saey ne by reducing he number o acres ha armers were required o leave unplaned. I also sared o phase ou he crop-reserve purchase program. This boh brough new acreage ino producion and allowed excess socks o ener he marke, which increased supply and lowered prices paid o armers. These changes were sold o he arm communiy wih promises ha he excess supply would go o hungry expor markes around he world. Bu he promised increase in earnings rom expor prois, based only on heory and no evidence, never maerialized — armers jus los money.
The End of Reserves
The 1996 Farm Bill signiicanly changed U.S. agriculural policy and compleed many o he ree-marke eﬀors inii-aed in he 1980s. Unil 1996, he ederal governmen made emergency “deiciency” paymens o producers o whea, eed grains, coton and rice o make up he diﬀerence i seesaw-ing marke prices ell below arge prices se in he Farm Bill. The 1996 Farm Bill capped his spending or he irs ime, guaraneeing armers a series o ixed bu declining paymens ha were no linked o how much hey were growing.
The 1996 Farm Bill also abolished he naional sysem o holding grain in reserve.Insead o buying or selling grain in reserves o sabilize naional supply, he ederal governmen paid armers direcly wih ixed paymens based on heir hisoric producion o speciied commodiy crops — bu no heir producion ha year. There was no mechanism in place o preven armers rom planing as much as hey could, and prices ell accord-ingly. Farmers harvesed 7.5 million more acres o corn and 7.6 million more acres o soybeans in 1997 han in 1995.
As a resul o his drasic increase in producion, crop prices plunged. By 1999, he real price o corn was 50.0 percen below 1996 levels, and he soybean price was down 40.9 percen.
By he 2002 Farm Bill, i was clear ha hese ixed bu declining paymens weren’ enough — armers could no make a living based solely on he marke. Congress resored a more expensive and weaker arm saey ne paymen sysem o provide some proecion rom crashing prices.
As or he whea held in reserves, i was ranserred o a humaniarian ood bank and global chariies under he governance o he U.S. Deparmen o Agriculure. Because i was no longer buying armers’ surplus crops, he reserve was gradually depleed unil 2008.
Figure 1 ells he sory: in conras o he promises made in he 1980s and 90s, agriculure markes do no sel-correc. As corn prices have coninued o plumme in he las 20 years, armers are sill producing roughly he same acreage in hopes o greaer reurn.
They hope o make up or he low price or each bushel by selling more bushels. Wihou incenives o ollow land se-aside programs or use sraegic grain reserves, mos armers won’ decide on heir own o limi heir produc-ion in order o correc a marke ha hey don’ conrol.
Agriculural Adjusmen Ac o 1933 creaes he Commodiy Credi Corporaion (CCC), which ses minimum prices ha processors and oher buyers mus pay or commodiy crops. Volun-ary acreage reducion programs discourage armers rom overproducing.
Agriculural Ac o 1954 auhorizes a CCC-run grain reserve or oreign and domesic ood securiy.
Food and Agriculural Ac o 1965 auhorizes a long-erm diversion o acreage o reduce over-producion.
Food and Agriculural Ac o 1977 esablishes a armer-owned reserve or grain.
Food Securiy Ac o 1985 eliminaes he CCC grain reserve.
Federal Agriculure Improvemen and Re-orm Ac o 1996 marks he inal shif oward “marke-oriened” arm policy. I eliminaes acreage reducion programs and armer-owned grain reserves, and inroduces direc paymens o armers as a diﬀeren kind o “saey ne” ha allows marke prices o say very low. Mar-ke prices or corn and soybeans drop by nearly hal by 1999.
Farm Securiy and Rural Invesmen Ac o 2002 makes direc paymens permanen.
Agriculural Ac o 2014 ends direc paymens and emphasizes subsidized crop insurance as he primary saey ne.
SOURCE: Food & Water Watch analysis of National Agricultural Statistics data; price index calculated on real 2010 dollars.
Figure 1: Indexed Corn Price and Acreage
(1995 = 100)
Corn Harvested AcresCorn Real Price Received1401201008060402001990199520002005