by Marion Nestle

Currently browsing posts about: Farm-policy

Apr 16 2012

The exceedingly strange world of federal crop insurance subsidies

According to an account in last week’s New York Times, the federal government could save about $1 billion a year by reducing the subsidies it pays to large farmers to cover much of the cost of their crop insurance.  Crop insurance subsidies are expected to cost $39 billion from 2012 to 2016, or about $7.8 billion a year.

The Times based this statement on a new report from the Government Accountability Office.  This report explains that the billion-a-year savings would occur if the government applied the same limits to subsidies for crop insurance as it applies to other farm support programs.

The report raised the prospect of the government’s capping the amount that farmers receive at $40,000 a year, much as the government caps payments in other farm programs. Any move to limit the subsidy, however, is likely to be opposed by rural lawmakers, who say the program provides a safety net for agriculture.

Get this:

Under the federal crop insurance program, farmers can buy insurance policies that cover poor yields, declines in prices or both. The insurance is obtained through private companies, but the federal government pays about 62 percent of the premiums, plus administrative expenses.

And that’s not all.  The Environmental Working Group says many of the crop insurers are foreign companies.

Twenty insurance companies in Bermuda, Japan, Switzerland, Australia, Canada and the U.S. were paid $7.1 billion in U.S. taxpayer funds from 2007 to 2011 to sell American farmers crop insurance policies, an Environmental Working Group analysis shows. The U.S. Department of Agriculture’s Risk Management Agency paid these companies for administrative and operating expenses for the federally subsidized crop insurance program.

We talked about crop insurance subsidies in the class on the farm bill that I taught at NYU last fall.   My class thought all of us should immediately go into the crop insurance business.  The government pays most of the premiums and administrative expenses and also covers most of the risk.  This is a really good deal for Big Ag and the lucky few insurance companies.

You find this difficult to believe?  Take a look at two of the readings for the course:

Shields DA.  Federal crop insurance: background and issues.  Congressional Research Service, December 13, 2010.

Insurance policies are sold and completely serviced through 16 approved private insurance companies. Independent insurance agents are paid sales commissions by the companies. The insurance companies’ losses are reinsured by USDA, and their administrative and operating costs are reimbursed by the federal government.

Smith VH.  Premium payments: why crop insurance costs too much.  American Enterprise Institute, 2011.

Since 2007, government subsidies for crop insurance have averaged about $5.6 billion per year, representing over one-third of total expenditures on income transfers and other government payments for programs targeted directly to farmers.

However, about 58 percent of those expenditures have ended up in the hands of agricultural insurance companies and agricultural insurance agents.

In fact, since 2005, on average, the agricultural insurance industry has received $1.44 for every dollar farmers have received in crop insurance subsidies.

No wonder Big Ag wants crop insurance subsidies continued.

Will the 2012 farm bill fix this?  I’m not optimistic but will stay tuned.

Jan 3 2012

Musing about organics leads me to the Farm Bill

Sales of organic foods continue to increase at a faster pace than sales of conventional foods.  This alone makes people suspicious of the organic enterprise.

Another reason is confusion about what organic production methods are, exactly.  If you are part of the food movement, you probably want your foods to be organic, local, seasonal, and sustainable.  You might also want them produced by farm workers who have decent wages and living conditions.

Unfortunately, these things do not necessarily go together.

  • Organic means crops grown without artificial pesticides, fertilizers, GMOs, irradiation, or sewage sludge, and animals raised without hormones or antibiotics.  Certified Organic methods follow specific rules established by USDA.
  • Local means foods grown or raised within a given radius that can range from a few to hundreds of miles (you have to ask).
  • Seasonal refers to food plants eaten when they are ripe (and not preserved or transported from where they were grown).
  • Sustainable means—at least by some definitions—that the nutrients removed from the soil by growing plants are replenished without artificial inputs.

