Letter Supporting Kind Amendment to 2007 Farm Bill
July 24, 2007
TO THE MEMBERS OF THE U.S. HOUSE OF REPRESENTATIVES:
The U.S. Chamber of Commerce, the world's largest business federation representing more than three million businesses and organizations of every size, sector, and region, supports an amendment by Rep. Kind to H.R. 2419, the "Farm Bill Extension Act of 2007," which would reduce agricultural subsidies to farmers, encourage market-based reforms to our nation's agricultural policy, and ultimately begin to promote international trade liberalization.
Federal laws subsidizing U.S. farmers were enacted in the 1930s and 1940s, in response to the economic impact of the Great Depression. With more than 25% of the U.S. population living on farms, these laws were intended to stabilize farm incomes through price support and supply control programs, thereby helping a large segment of the economy. Yet today, farmers comprise less than 2% of the U.S. population. Moreover, industry consolidation has reduced the number of working farms from 6 million to less than 2 million today; and of those, about 7% account for 76% of commodity sales with average earnings exceeding $1 million.
A fundamental reform of our national agricultural policy is long overdue. The current system of farm subsidies—which is determined by crop, not poverty level or need—is inequitable and inefficient, and it is hampering our ability to gain greater international market access through reduced tariffs and non-tariff trade barriers because they significantly distort international trade. Consider, for example, that the United States has recently lost a number of dispute settlement cases at the World Trade Organization (WTO) under which foreign governments have successfully challenged U.S. subsidy programs. Emboldened by these events, more such challenges are being filed, yet this bill does little to modernize farm programs to reduce their vulnerability to challenge at the WTO.
Indeed, U.S. farm subsidies are cited around the globe as a principal reason why the global Doha Development Agenda negotiations have failed to advance. The United States has much to gain in a potential global trade deal, with benefits likely to accrue to U.S. manufacturers, service providers, as well as farmers and ranchers. Reductions in U.S. agricultural subsidies are required to reach such an agreement, and these reductions will allow the United States to gain access to scores of markets important to the growth of our entire economy.
Congress should move forward with a reform-based farm bill that would reduce U.S. farm subsidies in a manner leading toward our WTO goals. Responsible reform of our agricultural programs will signal our trading partners that we are committed to seeing a successful conclusion of Doha Round come to pass, and that the United States is committed to negotiations to eliminate trade barriers that injure U.S. companies, farmers and workers.
The amendment—which is being called the "Fairness in Farm and Food Policy" amendment—is a good first step in reforming our national agricultural policy. It would reduce direct payments to farmers, create voluntary Risk Management Accounts, and link counter-cyclical payments to a crop's national revenue (rather than a government target). The reforms included in the amendment would save an estimated $12 billion over five years than the likely budget allocation and baseline estimates of the existing farm subsidies.
It is critical that we not allow protection of one sector of our economy to threaten the ability of other sectors to compete and succeed globally. Therefore, the U.S. Chamber urges you to support this amendment to reform U.S. agricultural policy for the benefit of citizens, our economy, and our international trading position.
R. Bruce Josten