Recommendations for the Department of Agriculture

Remove the U.S. from any association with U.N. and sustainable-development food production schemes.

Defend American agriculture and advance the critical importance of efficient and innovative food production, especially to advance safe and affordable food.

Stress that ideal policy should remove obstacles imposed on American farmers and individuals across the food supply chain so that they can meet the food needs of Americans.

Clarify the critical importance of efficiency to food affordability, and why a failure to recognize this fact especially hurts low-income households who spend a disproportionate share of after-tax income on food compared to higher-income households.23

To accomplish these objectives, a new Administration should announce its principles through an executive order, the USDA should remove all references to transforming the food system on its web site and other department-disseminated material, and it should expressly and regularly communicate the principles informing the objectives listed above, as well as promote these prin- ciples through legislative efforts. The USDA should also carefully review existing efforts that involve inappropriately imposing its preferred agricultural practices onto farmers.

Proactively Defend Agriculture

From the outset, the next Administration should: Denounce efforts to place ancillary issues like climate change ahead of food productivity and affordability when it comes to agriculture.

Address the Abuse of CCC Discretionary Authority. With the exception of federal crop insurance, the Commodity Credit Corporation (CCC) is generally the means by which agricultural-related farm bill programs are funded. The CCC is a funding mechanism, which, in simple terms, has $30 billion a year at its disposal.24 Section 5 of the Commodity Credit Corporation Charter Act (Charter Act)25 gives the Secretary of Agriculture broad discretionary authority to spend “unused” CCC money. However, in general, past Agriculture Secretaries have not used this power to any meaningful extent. This changed dramatically during the Trump Administration, when this discretionary authority was used to fund $28 billion in “trade aid” to farmers, consisting primarily of the Market Facilitation Program. In 2020, this authority was used for $20.5 billion in food purchases and income subsidies in response to the COVID-19 pandemic.26

At the time, critics warned that this use of the CCC, which in effect created a USDA slush fund, would lead future Administrations to abuse the CCC, such as by pushing climate-change policies.27 Predictably, this is precisely what the Biden Administration has done, using the discretionary authority to create programs out of whole cloth, arguably without statutory authority,28 for what it refers to as climate-smart agricultural practices.29

The merits of the various programs funded through the CCC discretionary authority is not the focus of this discussion. The major problem is that the Secre- tary of Agriculture is empowered to use a slush fund. Billions of dollars are being used for programs that Congress never envisioned or intended.

Concern about this type of abuse is not new. In fact, from 2012 to 2017, Congress expressly limited the Agriculture Secretary’s discretionary spending authority under the Charter Act.30 And this was before the recent massive discretionary CCC spending occurred.

The use of the discretionary power is a separation of powers problem, with Congress abrogating its spending power. This power is ripe for abuse—as could be expected with any slush fund—and it is a possible way to get around the farm bill process to achieve policy goals not secured during the legislative process.

The next Administration should:

Refrain from using section 5 discretionary authority. The USDA can address this abuse on its own by following the lead of most Administrations and not using this discretionary authority.

Promote legislative fixes to address abuse. Ideally, Congress would repeal the Secretary’s discretionary authority under section 5 of the Charter Act. There is no reason to maintain such authority. If Congress needs to spend money to assist farmers, it has legislative tools, including the farm bill and the annual appropriations process, to do so in a timely fashion. While not an ideal solution, Congress could also amend the Charter Act to require prior congressional approval through duly enacted legislation before any money is spent.

At a minimum, Congress should amend the Charter Act to:

Prohibit the CCC from being used to assist parties beyond farmers and ranchers.

Clarify that spending is only to address problems that are temporary in nature and ensure that funding is targeted to address such problems. Tighten the discretion within section 5 and identify ways for improper application of the Charter Act to be challenged in court.

Reform Farm Subsidies

Too often, agricultural policy becomes synonymous with farm subsidy policy. This is unfortunate, because making them synony- mous fails to recognize that agricultural policy covers a wide range of issues, including issues that are outside the proper scope of the USDA, such as environ- mental regulation.

However, there is no question that farm subsidies are an important issue within agricultural policy that should be addressed by any incoming Adminis- tration. There are several principles that even subsidy supporters would likely agree upon, including the need to reduce market distortions. Subsidies should not influence planting decisions, discourage proper risk management and innovation, incentivize planting on environmentally sensitive land, or create barriers to entry for new farmers. Farm subsidies can lead to these market distortions and there- fore, it would hardly be controversial to ensure that any subsidy scheme should be designed to avoid such problems.

