Farm Policy Reform in the United States: Past Progress and Future Evolution

This chapter examines the issues facing U.S. farm policy in 2007 and beyond in an historical context. Reforms of the main commodity programs along a cash-out and decoupling path peaked when prices were high in 1995-96. Recent buyouts, driven largely by declining production levels and revenues, have also ended supply-control quota programs for peanuts and tobacco. Then, in a setback to reduced subsidies, countercyclical payments were re-institutionalized for the main commodities in 2002, although farmers retained substantial planting flexibility. The radical option of a broader buyout of the commodity programs is an idea whose time has not arrived. Instead, farm groups sought to retain their traditional programs in 2007, despite another commodity price boom. Under budget pressure, direct payments that represent the most decoupled instrument of support of farm incomes came under scrutiny in the domestic debate but were defended by subsidy recipients.