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The 2002 U.S. farm bill has been widely criticized for increasing subsidies with detrimental effects on competing agricultural producers abroad and for undermining U.S. leadership in achieving liberalized world agricultural trade. This paper provides an assessment that shows the 2002 bill has effects that are nuanced in at least four respects. It raises expenditures compared to 1996 legislation, but not compared to actual 1998-2001 outlays. It maintains planting flexibility, but extends support to new crops and undermines some of the decoupling of subsidy payments from production and market prices that had occurred. It violates the spirit of U.S. trade liberalization rhetoric, but probably not the letter of U.S. WTO commitments. And it continues the policies of wealthy countries that collectively distort agricultural production and world prices, but only marginally worsen the net effects of these policies. ; IFPRI4; Markets and Trade ; MTID ; PR

This paper examines the issues facing U.S. farm policy in 2007 and beyond in an historical context. Reforms of the main commodity programs along a cash-out and decoupling path peaked when prices were high in 1995-96. Recent buyouts, driven largely by declining production levels and revenues, have also ended supply-control quota programs for peanuts and tobacco. Then, in a setback to reduced subsidies, countercyclical payments were re-institutionalized for the main commodities in 2002, although farmers retained substantial planting flexibility. The radical option of a broader buyout of the commodity programs is an idea whose time has not arrived. Instead, farm groups sought to retain their traditional programs in 2007, despite another commodity price boom. Under budget pressure, direct payments that represent the most decoupled instrument of support of farm incomes came under scrutiny in the domestic debate but were defended by subsidy recipients. In addition, agriculture now has a new policy tool and strengthened political clout through energy policy, and through this policy avenue substantial new power to influence agricultural prices.

The 2002 U.S. farm bill has been widely criticized for increasing subsidies with detrimental effects on competing agricultural producers abroad and for undermining U.S. leadership in achieving liberalized world agricultural trade. This paper provides an assessment that shows the 2002 bill has effects that are nuanced in at least four respects. It raises expenditures compared to 1996 legislation, but not compared to actual 1998-2001 outlays. It maintains planting flexibility, but extends support to new crops and undermines some of the decoupling of subsidy payments from production and market prices that had occurred. It violates the spirit of U.S. trade liberalization rhetoric, but probably not the letter of U.S. WTO commitments. And it continues the policies of wealthy countries that collectively distort agricultural production and world prices, but only marginally worsen the net effects of these policies. ; Non-PR ; IFPRI1; Markets and Trade ; TMD

Congress is on the verge of finalizing a new long-term farm bill to replace legislation passed in 1996. The earlier legislation, when it was enacted, received attention for ist potential to end farm subsidies as they had been known. If Congress had adhered to the 1996 law, both the level and year-to-year variability of previous farm support outlays would have been reduced. Instead, when a three-year run of high crop prices collapsed in 1998, lawmakers began appropriating extra support payments on an annual basis. Momentum to 'beef up' the subsidies authorized in this year's farm bill has been building ever since. The 2002 farm bill will provide both fixed direct payments and producer price guarantees for wheat, feed grains, soybeans, rice, and cotton. It will also authorize an expensive new counter-cyclical subsidy program for a large proportion (but, in principle, fixed quantity) of farm output. The new countercyclical payments will provide a third tier of farm commodity support by reauthorizing subsides similar to those of the past. The long-term support given to farmers by the new bill will have predictable effects. Lawmakers have promised a total of $100 billion in commodity support expenditures over the next decade, which assuredly will create production incentives or be captured in higher land values and rents. Yet, the 2002 farm bill's harm can be limited, depending on how it is written. A House-Senate conference committee is hammering out the final language as this article goes to press.

Technical regulations are increasingly visible in agricultural trade, yet their idiosyncratic nature has limited prior aggregate analysis. This research draws upon a unique data source for systematic enumeration of the technical regulations questioned by one exporter among all of its trading partners in mid-1996. Political economy analysis indicates that barriers decrease when the relative contribution of agriculture to an economy increases, when the anticipated future level of protection through other forms of government intervention increases, and when economies are more open. Despite increased scrutiny and discipline by the World Trade Organization, technical barriers remain a significant impediment in world agricultural markets. ; IFPRI3 ; MTID ; PR

"Agricultural Domestic Support Under the WTO The WTO Agreement on Agriculture subjects different groups of developed and developing countries to different limits on domestic support and allows various exemptions from these limits. Offering a comprehensive assessment of the Agreement's rules and implementation, this book develops guidance toward socially desirable support policies. Although dispute settlement has clarified interpretation of the Agriculture and SCM Agreements, gaps remain between the legal disciplines and the economic effects of support. Considering the Agriculture Agreement also in the context of today's priorities of sustainability and climate change mitigation, Lars Brink and David Orden build a strategy that aligns the rules and members' commitments with the economic impacts of agricultural support measures. While providing in-depth analysis of the existing rules, their shortcomings and the limited scope of ongoing negotiations, the authors take a long-term view, where policies directed toward evolving priorities in agriculture are compatible with strengthened rules that reduce trade and production distortions. Lars Brink is independent advisor on agricultural support policies, and Fellow and former President of the Canadian Agricultural Economics Society. He has held positions with Agriculture and Agri-Food Canada and was a representative in WTO and OECD meetings for many years. Governments, international organizations, academics and interest groups seek his advice. David Orden is Professor of Agricultural and Applied Economics at Virginia Polytechnic Institute and State University, and a former Senior Fellow at the International Food Policy Research Institute. He is an author/editor of five books including Policy Reform in American Agriculture (1999) and WTO Disciplines on Agricultural Support (2011)"--