by Lance T. Izumi, Fellow in California Studies
Pacific Research Institute
June 4, 2002

Announcer lead: Time for Perspectives. Lance Izumi says that the 2002 federal farm bill is too expensive and will hurt California agriculture.

During his presidency, Bill Clinton said that the era of big government was over. Evidently, someone forgot to tell that to President Bush when he recently signed the 2002 federal farm bill.

The whopping $190 billion package will add more than $80 billion to the current high level of government farm subsidies. More tax dollars will be funneled into a system where three-quarters of farm subsidies go to just 10 percent of the nation’s farms, most of which are owned by well-off corporations and individuals.

Unfortunately, increased government spending will only make farm problems worse. For instance, crop surpluses drive down crop prices, which hurts farmers. However, federal subsidies increase as farmers plant more crops. Crop surpluses thus become even bigger, driving prices down further, and increasing the demand for even greater subsidies.

The farm bill also makes a difficult international trade situation worse. Foreign protectionism keeps out exports from the U.S. By increasing subsidies to American farmers, foreign countries will not be in a mood to tear down their trade barriers. Senator Pat Roberts of farm-belt Kansas opposed the bill saying it increases the risk of foreign retaliation and reduces our leverage in trade negotiations.

California could be especially hard hit by the farm bill’s impact on international trade. California has the nation’s largest agricultural output and exports more than $6.5 billion in farm products. Any reduction in access to foreign markets would cost farmers in our state dearly. The irony is that California, despite its huge farm industry, receives relatively little subsidy money because many of the crops grown here are not part of the subsidy program. Indeed, the fact that most California farmers survive quite well without subsidies demonstrates that government assistance is more a political tool than an economic necessity.

The long-term solution to farm problems is an open international market for agricultural goods. By sabotaging this solution, Congress and the president have not done any favors for farmers or consumers.

With a perspective, I’m Lance Izumi.

Lance Izumi is the Director of Center for School Reform at the California-based Pacific Research Institute for Public Policy. He can be reached via email at lizumi@pacificresearch.org.