When the 1985 Farm Bill was passed, lawmakers were convinced that the export markets would grow in excess of U.S. production capabilities and subsequently farm prices would continue to rise. In reality, technology has increased farm production to levels higher than demand. Ironically, farmers continue to struggle with low farm commodity prices. Consequently, the USDA is sending out checks to keep the agricultural community afloat.
It is time to reconsider attributes of the 1985 Harkin-Gephardt Farm Bill. That bill would have let farmers cut back on production to receive a guarantee of 70% parity on their crops through higher USDA loan rates. Farmers that wanted to farm for the export market could do so, understanding that they would receive no government subsidies.
The USDA loan rate on corn today would need to be raised to at least $7 a bushel to equal the buying power of the $2.40 rate in 1984. The present loan rate on corn is $2.20 per bushel and the actual parity number for corn in 2018 was $13.20 ($9.24 at 70%). I think that it is reasonable that the USDA loan rate on corn should be raised to $5 per bushel, or the minimum price guarantee on Federal Crop insurance should be no lower than $6 per bushel or both.
In 2012, because of the drought, we had $7.50 corn and the U.S. dollar balance of agriculture trade was higher than 2018 — with $3.50 corn when we exported almost twice the bushels. Why waste natural recourses, by exporting our soil, nutrients and water when we receive little value for them?