That these are different is illustrated by a recent article in the New York Times about industrial organic production in Mexico.  The story makes it clear that organics do not have to be local, seasonal, sustainable, or produced by well paid workers.

While the original organic ideal was to eat only local, seasonal produce, shoppers who buy their organics at supermarkets, from Whole Foods to Walmart, expect to find tomatoes in December and are very sensitive to price. Both factors stoke the demand for imports.

Few areas in the United States can farm organic produce in the winter without resorting to energy-guzzling hothouses. In addition, American labor costs are high. Day laborers who come to pick tomatoes in this part of Baja make about $10 a day, nearly twice the local minimum wage. Tomato pickers in Florida may earn $80 a day in high season.

The cost issues are critical.  Dairy farms in general, and organic dairy farms in particular, are entirely dependent on the cost of feed for their animals, and the cost of organic feed has become almost prohibitively expensive.  This has caused organic dairy producers to cut back on production or go out of business.  As another New York Times article explains,

The main reason for the shortage is that the cost of organic grain and hay to feed cows has gone up sharply while the price that farmers receive for their milk has not.

While the shortage may be frustrating for consumers, it reveals a bitter truth for organic dairy farmers, who say they simply need to be paid more for their milk.

Why is the price of feed rising?  Simple answer: because 40% of feed corn grown in the United States is being used to produce biofuels.

Why do farmers grow corn for biofuels?  Because the government gives them tax credits and other subsidies to do so.

But in a small step in the right direction, the ethanol tax credit program was allowed to expire last week,”ending an era in which the federal government provided more than $20 billion in subsidies for use of the product.”

One person quoted in the article connected the dots:

Production of ethanol, with its use of pesticides and fertilizer and heavy industrial machinery, causes soil erosion and air and water pollution. And it means that less land is available for growing food, so food prices go up.

Organics do not exist in isolation.  Their production is connected to every other aspect of the food system.

Wouldn’t it be nice to have a food system that promoted organic, local, seasonal, sustainable agriculture and paid farm workers a living wage?

Wouldn’t it be nice if the 2012 Farm Bill supported that kind of a food system if not instead of than at least along side of the one we have now?

I will be watching to see what Congress does with the Farm Bill.  Stay tuned.

Dec 11 2011

The farm bill hackathon: results and a plea for more

Grist and Food and Tech Connect have excellent reports on last week’s Farm Bill Hackathon.  This event brought together farm bill experts and designers to try to produce materials that make farm bill issues accessible.

The terrific winning entry: A Clean Farm Bill of Health slideshow illustrating the contradiction between USDA dietary advice policy and that for farm supports.

I could not participate in the Hackathon but having just taught a class on the farm bill I know what I’d like to have: a complete text of the farm bill annotated to include all of the relevant information.

The 663-page 2008 farm bill is readily accessible online, but it is unreadable (by me at least).   This is because it refers to previous bills and other Acts of Congress, which in turn refer to previous bills and Acts, in some cases going back to 1933.

You don’t believe me?  Try this entirely typical section, chosen at random:

Section 502(b) of the Federal Crop Insurance Act (7 U.S.C.
1502(b)) is amended—
(1) by redesignating paragraphs (7) and (8) as paragraphs
(8) and (9), respectively; and
(2) by inserting after paragraph (6) the following:
‘‘(7) ORGANIC CROP.—The term ‘organic crop’ means an
agricultural commodity that is organically produced consistent
with section 2103 of the Organic Foods Production Act of 1990
(7 U.S.C. 6502).’’.

It would be so nice to have a text that gives the relevant information in one place: what the Federal Crop Insurance Act says, what paragraphs 7 and 8 are all about, and what’s in section 2103 of the 1990 Act.

Hackers: anyone want to take this on?

Dec 4 2011

Farm bill needs a major overhaul

My monthly (first Sunday) Food Matters column in the San Francisco Chronicle:

Q: What’s going on with the farm bill? Any chance for improving it?

A: I wish your question had an easier answer. The farm bill has to be American special-interest politics at its worst.

