Farm Support and Environmental Quality at Odds?

In many respects, a clean, safe natural environment is compatible with a vital, productive farm economy. But evidence shows that agriculture is the largest single contributor to several important environmental quality problems.

Seventy percent of the nutrients and 33 percent of the sediment reaching water-ways originate on agricultural land. Approximately 75 percent of the pesticides sold in the United States are purchased by agricultural users. Most of the conversion of wetland and grassland to other uses over the past thirty years has been a result of agricultural expansion.

Public concern, especially about pesticide and fertilizer contamination of drinking water sources, has sparked accelerated state and federal environmental legislation. Early discussion of options for the next domestic farm bill suggest that this legislative action will carry over into the agricultural policy arena.

Environmental components

Environmentalists are relative newcomers to the farm policy process. In 1985 their views together with those of farm interests were incorporated into a new farm bill (the 1985 Food Security Act, or FSA). This bill combines environmental and resource conservation goals with support of farm income. Contained within FSA is a conservation section which includes "sodbuster" and "swampbuster" provisions. FSA also includes conservation compliance provisions and establishes a cropland conversion program called the Conservation Reserve Program (CRP).

But these programs are no panacea for agriculturally related environmental problems. In its first two years, the CRP has concentrated enrollment of land in wind erosion areas rather than in areas where water quality is most vulnerable to pollution from sedimentation. Furthermore, CRP enrollment rates are declining, and rental rates sufficient to induce full enrollment of 40 million acres by 1990 may be higher than the agricultural budget can tolerate. Moreover, although the effectiveness of conservation compliance is determined in large part by the attractiveness of the farm program payments that would be forgone under noncompliance, the FSA authorizes annual decreases in those payment levels.

While environmentalists were effective in adding conservation and environmental components to the FSA, they have not so far directed their efforts to changing the farm support components of the bill, which constitute the heart of farm policy. Overlooking this strategy may be a mistake because these programs have links to many of the resource and environmental problems of agriculture. Current domestic commodity programs have helped to create agricultural production patterns that have led to environmental problems involving soil erosion, agricultural chemical use, and loss of wildlife habitat. Elimination, phase-out, or other modifications of current farm programs could reduce environmental problems enough to reduce the need for separate environmental legislation.

Farm support programs

Three major sets of programs are currently employed to achieve farm policy goals: programs for commodity price support, farm income support, and supply control. While these programs are often employed in combination with one another, each has a distinct effect on environmental quality.

Commodity price support programs affect environmental quality in that they provide an incentive for farmers to grow more of the supported commodities and to bring more acreage into production. Price supports lead to unintentional, adverse environmental effects because supported commodities coincidentally are grown in ways that result in high levels of erosion and require large volumes of agricultural chemicals. In addition, commodity price support encourages even greater use of fertilizers and pesticides, since yield gains resulting from chemical application have greater value when prices are high.

Farm income support programs provide the means for crop production in regions where farmers must contend with high chemical and irrigation costs. These programs rely on a base acreage system that discourages the diversification of farm operations. Base acreage is used to determine a farmer's deficiency payment for each program crop and is equal to the average number of acres planted in each crop over the previous five years. Corn farmers, for example, are discouraged from planting other crops such as alfalfa because every acre of corn base planted in another crop would reduce the size of their corn deficiency payment for the next five years.

Diversification is important from an environmental perspective because diverse landscape provides more productive wildlife habitat than monoculture and is also less susceptible to pest infestation. In fact, diversification is one of the most important techniques—as is crop rotation—for reducing the use of pesticides and chemical fertilizers in agriculture.

Supply control programs, the third type of farm support program, have varying effects on environmental quality depending upon the form of supply control. Those programs that rely on removing acreage from production to reduce surplus crop production relieve pressures on the land base, but encourage greater use of agricultural chemicals on land that remains in production to compensate for the reduced amount of available land. Acreage control programs, then, increase the application rate of agricultural chemicals per acre, but may reduce soil erosion by limiting the amount of land in production.

By contrast, direct control of commodity supply, a less commonly used form of supply control, would not lead farmers to use more chemicals on land since land use is not restricted. But it might result in a higher level of soil erosion than acreage control since more land would remain in production.

Marketing orders, used mainly for fresh fruits and vegetables, are another form of supply control. Here, growers of certain commodities are allowed to control the amount of the product that is placed on the market in order to regulate price. Some marketing orders use cosmetic standards—such as color, or levels of visible surface insect or disease damage—to limit indirectly the amount of product that reaches the market. Cosmetic standards may cause individual growers to apply more pesticides than they would otherwise to increase the proportion of their crop that reaches the more profitable market.

Net effects

Each of these three sets of farm programs affects environmental quality in different, sometimes conflicting ways. The net effects of the current combination of farm program instruments are that (1) more acreage is retained in the agricultural sector than would be the case in the absence of farm programs, but (2) less acreage is cultivated, and (3) agricultural chemical use rates and crop yields per acre are higher.

There is considerable budgetary pressure to modify, reduce, or eliminate existing farm support programs. The abandonment of all programs, with retention of current conservation provisions, would increase the number of acres planted in crops but would result in the environmentally beneficial relocation and mix of production activities, with less intensive and less damaging use of agricultural chemicals on expanded acreage. However, abandoning all farm programs without providing some alternate means of support would also mean that farm income would decline, agricultural exports would fall, and rural communities and agribusiness interests would suffer. Clearly, new strategies are needed to reduce the conflicts between the goals of farm policy and environmental policy.

