Administration’s budgetary goals.”
The President’s proposal for Fiscal Year 2019 federal spending was released on February 12th, which gives us a better idea of what both the President and Secretary meant about ‘supporting crop insurance’. It proposes to cut more than $30 billion over the next 10 years from crop insurance and disaster assistance programs alone, and more than $51 billion over the same period from a range of commodity, crop insurance, conservation, and rural development programs that serve farmers.
Perhaps the past performances of Republican presidents with respect to farm bills can provide some insights on this matter. Over the history of U.S. farm policy, there have been five farm bills that were vetoed by the President who was in office at the time. Four of those veto decisions were made by Republican presidents–by Calvin Coolidge, of the initial efforts to establish farm price supports called the McNary-Haugen bill, in both 1927 and 1928, by Dwight Eisenhower, in 1956, and by George W. Bush, twice in 2008 (because of a clerical error that sent the original text of the legislation missing one title to the White House), although the Bush vetoes were both overridden. The fifth veto was by Democratic President Bill Clinton of a budget reconciliation bill in 1995 that included a farm bill, although he did sign the nearly identical farm bill several months later when it was presented as a stand-alone bill in 1996.
Republican presidents were also in office at the time of the two largest economic shocks to American farmers in our entire history–President Herbert Hoover, during the beginning of both the Great Depression and the Dust Bowl in the late 1920’s, and President Ronald Reagan, during the farm bankruptcy crisis in the mid-1980’s. During the Great Depression and Dust Bowl, the combination of low prices and low crop yields in the Great Plains states caused the average income of a farm household to fall to about one-third of non-farm households. President Hoover declined to provide direct financial assistance to farmers who had been suffering from low income even before the stock market crash of October 1929, although he did support the establishment of a Federal Farm Board in 1930, which provided credit assistance to farmers and helped to strengthen agricultural cooperatives. One of the responses of the Hoover administration to the Great Depression was his decision to sign the Smoot-Hawley bill, which raised U.S. tariffs on a range of agricultural and industrial goods, ostensibly to protect farmers. However, it had the effect of depressing global trade flows and likely slowing the overall U.S. recovery.
In the early to mid-1980’s, a combination of persistent high interest rates and low crop prices due to U.S. overproduction and soft export markets caused U.S. land prices to fall abruptly, forcing tens of thousands of American farmers, who had previously borrowed money to expand their operations, into foreclosure. According to extensive farmland price data collected by Iowa State University since 1950, the average price per acre of Iowa farmland fell from $2,147 in 1981 to $787 in 1986, a decline of 63 percent over a five-year period. We don’t have precise data about the number of farmers who declared bankruptcies during this period, because the U.S. government stopped collecting such information between 1981 and 1986. In March 1985, President Reagan vetoed legislation that would have provided funds for loan guarantees, interest rate-buydowns, and advance payments for farmers struggling to stay afloat. However, the 1985 farm bill that he did sign eight months later–after first threatening to veto it–did include provisions aimed at strengthening the Farm Credit System.
While past performance is not a perfect predictor of future behavior, it is useful to know the historical tendencies of Presidential attitudes of the two major parties towards farm bills and other important farm legislation.