Update

Update

Congress again considers “green” payments to farmers

In the Spring 1995 Issues, I argued that it was “Time to Green U.S. Farm Policy.” A new comprehensive package of federal farm legislation was then being developed. Both the farm and the general economies were strong, and many Americans were seeking environmental enhancements, particularly in agriculture. What could have been better under those circumstances than decoupling farm support from commodity production and tying it instead to payments that would reward farmers for environmental stewardship?

The bill that was approved, the Federal Agriculture Improvement and Reform (FAIR) Act of 1996, accomplished only half the task–the decoupling part. It radically changed the approach for making direct payments to farmers. It eliminated target prices for crops; discontinued payments to farmers based on differences between target and market prices; and ceased production-adjustment programs, thus revoking several policies perceived to discourage environmentally responsible farming. As a transition toward more reliance on market forces, the act established a payment schedule to farmers who had been receiving these government interventions, with levels declining over a seven-year period.

The FAIR Act made marginal adjustments to agricultural conservation programs but did not take the extra step of rewarding farmers who practice environmentally responsible farming with payments that would also, in part, undergird their ability to remain in farming. Apparently, 1996 was not the time to green farm policy after all.

Since that time, optimistic predictions about the act’s performance have been broadsided by a downturn in the farm economy. With low farm prices, government payments to farmers have increased rather than decreased in recent years, enabled by “emergency payments” that were neither green nor brown in hue.

As we contemplate the next farm bill, low commodity prices continue. This time, however, the concept of green payments is more than just an idea. It has champions in Congress and appears in the policy platforms of a range of agricultural interest groups. Companion bills with bipartisan support were introduced in the House and Senate during the 106th Congress and are expected to be reintroduced in this session. The proposals in the Senate bill, called the Conservation Security Act (CSA) by its chief sponsor, Sen. Tom Harkin (D-Iowa), provide a far broader basis than ever before to reward farmers for environmental stewardship.

The CSA would be a voluntary program. Participants would indicate the set of conservation and environmental enhancement practices they presently use and those that they would implement under a “conservation security contract.” Each contract would fall under one of three tiers of conservation practices, and annual payments would be based in part on the tiers implemented. For example, tier one could involve addressing one resource of concern for the farming operation, whereas tier two would require multiple problems to be addressed, and tier three would require that a whole farm plan be implemented.

Several features most clearly distinguish a CSA-like program from former federal conservation programs. It would provide monetary rewards to farmers who already practice conservation at a specified tier as well as those who adopt additional conservation practices. It covers a more expansive range of conservation and environmental needs, allowing the opportunity for site-specific customization of plans. And it can accomplish, whether as an explicit goal or not, income transfers to farmers. This last feature results from the proposal’s flexibility in permitting farmers to receive payments for practices they already use or would have to adopt in order to meet regulatory requirements in any case. It would be further strengthened if, as the bill proposes, the amount of the payments were a function of the value of the environmental benefit gained, instead of just the cost of obtaining it.

Whether our next farm bill adopts this new legislative approach is yet to be seen. Even if adopted, the approach could succeed or fail on the basis of myriad implementation details that would need to be specified. Still, we seem a lot closer to greening farm policy now than in 1995.

KATHERINE R. SMITH