Agriculture

Frank Lucas Talks Farm Policy

June 4, 2014

OCPA’s Brian Bush recently sat down in the OCPA library with Oklahoma Congressman Frank Lucas to talk about the farm bill, crop insurance, and more.

BUSH: Congressman Lucas, thanks for making the time to return to OCPA today.

LUCAS: Thanks for having me, Brian. It’s good to be back. This institution is continuing to make valuable contributions to Oklahoma’s public life. I always enjoy reading Perspective each month.

BUSH: As chairman of the House Agriculture Committee, you are most known for your work on the farm bill. Let’s start by discussing what exactly the “farm bill” is.

LUCAS: Put simply, the “farm bill” is the legislative instrument that regularly sets the policy of the United States towards the hard-working families that produce the food we eat and drink and the fiber we wear.

BUSH: As you know, we at OCPA value a free-market approach, so we generally prefer less government interference in the marketplace whenever possible. When did the federal government become involved in production agriculture, and why?

LUCAS: The “farm bills” Congress considers from time to time today are a legacy that dates back to George Washington’s first proposals in the late 1700s to form a “national board of agriculture.” By the 1820s Congress and most of the state legislatures had standing agriculture committees overseeing work being done mostly by the Patent Office at that time related to farming and ranching in this country. President Lincoln created the U.S. Department of Agriculture (USDA) in 1862, and between that time and the 1930s several different pieces of agriculture legislation—“farm bills” before we called them that—passed Congress and were signed into law. These measures dealt with everything from agricultural research, meat inspection, and extension agents for educating producers to agriculture loans, farmer cooperatives, and commodity market regulations.

Of course, the Great Depression and the resulting 1930s “farm bills” under FDR saw radical centralization and command regimes put into place to try to stabilize production agriculture in this country during some pretty traumatic times. After that most “farm bills” built on the New Deal-era programs of quotas, allotments, etc. Once Republicans took control of Congress in 1994 for the first time since the Truman Era, we started moving federal agriculture programming away from central planning and towards a market-oriented, entrepreneurial situation where farmers and ranchers have a “safety net” that keeps them producing food and fiber for all of us to consume during bad times, but that during good times doesn’t expose the taxpayers.

It’s a tricky balance, but one we’re starting to see success in achieving. You’ll note that while most of the agriculture sector in this country is experiencing several years of prolonged drought, the taxpayers aren’t being asked for ad hoc, costly bailouts. The safety net we’ve crafted over the course of the last couple of farm bills is doing what it should do—helping us survive the bad times so that we can farm and ranch again during good times. And since we all eat, we all benefit from that.

I think your last question was, “Why has the federal government always had an abiding interest in production agriculture?” Recall that the Preamble to the Constitution points out that one of the reasons the Union was formed was to “provide for the common defense.” A critical part of that responsibility lies in ensuring that we are able to produce our own supply of food and fiber. If we can’t do that, we’re not secure—far from it! We can go without certain products and luxuries during times of war and hardship, but we have to have a certain number of calories each and every day. The Founders knew it, and today we need to remember it.

BUSH: You’re the first Oklahoman in history to chair the House Agriculture Committee, and our state is often cited as one of the most conservative states in the union. Were you able to bring those conservative principles to bear on the 2014 farm bill process?

LUCAS: Oh, yes. Some of your readers will recall that the 2014 farm bill should have been finished in 2012, when the 2008 law expired. In July of 2012 I was able to lead the Committee to pass, on a large bipartisan vote, a “farm bill” that would save taxpayers $35 billion in mandatory—a very important word, as mandatory programming is what is growing our deficit so dramatically—money. That bill would have repealed the last of what people traditionally view as “farm subsidies,” a program called Direct Payments, along with more than 100 other government programs. It also would have reformed food stamps to the tune of $16 billion—keep in mind that we haven’t been able to touch food stamps since Bill Clinton was in the White House! Unfortunately that bill was never allowed to come to a vote on the House floor.

