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April 1996, Volume 2, Number 2

US Changes Farm Policies

Basic US farm policies that support farm incomes by establishing
minimum prices for crops such as corn and wheat were enacted in 1938
and 1949. However, for most of the past 50 years, a farm bill has
established farm policies rather than this basic legislation.

Republicans in Congress tried and failed to eliminate the basic
1938 and 1949 farm legislation, but Congress in March 1996 approved a
seven-year transition Freedom-to-Farm program, without specifying
what will happen in 2003. Under the new farm policy, signed into law
by President Clinton on April 4, 1996, corn, other feed grain,
cotton, rice and wheat farmers will be able to sign up for $36
billion in government payments under seven-year "market transition
contracts" based on their production of these crops between 1990 and

Farmers will not be required to plant certain crops, or idle a
certain percentage of their land in exchange for government payments,
but they may not grow fruits and vegetables on land for which they
are receiving payments unless they have a history of growing produce.

There are about 11 million acres of fruits and vegetables grown in
the US, and almost 200 million acres of crops whose prices
have been supported by federal payments. Record prices for corn,
wheat and other commodities supported by federal programs made these
reforms politically easier.

The Farm Bill includes $90 million to promote US farm commodities
abroad, and makes no changes in the Food Stamp program.

Unless reauthorized before October 1, 1992, farm policy will
revert to the 1949 legislation that offers farmers guaranteed prices
for major crops in exchange for obeying government rules on how much
to plant. Southeastern producers of sugar and peanuts will continue
to be able to participate traditional programs.

There were 8,000 non-family farm corporations in the US in 1992,
and 650,000 family farm corporations, and they accounted for six and
21 percent, respectively, of total farm sales of $163 million.

Bruce Ingersoll, "Congress passes new farm bill that dismantles
subsidy programs after much vote trading," Wall Street Journal, April
1, 1996. Eric Schmitt, "Senate Passes Sweeping Farm Bill," New York
Times, February 8, 1996.

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