United States farm bill

1920s Farmers demanded relief as the agricultural depression grew steadily worse in the mid-1920s, while the rest of the economy flourished. Farmers had a powerful voice in Congress, and demanded federal subsidies, most notably the McNary–Haugen Farm Relief Bill. It was passed but vetoed by President Coolidge. Coolidge instead supported the alternative program of Commerce Secretary Herbert Hoover and Agriculture Secretary William M. Jardine to modernize farming, by bringing in more electricity, more efficient equipment, better seeds and breeds, more rural education, and better business practices. As president (1929–1933), Hoover set up the Federal Farm Board to promote efficiency and assist funding of cooperatives. New Deal When the Great Depression began in 1929, farm prices fell sharply, and exports fell as well. The New Deal started three closely related programs after 1933. The Commodity Credit Corporation (CCC) made 12-month loans of cash against the farmers newly planted crops at a fixed price. If the market price rose higher, the farmer could pay off the loan by selling the crop for a profit. If the market price dropped below the fixed loan price, the farmer would give the harvested crop to the CCC. That would cancel the debt and leave the CCC with a storage issue. In effect CCC set a minimum price for crops such as corn, cotton and wheat. The second program was the Agricultural Adjustment Administration (AAA). It paid farmers to replace part of their cash crops with soil conservation grasses. This hoped to reduce the crop supply on the open market and was intended to artificially inflate prices. The CCC and AAA were permanent. The third program was the temporary Farm Credit Administration (FCA) which refinanced farm mortgages in 1934–1935, at lower interest rates. Farm bills gave financial assistance to farmers who were struggling due to an excess crop supply creating low prices, and also to control and ensure an adequate food supply. The limited benefit to farmers was supposed to outweigh the ongoing hurt to consumers who paid higher food prices. On May 12, 1933, President Franklin D. Roosevelt signed the Agricultural Adjustment Act (AAA) of 1933 into law. The AAA also included a nutrition program for consumers, the precursor to food stamps. The AAA of 1933 was an abrupt change in policy and was designed as an emergency response to the low prices of commodity crops during the Great Depression. The AAA established a primary federal role in limiting the production of certain agricultural crops including wheat, corn, and cotton hoping to reduce supply in order to artificially inflate food crop prices. President Roosevelt's New Deal agriculture focused legislation paid farmers to reduce the number of productive acres on their farms, hoping to limit the supply of commodity crops on the market. This was, however, a voluntary program, meaning farmers were not required to remove farm acres from production if they were not interested in government subsidy. Those who participated tended to remove land from production that was already producing poorly, thereby reducing their yield as little as possible, and ultimately limiting the effectiveness of the Act. Senator Hubert Humphrey, a leading Democrat, in 1953 convinced bipartisan majorities in Congress to use the Commodity Credit Corporation's store of surplus crops as part of American foreign aid. The idea was that needy nations could buy grain with local currencies rather than scarce dollars, thereby exporting American surpluses and become a major part of American foreign trade policy during the Cold War. 1981–1995 Farm programs under the presidency of Ronald Reagan (1981–1989) were not very successful, even as the rest of the economy soared. Federal budget outlays reached $60 billion during his first term, but real farm income declined to its lowest level in postwar years. The price of farmland declined, causing a series of bankruptcies to farmers who had borrowed to buy neighboring acreage, as well as bankruptcies of local banks. Reagan advisor William A. Niskanen concluded: "One can hardly imagine a more disastrous policy outcome." The 1981 farm bill involved only small changes and continued the policy of restricting supply rather than increasing demand. The 1984 budget proposal was designed to cut subsidies rather than reform the system, but Congress rejected it. Instead, Congress continued the same policies in the 1985 farm bill, which Reagan reluctantly signed. The succeeding George H. W. Bush administration (1989–1993) again continued the same policies. Niskanen said: "The U.S. farm program is still a scandal—raising the price of food to the hungry of the world, increasing the burden to U.S. taxpayers, and restricting the output of the world's most productive farmers." 1996 reforms In 1996, the first major structural change was made to the farm bill when Congress decided farm incomes should be determined by free market forces and stopped subsidizing farmland and purchasing extra grain. Instead, the government began requiring farmers to enroll in a crop insurance program in order to receive farm payments. This led to years of the highest farm subsidies in American history. Direct payments also began in the late 1990s as a way to support struggling farmers, regardless of crop output. These payments allowed grain farmers to receive a government check every year based on yields and acreage of the farm as recorded the previous decade. ==Farm bills since 1996==