By KEVIN WALKER
Michigan Correspondent WASHINGTON, D.C. — For the American Enterprise Institute’s (AEI), it seems safe to say it views farm subsidies as a bad thing.
At last week’s AEI conference on the 2012 farm bill, titled “American Boondoggle,” researchers said their free market-oriented farm policy proposals could get more serious consideration than is typical given the current focus on federal budget constraints.
Several panelists talked about subsidies in the context of conservation and trade policies. Speakers included Tomislav Vukina, a professor of agricultural economics at North Carolina State University; Daniel Sumner, professor of agricultural economics at the University of California-Davis; and Sallie James, a policy analyst at the CATO Institute. Vikuna and Sumner also had related papers posted on the AEI’s website.
Vikuna’s discussion topic was conservation. Although he dealt with several areas having to do with the environment, his overall attitude could be summed up with his comment: “What’s the difference between agriculture and (the) cement (industry)?” Vikuna believes the agriculture sector isn’t regulated enough and, in this regard, should be treated more like other industries that pollute.
He said farmers “should be taxed for the pollution they create” rather than given credits or payments for environmental best practices, or relying on voluntary mechanisms. This approach would cost the least to society as a whole, he stated.
“When polluters must pay for every unit of pollution emitted, it behooves them to reduce emissions,” Vikuna wrote in his paper Conserving Our Future: How to Reform Title II of the Farm Bill. He writes that an alternative to the above approach could be a plan based on marketable pollution permits, similar to the cap-and-trade concept.
“A marketable permit allows polluters to buy and sell the right to pollute. Trading these rights puts a price on the permit, which causes polluters to see polluting as an expensive activity: less pollution means fewer permits need to be bought or more permits can be sold.”
Vikuna described his proposals as moderate, including combining the large land conservation programs together in the short term and, in the long term, regulating the environmental aspects of farming more heavily.
Anita Zurbrugg, Midwest director of American Farmland Trust (AFT), said it’s often a challenge getting people to define just what it is they mean when they say “subsidies.”
“Are they talking about direct payments to farmers – which is what a lot of people mean when they say subsidies – or do they mean one of the land conservation programs?” she asked.
Although the AFT is mainly concerned with policy questions regarding easement purchases so land may be preserved in perpetuity, it has a stated position on certain other subsidy programs.
For example, the AFT proudly states it helped to develop the new Average Crop Revenue Election (ACRE) program along with the National Corn Growers Assoc. It believes ACRE restores the concept that a farm safety net should provide help only when producers are in need after suffering from a loss beyond their control, and it describes ACRE as more market-oriented than other subsidies because a farmer isn’t paid unless he suffers a crop loss.
Vikuna, on the other hand, would replace ACRE and similar programs with a system where payments “would not change in response to changes in enterprise mix or production volumes on the farm and would be completely decoupled from both prices and production.” The companion to this proposal would be a “regulatory scheme based on economic incentives such as taxes or permits.”
The entire AEI panel discussion on conservation as well as trade may be viewed at www.aei.org |