As Stacy Finz has been reporting in the main news and Business sections of The Chronicle, the failure of the recent super-deficit reduction plan also brought an end to a secret committee process for writing a new farm bill. Now Congress must follow its usual legislative procedures. The farm bill is again open for debate.

Advocacy is much in order. The farm bill is so enormous, covers so many programs, costs so much money and is so deeply irrational that no one brain – certainly not mine – can make sense of the whole thing.

It is all trees, no forest. The current bill, passed in 2008, is 663 pages of mind-numbing details about programs – hundreds of them – each with its own constituency and lobbyists.

The farm bill was designed originally to protect farmers against weather and other risks. But it grew piecemeal to include programs dealing with matters such as conservation, forestry, biofuels, organic production and international food aid.

The most controversial programs cover food commodities – corn, soybeans, wheat, rice, cotton, sugar and dairy – but lesser-known provisions support smaller industries such as honey or Hass avocados.

The elephant in the farm bill is SNAP, the Supplemental Nutrition Assistance Program (formerly food stamps). Fully 80 percent or more of farm bill expenditures go for SNAP.

This year, SNAP costs ran about $6 billion a month, and they are rising in today’s depressed economy. In contrast, commodity subsidies cost “only” about $8 billion a year. Crop insurance adds $4.5 billion, and conservation about $5 billion. Everything else runs in the millions, not billions, mere nothings in comparison to SNAP’s $70 billion 2011 expenditures.

SNAP judgements

What, you might ask, is SNAP doing in the farm bill? Think: logrolling.

Members of Congress who represent farm states need urban votes to pass subsidies. Urban members need farm votes to protect SNAP. This deal works, and both sides like the unsavory system just as it is.

As for irrationality: At a time when preventing obesity heads the public health agenda and reducing greenhouse gases is an international priority, the farm bill firmly protects the status quo.

It promotes production of commodities, but does little to link agricultural policy to policies that promote health or environmental protection. Although the Dietary Guidelines and MyPlate strongly promote consumption of fruits and vegetables, the farm bill inconsistently considers these foods as horticulture or specialty crops that do not merit subsidies or government-supported insurance. Indeed, many farm bill provisions discourage production of fruits and vegetables.

Overall, the farm bill must be seen as an inequitable means to protect the income of the largest and richest industrial producers of food commodities. It has little to do with serious efforts to protect conservation of natural resources, support rural communities or promote sustainable farming practices that maintain soil quality and mitigate climate change. Nor does it address the real needs of low-income communities.

The current bill favors large farms over small ones, intensive rather than sustainable production methods, and some states and regions over others. It actively promotes risk-taking; the government covers the costs.

It ignores food safety. It promotes production of inefficient biofuels. It does nothing to promote sustainable farming practices in this or any other country. And because it rewards farmers for overproducing commodities, it gets the United States in trouble with international trading partners.

Worst of all, the bill is inherently undemocratic. It is so opaque that nobody in Congress or anywhere else can possibly grasp its entirety. Its size and complexity make it especially vulnerable to influence by lobbyists for special interests and by the corporations most generous with campaign contributions.

Pro and con arguments

Its defenders argue that the present system works pretty well in ensuring productivity, global competitiveness and food security. Tinkering with it, they claim, will not make much difference and could do harm.

I disagree. It needs more than tinkering. Americans need farm policy to be brought into line with health and climate-change policy, and now is our chance.

Those of us who believe that food systems should be healthier for people and the planet have been handed an opportunity to rethink farm bill programs and to make the processes for its development more democratic.

Groups such as the Environmental Working Group ( and National Sustainable Agriculture Coalition ( have been hard at work on these issues. Join them, speak up, and get busy.

