Assessing the Impacts of the Federal Farm Bill Programs on Rural

Communities

Douglas Jackson-Smith

Jessica Ulrich-Schad

Curt Grimm

FARM BILL GOALS…Rural Community Well Being?

OUR QUESTION…

How do different farm bill programs impact rural community well being?

Project Methods• Qualitative Interviews (2011/12)

– 26 key informants (rural development practitioners, federal agency staff, academics, USDA state rural development directors)

– Literature review (studies of impacts of farm bill programs on rural communities)

• Spatial Analysis of Farm Bill Payments

– Food & Nutrition (SNAP) - USDA

– Farm Commodity Program Payments – USDA/EWG

WHAT IS THE FARM BILL?

• ‘Omnibus’ Legislation that funds US Farm and Food Programs

• Approved roughly every 5 years

• Analysis presented today – focused on 2008-2013 legislation

• Current version signed 2014 “Agricultural Act of 2014”

Farm BILL TITLES

I. Commodities

II. Conservation

III. Ag Trade & Food Aid

IV. Nutrition

V. Farm Credit

VI. Rural Development

VII. Research

VIII. Forestry

IX. Energy (biofuels)

X. Hort. & Organics

XI. Livestock

XII. Crop Insurance

XIII. Commodity Futures

XIV. Miscellaneous

Which Title Gets Most $$$ ?

Total Est. Cost = $284 billionProjected = ~$60 billion/year

Actual = $80 b/yr, $400 billion 2008-2012

97% in just 4 titles

CO

MM

OD

ITY

PR

OG

RA

M

SPEN

DIN

G

FARM COMMODITY PROGRAM IMPACTS

• Farm Structure & Farm Well Being

– Overall impact on farm trends = easily overstated

• Reinforces demographic, market, tech forces

– Short-term direct income benefits can stabilize rural economies (in farm dependent areas)

– Multiplier effects are diminishing over time

– Long-term benefits reduced as they are capitalized in land values

• FARM ≠ RURAL: Most rural communities don’t depend on farming

CR

OP

INSU

RA

NC

E SU

BSI

DIE

S

Crop Insurance and Disaster Assistance Impacts

• No strong empirical evidence of direct positive link between subsidized crop insurance and broader rural community well-being

• Can minimize volatility and shocks to farm income (and help survive natural disasters)

• Private insurance industry can be source of local jobs

• Subsidized insurance may promote risky behaviors

• Not very efficient way to promote rural development, but preferable to commodity $

CO

NSE

RV

ATIO

N

PR

OG

RA

M S

PEN

DIN

G

Conservation Program Impacts

• Few experts see conservation programs as a major driver of rural development

• Little published research

• Land retirement programs reduce agricultural economic activity

• Improved environmental quality and wildlife habitat sometimes supports recreational economy, but difficult to quantify net effects on communities

FOOD AND NUTRITION SPENDING

Food and Nutrition Program Impacts

• By far the biggest amount of federal spending, but spread across much larger landscape

• Universally viewed as significant and direct contributor to rural community well being

• Nutrition payments more likely to be spent locally

– higher multiplier effects

• Local food system support has been beneficial in some places

– but mostly in urban & suburban areas

RU

RA

L D

EVEL

OP

MEN

T P

RO

GR

AM

SRotation Funds & Leveraging = Actual spending = $24 billion in FY11

Rural Development Programs

• Large research base demonstrating benefits of different rural development approaches; few studies of the impacts of farm-bill funded RD

• Experts suggest that USDA-RD programs generate obvious and significant benefits for many rural American– Grants, Loans, Loan Guarantees for infrastructure

– Homeownership/housing

– Capacity building (entrepreneurship, human capital) –important but less well funded

Geographic Differences in Farm Bill Impacts

• Farm program spending data from USDA (compiled and made available by the Environmental Working Group –farm.ewg.org)

– Note: reflects where farms are (not nec. recipient)

• Food and nutrition spending data from USDA

• Explore overall and per capita spending

TOTAL PAYMENTS BY COUNTY

ALL FARM PROGRAMS FOOD AND NUTRITION PROGRAMS

TOTAL PAYMENTS PER CAPITA

ALL FARM PROGRAMS FOOD AND NUTRITIONPROGRAMS

By Farm Program

Type

KEY CONCLUSIONS

• The most important farm bill programs are the rural development and nutrition programs because of their wide reach and direct impacts.

• Rural development programs make the biggest impact per dollar spent. – Designed to benefit rural communities

– Provide the basic building blocks for rural development

– Loan guarantees are a particularly powerful tool since they leverage investment from other private and public lenders.

KEY CONCLUSIONS (cont)

• Farm commodity programs are probably the least efficient policy mechanisms for promoting rural community well-being. – Key exception = farm-dependent areas

• If rural community outcomes are a primary policy goal and assuming finite federal resources, experts in recommend shifting public investments away from direct payments and into targeted rural development programs.– But politically difficult

KEY CONCLUSIONS (cont)

• Efforts to promote broad rural community development, provide for nonfarm employment, and sustain rural amenities and quality of life may be more important to the well-being of most farm families than benefits from traditional farm programs.

THANKS

FULL REPORT available: www.foodandagpolicy.org

(click on “Publications”)FULL URL: http://www.foodandagpolicy.org/sites/default/files/AGree-FarmBill%20Programs%20on%20Rural%20Devlp%20Apr2013.pdf