KNOXVILLE, Tenn. — Low crop prices and meager farm incomes are challenging the arguments made for the federal 1996 Farm Bill, a University of Tennessee farm policy analyst said Friday.
Dr. Daryll Ray, who holds UT’s Blasingame Chair of Excellence, said a gradual 20-year rollback of farm programs and trade rules, culminating in the 1996 Farm Bill, have not met farmers’ expectations.
Hurt most are producers of corn, cotton, and wheat, which were previously government controlled program crops, and soybeans, Ray said.
”The intent was to eliminate farm programs and create a free market,” Ray said. ”The free market was supposed to enable farmers to adjust their crop supplies to meet market conditions.”
Instead, the profitability of the four major crops is at or near 20-year lows, Ray said.
”Many farms in various parts of the country are hard-pressed to meet their costs,” Ray said. ”They would not make it if they paid rent for their land.”
Although farmers now can switch from one crop to another depending on demand, the change can’t be made fast enough to be effective. And, in some parts of the country, there are no crop alternatives available, Ray said.
Crop exports were expected to increase when federal price supports were removed but that hasn’t happened, Ray said.
”The data clearly show that when prices decline, exports do not increase enough to increase export revenue,” Ray said. ”Exports of our major crops have never been higher than they were in the 1970s and early ’80s when farm programs were in full force and support prices were relatively high.”
Ray was in Washington, D.C., this week to talk with lawmakers about what went wrong. He said that among the lessons to be learned are the following:
— Farmers have every incentive to maximize crop production and the single most important factor in determining crop production is weather, not price. — Domestic and export crop demand fluctuates very little in a given year due to price. Even large price changes have little impact.
— Eliminating government purchases of surplus crops reduces government spending, but resulting market conditions can’t match the stability provided by a surplus buying program.