This article appeared on page G – 4 of the San Francisco Chronicle

Nov 28 2011

On the demise of the secret farm bill

Stephen Clapp, reporting Friday in Food Chemical News (subscription required, alas), had this to say about Congress’s failure to create and pass a farm bill in secret and without debate (see previous post):

The agriculture committees will now try to achieve an unprecedented feat — passing a Farm Bill in an election year. Even in the best of times, passing a Farm Bill is like “passing a kidney stone,” quipped Sen. Tom Harkin (D-Iowa) in 2008.

Nov 22 2011

The farm bill: now what?

After the budget SuperCommittee failed to reach an agreement yesterday, Rep. Frank Lucas, Chairman of the House Agriculture Committee, and Sen. Debbie Stabenow, Chairwoman of the Senate Agriculture Committee issued a joint statement about their proposal for the farm bill:

House and Senate Agriculture Committee leaders developed a bipartisan, bicameral proposal for the Joint Select Committee on Deficit Reduction that would save $23 billion.

However, the Joint Select Committee’s failure to reach a deal on an overall deficit reduction package effectively ends this effort.

We are pleased we were able to work in a bipartisan way with committee members and agriculture stakeholders to generate sound ideas to cut spending by tens of billions of dollars while maintaining key priorities to grow the country’s agriculture economy.

We will continue the process of reauthorizing the farm bill in the coming months, and will do so with the same bipartisan spirit that has historically defined the work of our committees.

With their proposal to cut $23 billion from the farm bill over 10 years (~$2.3 billion per year) blown out of the water (see yesterday’s post), the big question is what happens next.

Philip Brasher, who follows such things closely, writes in the Des Moines Register that the existing farm programs expire in two years.  The point of trying to hide the farm bill in the SuperCommittee was to protect farm subsidies from attack on the House or Senate floor:

Critics of using the supercommittee process to write farm policy saw it as an end run by the agribusiness lobby to guarantee growers a continued stream of federal money with as few strings attached as possible.

Now everything starts from scratch:

The conventional legislative process for writing a new farm would include public meetings and votes in committee and on the House and Senate floor. But that’s a long, difficult process for a major bill to navigate even in a year when little else is going on, and 2012 will be a presidential election year.

….Also up in the air is how much agriculture spending will be cut. The debt-reduction committee’s failure to reach a deal is supposed to trigger about $1 trillion in automatic cuts, including a $15 billion reduction in agricultural programs over a 10-year-period.

The agriculture committees had been crafting their farm bill to cut $23 billion, and now that the supercommittee has deadlocked corn growers lobbyist Sam Willett says that the eventual spending cut could wind up higher than that.

“The new starting point is $23 billion, not $15 billion,” he said.

Chris Clayton, writing for the Progressive Farmer, gives some of the juicier gossip about what led to this point.   He quotes  Senate Agriculture Ranking Member Pat Roberts, R-Kansas, complaining that even he had been left out of the loop:

In recent weeks, the chairs of the House and Senate Agriculture Committees have worked on a farm fill proposal, largely without my input and the input of the other members of the two committees. The last proposal was so ‘secret’ that I still have not seen final legislative language and scores.

If you thought the process was nasty up until now, I’m guessing what comes next will be worse.  Lobbyists for every piece of the farm bill will be working even harder to protect their employers from budget cuts.

The big ticket items are, in order, food stamps, commodity supports (including crop insurance), and conservation.  The fights will not be pretty, especially in a Congress that seems to care much more about who’s in power than about creating a healthy, sustainable agricultural system.

Additions, November 23: The National Sustainable Agriculture Coalition (NASC) has produced two analyses of the situation with the farm bill.  Part One reviews what has just happened and what it may mean (short answer: up in the air).  Part Two provides NASC’s analysis of the leaked bill proposed by the secret committee (the actual proposal has not yet been released).

Nov 21 2011

Budget talks fail: what’s happening with the farm bill?

As of this morning, it looks like the SuperCommittee process has failed.  This committee was supposed to recommend specific budget cuts by tonight.  If it fails, automatic budget cuts, half to the military, go into effect in January 2013—after the 2012 election.

