Agricultural policy of the United States

At the end of World War I, the destructive effects of the war and the surrender burdens enforced on the Central Powers of Europe bankrupted much of Europe, closing major export markets in the United States and beginning a series of events that would lead to the development of agricultural price and income support policies. United States price and income support, known otherwise as agricultural subsidy, grew out of acute farm income and financial crises, which led to widespread political beliefs that the market system was not adequately rewarding farm people for their agricultural commodities.

Beginning with the 1921 Packers and Stockyards Act and 1922 Capper–Volstead Act, which regulated livestock and protected farmer cooperatives against anti-trust suits, United States agricultural policy began to become more and more comprehensive. In reaction to falling grain prices and the widespread economic turmoil of the Dust Bowl (1931–39) and Great Depression (October 1929–33), three bills led the United States into permanent price subsidies for farmers: the 1922 Grain Futures Act, the June 1929 Agricultural Marketing Act, and finally the 1933 Agricultural Adjustment Act – the first comprehensive food policy legislation.

Out of these bills grew a system of government-controlled agricultural commodity prices and government supply control (farmers being paid to leave land unused). Supply control would continue to be used to decrease overproduction, leading to over 50,000,000 acres (200,000 km²) to be set aside during times of low commodity prices (1955–1973, 1984–1995). The practice was eventually ended by the Federal Agriculture Improvement and Reform Act of 1996.

Over time, a variety of related topics began to be addressed by agricultural policy: soil conservation (1956 Soil Bank Act), surplus crops as food aid (National School Lunch Act of 1946, Agricultural Trade Development and Assistance Act of 1954, the 1964 Food Stamp Act).

During this time, agricultural financial support also increased, through raised price supports, export subsidies, increased crop insurance (1938 Agricultural Adjustment Act), expanding price supports to different crops (Agricultural Risk Protection Act of 2000), offering more guaranteed federal loans, and through the replacement of some price supports with fixed payments (Food and Agricultural Act of 1962 and Federal Agriculture Improvement and Reform Act of 1996).

Senator Hubert Humphrey proposed to use the agricultural surpluses as part of American foreign aid in 1953. This proposal helped the U.S. address the surplus crops while other states could use their local currencies to trade during the Cold War.[5]

On the other hand, the failed policies, including the Brannan Plan in 1949, aimed to solve the agricultural surpluses caused by price supports for farmers by providing "compensatory payments." Conservatives were the major forces that opposed this farm bill. The outbreak of the Korean War in 1950 also consumed the surpluses that made this farm bill invalid.[6]

Beginning with the administration of Secretary of Agriculture Henry A. Wallace, the United States had generally moved to curb overproduction. However, in the early 1970s, under Secretary of Agriculture Earl Butz, farmers were encouraged to "get big or get out" and to plant "hedgerow to hedgerow". Over the course of the 20th century, farms have consolidated into larger, more capital-intensive operations and subsidy policy under Butz encouraged these large farms at the expense of small and medium-sized family farms.[7]

The percentage of Americans who live on a farm diminished from nearly 25% during the Great Depression to about 2% now,[8] and only 0.1% of the United States population works full-time on a farm. As the agribusiness lobby grows to near $60 million per year,[9] the interests of agricultural corporations remain highly represented. In recent years, farm subsidies have remained high even in times of record farm profits.[10]

Starting in 1985, several agricultural policies addressed wetlands and habitat conservation (Food Security Act of 1985, 1990 Wetlands Reserve Program, 1996 Wildlife Habitat and Environmental Quality Incentive Programs and 2002 Grassland Reserve Program). Wetlands Reserve Program (WRP) is a voluntary program implemented by the U.S. Department of Agriculture (USDA) that USDA may purchase conservation easements from eligible landowners who voluntarily protect wetlands by restoring, maintaining, and improving the hydrologic conditions, native species, and natural topography of the wetlands.[11] Wildlife Habitat Incentives Program proposed by USDA aimed to respond to the decreasing wildlife species by promoting voluntary farm management practices to protect and maintain habitat for wildlife.[12] The Grassland Reserve Program (GRP) is a voluntary program proposed by USDA that assisted landowners to improve the grasslands' quality on their property.[13]

Organic Food Production Act of 1990 (Food, Agriculture, Conservation, and Trade Act of 1990) directs the Secretary of Agriculture to establish a national organic production certification program; a label for organic products; a national list of approved and prohibited substances for organic productions; and a certifying agency program.[14]

In 1996, the U.S. agricultural policy reform started with the Federal Agriculture Improvement and Reform Act of 1996 (1996 Act) that the agricultural market should be determined by the free market competition that the government canceled agricultural subsidies and required farmers to enroll in the Crop Insurance Program.[15] The U.S. agricultural policy reform was caused by the agricultural and budget pressures combined with the growth in the U.S. economy level and the developments in the agricultural sector.[15] The Crop Insurance Program was first proposed in the 1930s to assist agriculture recover from the Great Depression and the Dust Bowl.[16] In 1996, farmers were required to purchase crop insurance or will lost the eligibility to receive other disaster benefits.[16]