I've had a couple of interesting responses from the recent post on the planting prohibition.

First up, the Fresh Talk blog takes issue with my portrayal of the fruit and vegetable industry:

Whether or not the planting restriction is in place in the next farm bill is an open question - the White House wants it out because of the WTO - and it is certainly open season on the f/v industry by at least some Midwest farm interests and also local food advocates. I don't recognize the f/v industry in the above paragraph. "Paying big bucks to lobbyists," looking for billions in support," "keeping out competition." I hope no self-respecting corn or cotton farmer getting a couple of hundred thousand dollars a year in government checks ever speaks those words about the f/v industry.

Fresh Talk has certainly been paying attention to the fruit and vegetable industry lmuch, much longer than I have. I will say this: the fruit and vegetable industry is certainly paying lobbyists to work on the farm bill to protect and promote their interests (full disclosure- so do we). And while I can't remember the exact numbers that have been tossed around, I do believe the congressional representatives from fruit and vegetable producing states were initially looking at about $5 billion in new spending for fruit and vegetable priorities. That has been whittled down considerably- the House farm bill provides about $1.6 billion and the Senate is in the neighborhood of $1 billion. This money is not for direct subsidies to growers- it is primarily increased research spending and increased purchases of fruits and vegetables for schools. It is, however, still a subsidy. To be sure, the fruit and vegetable industry does not come close to the size and influence of the traditional commodity and producer organizations, but they are there and they have scored substantial wins in this farm bill (so far).

As far as keeping out competition, I still think that's a top priority of the fruit and vegetable industry. For example, the Senate farm bill originally removed the planting prohibition if a farmer enrolled in a new revenue insurance program. Here's one industry response:

Tom Nassif, head of the Western Growers Association, said the $3 billion that budget estimators think the new program would save the government on crop subsidies is about what California produce growers would suffer in losses if subsidized farmers start competing with them by growing fruits and vegetables.

The federal aid those farmers receive "makes it much easier for them to grow more crops and have more production without increasing demand, and that lowers market prices," Nassif said. "A subsidy is a subsidy. We are very much opposed to it and have been from the beginning."

There are several arguments here all rolled into one. Mr. Nassif opposes subidies in general (we're assuming he means direct, checks to the farmer subsidies). Two, farm subsidies as they currently exist would provide an unfair advantage to farmers enrolled in farm programs who choose to grow fruits and vegetables (though he posits no alternatives). Three, and most telling, removing the planting prohibition would increase "production without increasing demand, and that lowers market prices." That, my friends, is an anti-competitive statement. You can call it supply management or whatever you want, but it is using public policy to limit production- and that limits competitor entry into the market. There are also broader, long-debated agricultural economic issues in play here- demand elasticity, etc. I may get to those in a later post.

Fresh Talk is absolutely right about the Bush administration, and it is a point I neglected to address in the previous post. In a landmark ruling a few years back, the WTO declared US cotton subsidies trade distorting (which everyone is still fighting over), and almost as an aside the WTO mentioned that the planting prohibition might mean that direct payments are trade-distorting. Previously, everyone had pretty much thought direct payments could be classified as non-trade distorting, because they are paid regardless of crop prices or even whether a crop is produced at all. In the WTO's eyes, that should mean that direct payments do not support prices and do not encourage production. However, the WTO said that the planting prohibition did affect what types of crops would be produced, and opened the door to a legal challenge before the WTO. The Bush administration likes the WTO, period, so it wants to see that planting prohibition go away. Those of us who want to get rid of the planting prohibition may have an ally in the current administration, but we certainly do not have the same motivations.

I'll agree that "no self-respecting corn or cotton farmer getting a couple of hundred thousand dollars a year in government checks ever speaks those words about the f/v industry". Producers of the five major program crops have certainly enjoyed much greater benefits from the farm bill than the produce industry. And I won't deny that the planting prohibition has an economic benefit for certain firms and individuals- that's the whole point. But that doesn't mean it serves the public good. It's time for the planting prohibition to go.