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A Question of Priorities

March 2, 2007

How much energy could half a billion dollars buy? Or, to be more precise, how much energy could $541,061,667 purchase? The significance of that figure will be clear in a moment.

It would buy about 540 megawatts of wind generation capacity, enough to provide for the annual electricity needs of about 160,000 homes.

Or, full installation of 2-kilowatt solar photovoltaic packages for 27,000 homes.

Or, about 100 million compact fluorescent light bulbs, one for almost every household in America.

So, why all the statistics, and what is significant about $541,061,667 anyway?

That’s the amount that was collected between 1995 and 2005 by the top recipient of farm subsidies in the United States – an outfit called Riceland Foods, Inc., based in Arkansas. In those 10 years, a total of $130 billion in commodity crop subsidies were doled out nationwide.

An odd coalition of conservationists, deficit hawks, defense specialists, and activists working on global poverty issues say that the U.S. farm policy that has resulted in such misallocation of national wealth must change.

Giving them momentum is the bipartisan political support for helping farmers diversify America’s energy portfolio.

Supporters of farm policy reform marshal plenty of arguments for their side.

Conservationists say that commodity crop subsidies – the bulk of which go to corn, wheat, rice, cotton, and soybeans – encourage overproduction of crops needing heavy doses of fertilizers and pesticides that can damage soil and pollute water.

Anti-poverty activists argue that U.S. crop subsidies distort international food markets and put struggling farmers in developing nations at an economic disadvantage.

International trade types warn that subsidies make the U.S. crosswise with global trade rules. In 2005, a World Trade Organization dispute panel ruled against the U.S. in a Brazilian complaint about U.S. cotton programs.

Security hawks want America to use less oil and more ethanol. And deficit hawks complain that commodity crop subsidies cost too damn much.

This year, Congress is rewriting the national farm bill, an opportunity to re-orient U.S. farm policy by ramping down commodity crop subsidies and redirecting farm payments towards conservation projects that protect topsoil, clean water, and wildlife habitat, and towards developing farm-based renewable energy. Farmers love the conservation programs and want more of them. The WTO has no beef with them either, as conservation payments are not considered trade distorting.

President Bush’s farm bill proposal makes a good start towards needed reforms. He has proposed raising conservation spending by nearly $8 billion, and spending $1.6 billion on research into cellulosic ethanol technology.

Over the long run, energy may be the biggest driver for restructuring farm policy. The security implications of oil dependence and growing support for greenhouse gas emissions limits are converging to change the face of agriculture. President Bush has proposed to more than quadruple ethanol production by 2017. Senator Richard Lugar, R-Indiana, one of Congress’ leading experts on both foreign policy and agriculture, has proposed raising ethanol production by a factor of 15 by 2025.

For the nation to meet such ambitious targets and accelerate a transition away from an energy economy based on petroleum, not enough corn can be grown to serve as the long-term ethanol feedstock, aside from the heavy doses of energy-intensive fertilizer and chemicals that growing corn requires. Instead, cellulosic ethanol and its country cousin biodiesel will have to move quickly from big ideas to widespread commercialization. That will require new crops and production patterns down on the farm, and new energy supply chains leading from rural croplands to urban gas stations.

Questions about policy priorities are likely to arise as the farm bill debate moves forward. Political pressure to fund technologies that will enhance energy security may trump pressure from interests fighting to keep large commodity crop subsidies in place.

Energy, along with conservation, global poverty, tight federal budgets, and trade disputes, are changing the politics of federal farm policy. And that’s a good thing.