Fixing the Farm Bill: Using the "Permanent Provisions" in Agricultural Law to Achieve WTO Compliance

Abstract

Agricultural policy in the United States over the past three-quarters of a century has involved supporting farmers in the unpredictable business of growing crops. Until 1973, such domestic supports took the form of a loan-based system that controlled crop prices. The current payment-based system, put into place after 1973, has encouraged over-production and run afoul of WTO trade rules. Moving back to a loan-based system, or incorporating elements of such a system into U.S. agricultural legislation, could potentially cure problems of overproduction and other domestic ills. A loan-based system could also bring the United States back into alignment with WTO trade rules, protecting it from potentially expensive sanctions by other countries. Furthermore, it is important to understand the ramifications of such a loan-based system because all farm bills since 1949 are simply modifications to loan-based “permanent provisions,” and in the absence of new legislation, these provisions take effect.