What does this mean for the farm bill?

The chairs and vice-chairs of the House and Senate agriculture committee have been meeting in secret—from the rest of the agriculture committee members as well as from the public—to recommend how to cut $23 billion from agriculture appropriations.

On Friday, the Environmental Working Group obtained a leaked copy of the secret recommendations.

These recommendations, rumored to be not quite final, were to go to the SuperCommittee today.  Now what?

I’m guessing the farm bill is up for grabs and will now have to go through the usual legislative processes.  This could be good or bad, depending on the politics.

In the meantime, I counted 97 recommendations in the secret committee’s report.  A few of the most interesting:


  • Eliminate direct payments, counter-cyclical payments, average crop revenue election, and supplemental revenue assistance payments to create $15 billion in savings.
  • Expand crop insurance for “underserved” crops, including fruits and vegetables.
  • Create a special program to protect cotton producers.
  • Protect commodity producers against both price and yield losses.
  • Restrict benefits to farmers who make less than $950,000 per year (adjusted gross), or twice that for couples.
  • Set payment limits of $105,000 per producer, or twice that for couples.
  • Do something complicated with dairy by replacing two programs with two others.


  • Cut the budget by an unspecified amount (continuing a long tradition of cutting conservation).
  • Reduce reserve acres from 32 million to 25 million over 10 years.


  • Cut SNAP (food stamp) benefits by about $4 billion a year, by eliminating automatic enrollment for anyone who gets energy benefits.
  • Require retailers to stock more fruits and vegetables.
  • Give USDA the authority to require documented need for states to allow SNAP benefits to be used in restaurants by the disabled and homeless.
  • Give USDA $5 million per year to prevent trafficking of benefits.
  • Require USDA to set rules to prevent lottery winners from getting SNAP benefits (what is this about?).
  • Grant $10 million to encourage whole grains in school meals.
  • Grant $20 million a year for incentives for SNAP recipients to buy fruits and vegetables.

“Specialty” crops (translation: fruits and vegetables)

  • Fund promotion program for farmers’ markets at $20 million a year
  • Give USDA $5 million to collect data on organics
  • Provide $61 million a year for programs to prevent agricultural pests
  • Give $70 million a year for grants to states to promote specialty crops
  • Allot $15 million a year to run the National Organic Program
  • Provide $40 million a year for specialty crop research.
  • Provide up to 75% of the cost of organic certification (maximum $750).

As in the past, SNAP takes up about 80% of the total farm bill budget, with the remainder going mainly to commodity support and insurance programs.

As always, large agricultural producers get most of the support money—$ billions—but this plan throws a handful of small benefits ($ millions) to help fruit-and-vegetable growers.

How any of this might work in practice is unclear, as is what happens next.  A whole new opportunity for lobbying, perhaps.  Stay tuned.

Sep 23 2011

Weekend reading: food politics reports

The U.S. Public Interest Group (USPIRG) has a new report out on the effects of farm subsidies on obesity: Apples to Twinkies: Comparing Federal Subsidies of Fresh Produce and Junk Food.  If you want people to eat more fruits and vegetables and less junk food, fixing the subsidy patterns might be a good place to begin.

New England Complex Systems Institute (whatever that might be) has an interesting explanation of the recent rise in world food prices: The Food Crises: A Quantitative Model of Food Prices Including Speculators and Ethanol Conversion.
The authors’ explanation: commodity speculation and growing corn for ethanol fully account for the rise in prices.  The remedy seems obvious, no?

The Robert Wood Johnson Foundation has just funded a report on the soft drink industry from the National Policy & Legal Analysis Network to Prevent Childhood Obesity (NPLAN), a project of Public Health Law & Policy (PHLP): Breaking Down the Chain: A Guide to the Soft Drink Industry.  This is about the industry itself, but also what it is doing to market its products here, there, and everywhere.  This is required reading for anyone interested in public health measures to reduce consumption of sugary drinks.

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