| Chapter 1: | Farm Bills, Interest Groups, and Policy Change |
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farmers were paid first to destroy crops and animals and later to simply keep part of their land out of production in order to reduce excess supply and raise market prices. It also created price-support loans or “nonrecourse” loans to be paid back if market prices were high and defaulted if prices were low (in which case the grain used as collateral was forfeited to and stored by the government to be fed back into the market when prices rose again) (Orden et al., 1999; K. L. Robinson, 1989).
Although such early farm policy was designed to moderate the effects of surpluses on prices by taking land out of production and by storing excess grain, farm policy since the 1950s has focused more on finding additional uses for excess supply (Flinchbaugh & Knutson, 2004). Public Law 480 (P.L. 480), for example, passed in 1954, donated surplus commodity crops to foreign countries as food aid, and the food stamp and school lunch programs of the 1960s were similarly designed to feed surplus commodities to children and the poor (Ackerman, Smith, & Suarez, 1995; Knutson et al., 1990; McGovern, 1967; Orden et al., 1999; K. L. Robinson, 1989; Talbot & Hadwiger, 1968).
The 1973 farm bill continued this trend, altering agricultural support mechanisms to promote increased exports. In 1972 a large sale of grain to the Soviet Union combined with drought in the U.S. Midwest to create international supply shortages and raise food prices (Orden et al., 1999; Pollan, 2006). An undervaluation of the dollar after many years of overvaluation further contributed to high crop and food prices and inflation (Schuh, 1974). In order to lower prices, the 1973 farm bill called on farmers to increase production—to plant “fencerow to fencerow.”It also established guaranteed target prices that would pay farmers a “direct payment” equal to the difference between market and target prices whenever market prices fell below target values. This createdan incentive for farmers to sell their crops even if prices were lowbecause the direct payment would make up their lost income. And it moved farm policy from a system where excess grain was stored when prices were low to a system where it was exported. Because direct payments subsidized farmers without raising the value of the commodities on the world market, farmers could also export these surplus grains more