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LUGAR & STUTZMAN: Reform farm programs and harvest savings

It’s time to stop subsidizing farmers even when they’re profitable

- The Washington Times - Tuesday, November 8, 2011

"The greatest advances of civilization, whether in architecture or painting, in science and literature, in industry or agriculture, have never come from centralized government. - Milton Friedman

As our congressional colleagues on the super- committee struggle to close the yawning budget gap that threatens our economic future, there is one obvious source of savings: a market-distorting, intrusive special-interest-driven government program that wastes billions of dollars, raises consumer prices and restricts businessmen's decisions. We are talking about America's farm and food subsidy programs - outdated, inefficient and in dire need of reform.

We are businessmen-farmers ourselves. We know that the national debt crisis endangers the prosperity of all and that wasteful farm program spending has been a real contributor over the years. That's why we've introduced the REFRESH (Rural Economic Farm and Ranch Sustainability and Hunger) Act, a deficit reduction bill that cuts an estimated $40 billion over 10 years, ends policies that work against market forces and offers insurance options for farmers. As the supercommittee gropes for solutions, our bill remains the only comprehensive piece of agriculture legislation that can claim this level of savings combined with fundamental reforms.

The REFRESH Act would eliminate the practice of writing checks every year to farmers regardless of need, which causes significant inflation of land rents and other input costs. It would do this by scrapping the $5 billion annual direct payment system that manipulates markets and restricts farmers' freedom by barring them from planting certain crops on their land.

To provide a genuine safety net for our nation's food producers, we've proposed an aggregate risk and revenue management program that protects farmers against "shallow-losses." Unlike direct payments currently in place, this program wouldn't blindly send money out the door but rather only when farm revenues actually fall. This program would complement the proven private-public crop insurance market for catastrophic loss that covered 255 million acres last year.

Our bill tackles other specific programs that hurt America's economy. For instance, thanks to technocratic price-fixing, U.S. consumers today pay nearly double for their sugar. Government manipulation levies an indirect tax of an extra $4 billion each year in food prices. Stringent controls and artificial barriers should be the antiquated relics of the Eastern bloc, not mainstays of U.S. policy. Our legislation would end the current system of trade quotas and tariff barriers, promoting competition and increased quality for domestic sugar users.

American dairy farmers face their own labyrinth of regulations and controls. Our REFRESH Act would give dairymen simple, voluntary risk management tools. By eliminating a complicated dairy price support program and milk income loss contract program, we offer producers the option to participate in a simpler insurance system. While not perfect, these reforms would move the future of dairy toward a freer market with, we believe, significant backing from the often-divided dairy community.

Likewise, conservation programs remain important for erosion control, wildlife habitat and passing on healthy land to the next generation. But much of the land in the 32-million-acre conservation reserve program was put there in a price- and market-manipulating effort to stop farmers from growing food. Today, there's no compelling argument for the government to lock up rich farm land. American farmers are the world's most productive. We propose opening up 8 million acres to let them do what they do best - supply global demand.

We also seek to reduce waste in food and nutrition programs, which actually account for more than 75 percent of annual farm bill spending. By closing loopholes in the food stamp program that grant eligibility to some who are not truly needy, we could achieve a modest 2 percent reduction in overall nutrition spending and cut $14 billion over the next 10 years. We can meet legitimate needs and also fulfill our budgetary obligations.

We know firsthand the anti-free-market impact of these farm programs because we participate in some of them in order to remain competitive with our farmer neighbors. We also know that slashing government spending must be our nation's No. 1 priority. There has never been a better time for change - thanks to foreign demand and strong prices, farm incomes are at record levels.

We urge the supercommittee to act quickly to adopt the REFRESH Act plan for the benefit of all Americans.

Sen. Richard Lugar and Rep. Marlin Stutzman are Indiana Republicans, family farm owners and members of their respective Senate and House Agriculture committees.

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