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Farm-Policy Pendulum Swinging Toward Free Market: Study

June 28, 1989

WASHINGTON (AP) _ The nation’s 60-year-old farm-policy pendulum is swinging away from reliance on government toward the free market, according to a private study released Wednesday.

″The evolution of agricultural policy toward less government intervention and control is a very positive trend, based on fundamental economic and social changes,″ the report said.

″Agriculture today is very different than it was in the 1930s when most of our current programs were designed.″

The study, released by Washington consultants Lesher, Russell and Moos for the Agricultural Policy Working Group, said agriculture is ″a much more integral part of the national economy″ today than 60 years ago.

Farms also are more similar to other businesses across the nation than those of half a century ago, the study said.

Farm law passed in 1985 expires next year, and Congress has begun preliminary work on a 1990 bill.

Although the current law - the Food Security Act of 1985 - is noted for its major commodity programs and their various price-support mechanisms, it also ranges widely, with programs for food stamps, nutrition, conservation, trade, credit, research and many other functions.

The study concentrates on the crop programs, including wheat, feed grains, cotton and soybeans, and their effect on the nation’s economy.

Officials of the consulting company include Bill Lesher and Randy Russell, senior economists in the Agriculture Department in the early Reagan years and chief architects of the 1985 farm legislation. Gene Moos is a former agricultural aide to Rep. Tom Foley, D-Wash., now House speaker.

Members of the sponsoring group are major companies deeply involved in agriculturally related enterprises - Cargill Inc., Central Soya Company Inc., Louis Dreyfus Corp., IMC Fertilizer Group Inc., Monsanto Co., Nabisco Brands Inc., and Norfolk Southern Corp.

The study was done by Government Research Corp., part of the public relations firm Hill and Knowlton, and Economic Perspectives Inc. of McLean, Va., since last fall part of Sparks Commodities Inc. of Memphis, Tenn.

One course, the study said, would be for Congress to extend current farm law, which ″is regarded to have worked well.″ But tacking on another five years ″would produce a stagnant sector, severely limited by sluggish market growth.″

Another option calling for ″planting flexibility″ would retain the basic structure of the 1985 farm law but without specific crop acreage bases. Instead, the acreage bases for such crops as wheat, corn and cotton - plus the acreage typically planted to soybeans - would be combined into a single farm base.

Acreage idling programs would still be used to control production, but the set-asides would be from the whole farm base, not specific crop bases.

The flexibility option over five years would result in smaller annual carryover supplies, or surpluses, ″faster market growth and somewhat higher incomes″ for farmers,″ the report said.

A third option would be another form of decoupling, which would continue historical federal income supports to farmers, but without annual requirements for idling specific crop acreages. Farmers would be free to plant what they choose.

The report said decoupling would require ″a transition period, during which prices and sales receipts would decline,″ but that declining farm income could be avoided by making federal income support payments larger in the early years.

″Following about two years of adjustment, increased market gowth would bring price recovery and higher incomes as well,″ the report said.

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