In May of 2013 my Committee passed—again, by a large, bipartisan majority—a “farm bill” that would save taxpayers almost $40 billion in mandatory money by repealing Direct Payments and more than 100 other programs, and by reforming food stamps to the tune of $20 billion. Unfortunately, for varied reasons, this bill didn’t receive enough support to pass the House. We actually ended up having to pass the Nutrition Title in a separate piece of legislation in order to get to a conference with the Senate. It’s really a shame—had the House passed this version of the “farm bill,” conservatives like myself would have been in a much stronger negotiating position vis-á-vis the Senate Agriculture conferees.

Still, we were able to achieve significant conservative victories in the 2014 “farm bill” that was signed into law not too long ago. Direct Payments are gone; no longer will payments go out to people who do not produce food or fiber. Almost 100 different government programs were repealed or consolidated, helping make the total savings to the taxpayers in the new farm law over $23 billion. And food stamps were reformed to the tune of $9 billion; we also ended food stamp advertising and recruiting both at home and abroad, and empowered states to begin new work programs requiring able-bodied adults to put some sweat equity into receiving assistance.

BUSH: There seems to be some dissatisfaction with what ultimately came to pass as the new farm bill. Even some of us here at OCPA wonder if we might have missed a great opportunity to enact even more positive change. You have been in Congress long enough to know you can’t please everyone, but why are some groups who are generally conservative or at least free-market-oriented unhappy right now?

LUCAS: It has certainly been an interesting process. I personally began work on this farm bill more than four years ago, and the committee itself worked in earnest for two and a half years. We began that process with plans to make significant improvements, and I am proud that many of them made it into the final product. However, the bill that was eventually signed into law did not contain all of those ideas. That is partly due to the learning curve many of the new members of Congress had in getting up to speed on farm policy, since many of them were not in Congress when we last passed a farm bill. In addition, I was not willing to let this important legislation be one more victim of Congressional inaction. Our efforts to make sure the bill moved through the process meant that it was one of the only bills moving at the time. Our goal was to get as far as we could toward free-market reforms while also knowing that we had a hostile Senate and White House that would simply not allow us to go as far as we would like. In spite of those limitations, I am proud that the latest CBO numbers show they expect us to save even more than we originally thought—$24 billion more, in fact.

BUSH: Should we have waited to pass a new farm bill until the makeup of Congress was more conducive to enacting a higher level of those free-market reforms?

LUCAS: Absolutely not. Inaction on the part of Congress would lead only to food stamp abuses continuing unchecked. Inaction would mean that taxpayers would continue to pay for food stamp advertising and recruiting both in the United States and in foreign countries, and that even the deceased could continue to receive food stamps. And perhaps most worryingly, inaction would result in the outdated, New Deal-era permanent agriculture laws, which I have attempted to repeal, becoming law of the land once more and requiring USDA to reestablish a centralized, command-and-control regulatory regime that would throw markets into chaos and do immense harm to farmers and ranchers as well as taxpayers.

Voting for the new farm law was a vote in support of reducing the deficit, repealing levels of bureaucracy and overregulation, and reforming a major entitlement for the first time in a generation. I’m proud of the work we did at the Ag Committee. If every committee in Congress provided the level of deficit reduction that we did, our nation’s fiscal house would be drastically improved.

BUSH: Are there any areas where you agree with those so-called critics? Would you say there is still work to do on farm policy?

LUCAS: Yes. The food stamp reforms I proposed in 2012 and 2013 that the House failed to act upon should be reconsidered. We have to protect the taxpayers from state governments that are trying to mine the U.S. Treasury by taking advantage of loopholes in federal law. And we have to repeal the unworkable, 1940s-era permanent farm laws that could throw production agriculture into chaos and cost the taxpayers unthinkable amounts of money.

We should continue to empower America’s farmers and ranchers to do just that—farm and ranch. That means continuing to guard against attempts by agencies like the EPA to regulate production agriculture right out of existence. That means ensuring that the hugely successful private-public partnership that is crop insurance is able to continue to flourish and provide American farmers and ranchers with a market-oriented safety net.

