Counter-Cyclical Farm Safety Nets

Since the 1920's, the federal government has used an array of farm programs to provide a “safety net” for American agriculture. Farm programs have used price supports, disaster payments, income supports, direct payments, and supply management to provide a safety net for particular markets and producers. This array of farm programs has rarely been organized or managed with the sole purpose of providing a minimum income level to farmers. With the exception of set aside programs, the programs have provided incentives for production and the diversification of production through out the continental United States. While the FAIR Act of 1996 has been generously applauded for allowing producers planting flexibility, maintaining export competitiveness through marketing loan programs, and maintaining production, the Act has been criticized for its lack of a sufficient safety net. All crop insurance programs and marketing loan provisions may be considered safety nets. However, the ad hoc passage of emergency relief in each of the last three years 1998-2000 suggests that these programs have not provided sufficient support to program crop agriculture. The safety net issue, therefore, will likely be a major source of debate in crafting the next farm bill. Can the U.S. government reduce the liquidity problem facing major crop agriculture while pressing the popular provisions of the FAIR Act? Developing a whole farm safety net proposal is one alternative being studied