Commentary: Heritage Foundation Slides from Think Tank to Propagandist
The Heritage Foundation recently published a new report detailing its 10 “guiding principles” for agriculture. As in the case of other reports, this report also departs from the respected analysis Heritage was once known for in favor of what appears to be the talking point of donors.
Over the years, Heritage increasingly starts with the answer to any policy question they want and then cherry pick information in order to arrive at their desired conclusion.
For example, the recent report on agriculture claims that while “agriculture has changed dramatically” over the last 80 years, farm policies have remained “Depression-era relics.” This makes for a good quip but it confuses the facts. Actually, nothing of the Depression-era programs survive under the 2014 Farm Bill except a single provision that says if Congress ever fails to do its work in passing a modern 5-year Farm Bill the law will revert back to the 1938 and 1949 Act.
In short, the only way we wind up with Depression-era farm policy is in the event the Heritage Foundation succeeds in defeating passage of a Farm Bill five years from now.
This sort of error is unworthy of a think tank that years ago, whatever you might have thought of their conclusions, you still felt was credible.
The 2014 Farm Bill, passed in February, marked a sea of change in farm policy that not only kept us free of Depression-era farm policy but threw off more recent policies that were not as cost effective as they needed to be.
For example, direct payments, first introduced in 1996, were repealed as part of a more than 30% percent cut in the commodity title, which is actually proving even deeper under CBO’s most recent analysis with projections of roughly $3 billion more in savings than earlier expected.
The only policies that are in effect after passage of the 2014 Farm Bill are policies that provide help only in times when a producer suffers a loss due to Mother Nature or market conditions affected by foreign subsidies and tariffs that are at record highs and rising even as U.S. support for farmers and ranchers reaches record lows.
The report calls for “free market principles” for U.S. farmers and ranchers while turning a blind eye toward heavily subsidized and protected foreign competitors.
For instance, the Heritage Foundation would have American rice farmers compete on their own against the government of Thailand, which pays farmers above market prices for their rice – about $4.4 billion above market prices in the 2011-2012 crop year alone.
Heritage would also have America’s sugar farmers stand alone as they compete on the world market against governments which have made headlines in their open and notorious subsidization of their sugar farmers.
And Heritage would leave our nation’s cotton farmers to contend alone with China, the 800-pound gorilla in the world cotton market. This command and control economy not only dictates its internal cotton policy but it calls all of the shots in the global market, with actual world supply and demand rendered immaterial.
Many readers would wholeheartedly agree with the author’s conclusion that “a free-market vision for agriculture starts with having principles that recognize the flaws of government intervention while embracing freedom and individual rights.” But that doesn’t blot out the reality of the world market where foreign government manipulation of agricultural markets is the rule and not the exception. It also ignores the fact that the U.S. is already leading by example with the most market-oriented farm policy in the world where crop prices are set totally by private markets.
What Heritage cannot get straight is if you strip out any federal involvement in crop insurance, farmers would have no insurance on their crops because no private company would sell them a policy because no farmer could afford the premium so risky is agricultural production.
Heritage also can’t get straight that everyday Americans don’t buy into Heritage’s view that it is just great if other countries want to subsidize their producers so they can undercut American farmers and ranchers and drive them out of business. Most Americans don’t recognize this as a free market.
Every five years, U.S. farm policy changes. We have gone from Depression-era policies in the 1930s to more modern policies in the 1970s, ’80s, ’90s, and earlier in this century, each decade shedding more and more of the policies of 80 years ago. And, the 2014 Farm Bill represents the most fundamental shift yet. The old Heritage Foundation would have observed this slow but certain evolution and constructively contributed to the landmark change made to farm policy earlier this year.
Undoubtedly, farm policy is going to continue to change as agricultural market conditions change. We are nearing the time when 9 billion people will inhabit the earth. Norman Borlaug, whom our nation just honored with a statue in the U.S. Capitol, taught us that we can be knee-jerk in our response to a hungry and growing world or thoughtful.
Heritage, and all of us, would do well to follow Borlaug’s thoughtful lead.
The bulls were again winners in an exciting week for longs and producers. In last week’s report, I said the markets bias would be near unchanged to a bit lower.