BUSH: I’m glad you brought up crop insurance. Producers pay part of the premium, and the government pays part of the premium. Many outside the ag sector wonder why taxpayers pay for any part of the crop insurance premiums at all if they themselves aren’t farmers and ranchers. In their minds, yes, agriculture is risky, but so are other industries.

LUCAS: Firstly, I would remind you that we as taxpayers don’t just subsidize crop insurance. We also help pay for flood insurance and terrorism reinsurance, for example. Producers pay a significant amount of the premium out of their own pockets—over $4 billion a year. Crop insurance sees private enterprises engage with farmers and ranchers to use market innovation and demands to create new products for purchase and distribution. Losses are incurred by the crop insurance companies, while any actuarial gains are credited to the U.S. Treasury. So in the long term, crop insurance actually makes money for the taxpayer.

Risk is and always will be a factor in production agriculture. Each producer has to make decisions about how to best manage and mitigate that risk. The safety net that the “farm bill” has put into place is needed because agriculture is one of the few industries that produces something without which our society cannot possibly function. We can go without a lot, but we have to eat. Plain and simple.

We all have a vested interest in supporting production agriculture in this country. You may not know that roughly 250,000 farms and ranches produce 80 percent of the food supply in this country. That is a remarkably thin “green line” to which we all owe a great deal. Many Americans today are not cognizant of where their food comes from; even more are, thankfully, largely unfamiliar with the horrors of food shortages. The gap between those who produce our food and those who consume it continues to grow—this makes it all the more important that we have a safety net in place to see America’s family farmers through the bad times.

A Free-Market Vision for Agriculture Policy

By Daren Bakst

Agriculture has changed dramatically over the past 80 years, yet farm and commodity programs are Depression-era relics that are grounded in central-planning philosophies. Even some policymakers who claim to be strong proponents of free markets and limited government tend to forget these core beliefs when it comes to these programs.

Agriculture policy is not just limited to these traditional farm and commodity programs that limit choice, stifle innovation, drive up consumer prices, and cost taxpayers billions of dollars a year. It also includes food safety, international trade, environmental policy and property rights, research and innovation, and general issues applicable to all sectors of the economy, such as labor policy.

There are alternatives to agriculture beyond the status quo of central planning and subsidies. The same free-market solutions that have allowed this nation to flourish are just as applicable to agriculture as they are to other sectors of the economy. The following are 10 guiding principles for agriculture policy. [These principles are fleshed out in a new issue brief, “10 Guiding Principles for Agriculture Policy: A Free-Market Vision,” available at heritage.org.]

1. Markets, not government incentives and controls, should inform farming decisions.
2. Free markets promote food affordability.
3. Subsidies are not necessary for farmers to succeed.
4. Property rights are the cornerstone of American agriculture.
5. Problematic regulations affecting agriculture should be fixed or eliminated.
6. The regulatory burden on the agriculture sector should be minimized and sound regulatory approaches used.
7. Obstacles to agriculture research and innovation should be removed.
8. Free trade in agriculture benefits farmers and consumers.
9. Individual dietary decisions should be respected.
10. Agriculture policy should not promote special interests.

A free-market vision for agriculture starts with having principles that recognize the flaws of government intervention while embracing freedom and individual rights. These broad-based principles, if applied, can help change agriculture policy from an area of excessive government control to an area of individual freedom.

Daren Bakst is a Research Fellow in Agricultural Policy at The Heritage Foundation.

BUSH: Of all the criticisms leveled against current ag policy, I hear two of them most often: crop insurance and other farm subsidies only help “Big Ag,” not family farms, and the crop insurance safety net is becoming a hammock. As a farm boy myself, I have an opinion on those, but let me just ask you—are those fair criticisms?

LUCAS: No, although this is a persistent myth because more and more Americans do not really understand how production agriculture operates—they are further and further removed from the source of what is on their plate and in their glass. The fact of the matter is that 96 percent of the 2.2 million farms in this country are family-owned. These families were very much “at the table” and a part of the process during the writing of the new farm law. Also, remember that the last of the traditional “farm subsidies”—direct payments—are abolished by the new farm law. Secondly, the new law’s safety net programs only offer assistance to farmers and ranchers who suffer significant losses and who actually produce food and fiber for the country to eat, drink, and wear. Finally, the new farm law caps assistance for any farmer, limiting exposure to the taxpayer and ensuring that the program is not abused.