The overall goal should be to eliminate subsidy dependence. Despite what might be conventional wisdom, many farmers receive few to no subsidies,31 with most subsidies going to only a handful of commodities. According to the Congres- sional Research Service (CRS), from 2014 to 2016, 94 percent of farm program Limit spending to directly help farmers and ranchers address issues due to unforeseen events not already covered by existing programs and that constitute genuine emergencies that must be addressed immediately.

support went to just six commodities—corn, cotton, peanuts, rice, soybeans, and wheat—that together account for only 28 percent of farm receipts.32 Although many farmers do not receive much in the way of subsidies, especially those in the areas of livestock and specialty crops (fruit, vegetable, and nuts),33 there are still a sig- nificant number of farmers growing row crops like corn and cotton that do receive significant farm subsidies.

The primary subsidy programs include the Agriculture Risk Coverage (ARC) program,34 the Price Loss Coverage (PLC) program,35 and the federal crop insur- ance program.36 Farmers can participate on a crop-by-crop basis in the ARC program or the PLC program. These programs cover about 20 different crops.37 The ARC program protects farmers from what are referred to as “shallow” losses, pro- viding payments when their actual revenues fall below 86 percent of the expected revenues for their crops.38 The PLC program provides payments to farmers when commodity prices fall below a fixed, statutorily established reference price.39 The federal crop insurance program is broader in scope than ARC and PLC, and in crop year 2019 covered 124 commodities.40 Farmers pay a portion of a premium to participate in the program. Taxpayers on average pay about 60 per- cent41 of the premium. As explained by CRS, “Revenue Protection was the most frequently purchased policy type in 2019, accounting for almost 70 [percent] of policies purchased.”42

While there are certainly other subsidy programs besides ARC, PLC, and federal crop insurance, one program that deserves special mention is the federal sugar program. This program, unlike most other subsidy programs, intentionally tries to restrict supply43 and thereby drives up prices. The program costs consumers as much as $3.7 billion a year.44 When it comes to reforming subsidy programs, the next Administration will primarily have to look to legislative solutions. The next Administration should champion legislation that would:

Repeal the federal sugar program. The federal government should not be in the central planning business, and the sugar program is a prime example of harmful central planning. Its very purpose is to limit the sugar supply in order to increase prices. The program has a regressive effect, since lower-income households spend more of their money to meet food needs compared to higher income households.45

Ideally, repeal the ARC and PLC programs. Farmers eligible to participate in ARC or PLC are generally already able to purchase federal crop insurance, policies that protect against shortfalls in expected revenue whether caused by lower prices or smaller harvests. The ARC program is especially egregious because farmers are being protected from shallow losses, which is another way of saying minor dips in expected revenue. This is hardly consistent with the concept of providing a safety net to help farmers when they fall on hard times. The Congressional Budget Office (CBO), in one of its options to reduce the federal deficit, has once again identified repealing all Title I farm programs, including ARC, PLC, and the federal sugar program.46

Stop paying farmers twice for price and revenue losses during the same year. Farmers can receive support from the ARC or PLC programs and the federal crop insurance program to cover price declines and revenue shortfalls during the same year. Congress should prohibit this duplication by prohibiting farmers from receiving an ARC or PLC payment the same year they receive a crop insurance indemnity.

CBO has found that reducing the premium subsidy to 47 percent would save $8.1 billion over 10 years and have little impact on crop insurance participation or on the number of covered acres.49 In that analysis, there would be a reduction in insured acres of just one-half of 1 percent, and only 1.5 percent of acres would have lower coverage levels. 50 This reform is basically all benefit with little to no cost. In its recently released report identifying options to reduce the federal deficit, CBO found that reducing the premium subsidy to 40 percent would save $20.9 billion over 10 years.51 Beyond these legislative reforms, the next Administration should:

Communicate to Congress the necessity of transparency and a genuine reform process. The White House and the USDA should make it very clear that the farm bill process, including reform of farm subsidies, must be con- ducted through an open process with time for mark-up and the opportunity for changes to be made outside the Agriculture Committee process. The farm bill too often is developed behind closed doors and without any chance for real reform. The White House, given the power of the bully pulpit,