Policy choices

At this time, the government has two major alternatives for reducing agriculture's effect on the environment: modifying the provisions of current farm support programs in ways that reduce environmental problems, or implementing new environmental legislation aimed at counteracting the unintentional but adverse effects of current agricultural production patterns.

How could the indirect, adverse effects of current farm support programs on environmental quality be substantially reduced? First, legislative provisions should be introduced that would sever the link between direct farm income support payments and crop production levels. Second, long-term acreage retirement schemes could be targeted to those areas of the country having greatest environmental vulnerability.

Severing the link between income support payments and production levels could take many forms. One option might be the use of payments to purchase environmental services from farmers. In other words, farmers who adopt environmentally beneficial practices could be reimbursed by society for the resultant soil conservation, water quality, and wildlife habitat benefits. This option directly addresses the compatibility of agriculture and the environment and makes sense by offering to pay for services society values rather than for commodities for which there is a taxpayer-supported surplus.

Not only would separating income supports from production levels produce positive effects for the environment, it would also improve the general economy by leading to increased efficiency in the use of resources in agriculture. As with all policies, however, there would be winners and losers. Producers of unsupported commodities such as beef cattle, dried beans, and sunflowers would face increased competition from former producers of supported commodities. Producers of highly protected commodities such as sugar and dairy products would face stiff competition from foreign producers whose costs are lower. Regions having high costs of production or poor-quality soils would experience a reduction in agricultural income. Taxpayers would gain from the targeting or elimination of price and income support programs.

Among other alternatives, two seek to modify the conservation reserve and cross-compliance provisions of the FSA. A widely discussed proposal would expand the Conservation Reserve Program. Under one scenario, land enrolled under the CRP would be expanded from 45 to 65 million acres. Improvement in water quality would be required as the main criterion for enrolling the additional acreage. Another scenario would expand the CRP to 70 million acres, require that 50 percent of the additional land be planted in trees, and encourage the use of vegetated stream borders to improve water quality and wildlife habitat.

The success of an expanded CRP in improving environmental quality would be contingent upon what type of land was enrolled. The current CRP has demonstrated that it is difficult to develop effective criteria for targeting the program toward improving water quality. An expanded CRP would face the same problem. Also, the CRP is an expensive program, and it might be difficult to expand that program given the size of the federal budget deficit and possible upward pressures on food prices.

A second alternative would be to generalize the cross-compliance restrictions in the FSA to cover environmental problems resulting from pesticide and fertilizer use. This "chemical compliance" approach could also be used in conjunction with other strategies. One proposal would deny all farm program benefits to anyone who clears land of trees to establish cropland or who contaminates well or surface water with agricultural chemicals.

Chemical compliance, however, does have its limitations. It is very difficult to trace a specific water pollution incident to a specific use of a chemical on the land. Chemical compliance would therefore be expensive to monitor and difficult to enforce. In addition, it has the potential to influence landowner behavior only if the subsidies gained by participating in farm programs remain lucrative. A phase-out of target prices, then, would also be a phase-out of cross compliance.

Several additional farm policy alternatives offer promise for directly addressing the environmental problems linked to agriculture. These alternatives include taxes or user fees on agricultural chemical use, subsidies to encourage adoption of low-input sustainable agriculture or integrated pest management, and funding of research to develop alternatives to current chemical-intensive practices.

Much important environmental legislation already exists that affects agriculture but is not directly related to farm policy. If agricultural legislation does not independently recognize and address the environmental consequences of agricultural production and current farm policies, then the burden of legislative activity in this arena will fall to federal institutions and state-level agencies having direct responsibility for environmental quality. Such activity is already in process.

Because the costs of preventing pollution from agricultural sources are less than the costs of cleaning up contaminated water, especially groundwater, environmental legislation is increasingly directed at the source of environmental problems. The source of agriculturally related problems is the farmer. Thus, if voluntary actions are unsuccessful and agricultural programs are not modified, it is increasingly likely that restrictions on land use or farm management will be imposed on farmers.

Trade Offs

Stricter environmental legislation affecting agriculture would produce trade-offs. For instance, restricting land use to improve environmental quality would also reduce the incomes of some farmers. Prohibiting pesticide or fertilizer use near vulnerable water systems could reduce crop yields. Although reducing crop yields might indirectly aid the farm sector by increasing commodity prices, individual farmers would pay the costs. In general, stricter environmental legislation would improve the environment but raise the cost of producing food and therefore its price.

The choice between a farm policy approach and an environmental legislation approach (or some combination of the two) depends upon whether and how the value of environmental quality benefits exceed farm sector adjustment costs. An evaluation of both the agricultural and environmental benefits and costs is needed to distinguish among alternative approaches. The environmental benefits of farm program modification need to be examined in concert with the implications for commodity prices, farm income, rural economies, agribusiness, and agricultural trade.

Modifying farm programs to allow for joint achievement of environmental and agricultural policy goals might be less traumatic for the agricultural sector than the alternative, and might be cheaper for society. The more we can modify farm support programs to reduce their negative environmental side effects, the fewer environmental problems will remain that require specific environmental legislation. Given the difficulty and expense of dealing directly with agricultural nonpoint pollution—whether it be the regulation of chemical use or enforcing surface and groundwater standards—this is clearly a situation where an ounce of prevention is worth a pound of cure.