Will Farm Bill Lower Grocery Tabs?

  • Share
  • Read Later

The Bush Administration met privately with Senate and House negotiators Tuesday to hash out the new $286 billion Farm Bill, a final draft of which lawmakers hope to have by Friday, when the extended 2002 farm law expires. Though President Bush called the new bill "bloated" at a press conference on Tuesday, he stopped short of threatening to veto it, as he had an earlier version of the bill before a tax increase was included in the legislation. At least one senator's aide took the absence of a new veto threat as a hopeful sign.

But even if it does become law, most of its provisions won't have much immediate impact on domestic food prices. The bill would cut subsidies to wealthy farmers, which won't be enough to impact the average grocery store bill. Americans are now facing the steepest increases in food prices in nearly two decades — in 2007, prices rose 4%, the sharpest single-year increase since 1990 — while prices for crops like wheat and rice are at record highs.

The new bill would however, include other changes that could ease price pressures in the long run, especially for the poorest Americans. Here's how, according to the latest negotiations:

Food Stamps: Total funding for the program could increase by $8 billion over 10 years. The formula for determining per-family benefits would be tied directly to the consumer price index, meaning, essentially, that benefits would rise in step with the cost of living — a standard that has surpassed food-stamp payouts since 1996. The minimum monthly benefit of $10 per month, which hasn't been increased since 1997, would also climb and keep pace with inflation.

Emergency Food Assistance: The program, which pays to stock the country's emergency food banks and pantries — such as the Food Bank for New York City or America's Second Harvest — could get up to $250 million in annual funding, up from $140 million a year. Advocates for low-income Americans say the bump is a response to demand: more and more people are depending on nonprofit distribution centers for food in today's sluggish economy.

Disaster Relief: A new program to compensate farmers hit by drought or flooding could get $3.8 billion over four years. Farmers now get emergency aid for disasters like flood or drought on a case-by-case basis, but payments can take years. Sen. Kent Conrad, a North Dakota Democrat, says the new program would allow farmers to borrow more money more quickly, and plant "fence row to fence row" to "give us a market response to these high prices."

Cuts in Ethanol Subsidies: Using fields to grow corn for ethanol production diverts the livestock-feed supply and occupies valuable land that could be used to grow food for humans. Along with low crop yields around the world and increased demand from China, it contributes to rising food prices. Under the new Farm Bill, corn-based ethanol producers may see their tax credit fall as much as 6 cents per gallon, down to 45 cents. The bill would instead offer a $1-per-gallon subsidy to producers of cellulosic ethanol, made from corn stalks, switchgrass and wood chips, which studies show can be produced more efficiently than corn-based fuel.