BUSH: For a while during the negotiation process, you were able to separate ag policy from the food stamp program, but ultimately the two came back together to look more like previous farm bills. Why are food stamps even a part of the “farm bill”?

LUCAS: The short answer is that this legislation authorizes every program administered by the USDA. SNAP, or food stamps, is a USDA program. During the Great Depression the USDA distributed food and commodities to those in need. In 1938 the first Food Stamp program was created and administered by the USDA. In 1959 the Eisenhower Administration was authorized by Congress to administer food stamps under the authority of the Secretary of Agriculture. President Kennedy’s first executive order initiated new pilot food stamp programs in 1961—again, administered by USDA. Finally, the Food Stamp Act of 1964 was signed into law, affirming the program’s place at the Agriculture Department; the 1977 food stamp legislation likewise kept food stamps firmly under the jurisdiction of the USDA. By passing the new farm law, the first major reforms to SNAP since the 1990s have been enacted. New state pilot programs allowing work requirements are going into effect. Exploitative loopholes are being closed and new efforts at curbing fraud and abuse are under way. Recruiting and advertising for food stamps are now prohibited. None of this would have been possible without the new farm law.

BUSH: Would you prefer to separate them in the future?

LUCAS: In an ideal world, we would definitely prefer discussing the food stamp program separate from farm policy. In fact, I favor that theory tremendously. However, sometimes those theories get tested during the process, and this time around, we realized it was actually better for producers and agriculture policy in general to consider them together as we had done in the past. The reason we brought the two back together in the long run was that President Obama, Harry Reid, and their friends in the Senate were simply not going to give the agriculture community a fair shake, and they would prefer to increase the food stamp entitlement programs while hurting the people who actually produce the food. By keeping them together, we were able to achieve significant savings in the food stamp programs as well as a true work requirement program for able-bodied adults, an incredibly important step, while also reducing and eliminating many non-market-based producer payment programs. This approach meant everyone participated in the reforms, not just one group or the other, and we improved both areas even if we did not get all of the reforms we may have wanted. Hopefully we will have a better political environment in the future that will allow us to consider ideas like separating the two.

BUSH: Any final thoughts on the farm bill process as a whole?

LUCAS: My job is certainly not finished, and I plan to keep very close watch on the USDA to make sure they carry out what we put into law. I will hold them accountable because it is critical that we enact these reforms while continuing to press on toward even more—not just in five years when we write another farm bill, but right now as we work through other legislation that impacts these programs. Washington needs to remember that farm policy and rural America are inextricably linked to the rest of the American economy, and we must make smarter decisions across the board. For example, the Renewable Fuel Standard has been a huge mistake in energy policy, as the ethanol requirement has dramatically distorted the market and adversely impacted feed prices for livestock producers. Those mistakes result in high food costs, high taxes, and government overreach that all hurt the people of this country.

While the political realities in Washington limited this effort to finding a full consensus on the farm bill, and while I certainly would have liked to enact even more significant changes to these programs, I am very pleased that this bipartisan law was achieved through the open processes and regular order that the voters demanded in the 2010 and 2012 elections. It is a great first step in “walking the walk” of restoring conservative, constitutional principles to the work we do on your behalf.

Congressman Frank Lucas is a fifth-generation Oklahoman whose family has lived and farmed in Oklahoma for more than 100 years. Lucas represents Oklahoma’s Third Congressional District, which includes all or portions of 32 counties in northern and western Oklahoma, stretching from the Oklahoma panhandle to parts of Tulsa, and from Yukon to Altus in the southwest. Congressman Lucas serves as the Chairman of the House Committee on Agriculture.

Brian Bush (J.D., University of Oklahoma) is OCPA’s executive vice president. He formerly served as director of government relations at Oklahoma Christian University, and also served as an assistant dis­trict attorney in Oklahoma County.