Government Policy

America's government farm policy is changing dramatically. After 60 years of programs which were originally designed to provide emergency aid during the Depression, President Clinton recently signed into law the Federal Agricultural Improvement and Reform Act of 1996 This reform will effectively remove the government from decisions made in farming. The potential effects of this new system on family farming, and agriculture in general, are being widely debated and are fairly unclear at the moment. To understand this issue, it is necessary to first understand the nature of the programs being supplanted. The most recent bill is the 1990 farm bill. Former programs administered by the USDA through the Farm Services Agency, were characterized by five major components:

Crop Insurance
Commodity Prgram
Farm Loans
Commodity Purchase and Donation
Conservation Programs

These components were designed to work together to provide a system of maintaining a safe and affordable food supply for the American consumer, while also keeping prices reasonable and consistent for farmers. They did this by providing income supports when market prices fell below basic costs of production. Although supplying some degree of stability, this system created many problems. First, farmers did not like this type of government intervention. Also, many economists argued that these programs created market inefficiencies by keeping prices artificially low. It also worked against the family farmer, in many cases, because it tended to discourage diversification and crop rotation. Instead it provided disproportionate benefits to large-scale agriculture. The Federal Agricultural Improvement and Reform Act of 1996 will eliminate many of the former system's problems, yet will certainly present new challenges for the family farmer.

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