Agricultural policy reform in the United States: an unfinished agenda

The 1996 Federal Agriculture Improvement and Reform Act (FAIR) contained important breaks with a tradition of crop-by-crop subsidies dating back to the Agricultural Adjustment Act of 1933. Farmers with recorded base acres were given the opportunity (which nearly all accepted) to sign a seven-year 'contract' with the US Department of Agriculture (USDA), under which payments will be continued on the merged base acres on a declining schedule until the year 2002. FAIR is an unfinished agenda. First, the coverage of 'freedom to farm' is only partial, with numerous commodities left out of the decoupling programme. Second, the largest producers will augment their already significant receipts with generous lump sum transfers from USDA. This will further reinforce the concentration of roughly 90 per cent of receipts and payments in the hands of the 100000 to 200000 largest producers of field crops. An alternative would be to make payments in times of low marketing receipts which recede when prices are high.