How to Reform Title II of the Farm Bill
The federal government spends over $5 billion annually on nine separate programs that take farmland out of production or pay farmers to use their land in a more environmentally sensitive manner. This paper examines these programs and makes recommendations on how they can be run more effectively and efficiently. The highlights include:
1) Existing land-retirement and working-land programs should be combined into one program: The existence of seven separate programs competing for the same piece of farmland encourages waste. Creating one program with a clear objective will reduce bureaucracy and encourage farmers to make cost-effective decisions about how to maximize the environmental benefits from their land.
2) The new program should rely on a multicriteria auction to cost-effectively allocate taxpayer funds: Requiring farmers to bid for a contract to meet multiple environmental goals allows taxpayers to get environmental benefits for the lowest possible cost.
3) In the long run, Title II farm programs should be combined with all conservation programs: The current array of programs is meant to provide farmers with stable and higher income while minimizing environmental damage caused by farming. We could accomplish both goals more efficiently by eliminating Title II programs, extending direct payments to all farm crops and livestock, and offering long-term contracts with a fixed payment rate and fixed estimated production amounts.
4) In the long run, environmental externalities should be dealt with through direct regulation: Agriculture is the only major industry exempt from most requirements of US environmental laws. Replacing the current system of voluntary payments for farmers who want to address environmental concerns with a mandatory system akin to that used in other industries will likely reduce the environmental harms caused by farming.