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Warren Offers Plan to Overhaul Government Farm Subsidies System

Warren Offers Plan to Overhaul Government Farm Subsidies System

(Bloomberg) -- Democratic presidential candidate Elizabeth Warren proposed a complete overhaul of the government-subsidies system for U.S farmers, replacing it with what she called a supply management system.

The plan announced Wednesday comes as the 2020 Democratic field descends on Iowa for the annual state fair in the first presidential-contest state.

Warren Offers Plan to Overhaul Government Farm Subsidies System

Warren proposed replacing the current $10 billion government subsidies system with a new approach, under which the government would offer to buy products in the form of a loan until farmers are able to secure better prices from private purchasers. The government would store the products in reserves, and would release the supply in and out of the market to stabilize consumer prices and farmers’ incomes.

“By making this shift, we can raise farm incomes and reduce taxpayer expenditures,” Warren wrote in a Medium blog post. “We can break the stranglehold that giant agribusinesses have over our farm economy, and expand economic opportunities for small-and medium-sized farmers.”

To address overproduction, farmers would have the option of bidding land into conservation programs and out of production. The USDA would issue payouts based on the environmental benefit the land could provide.

Iowa Swing

Warren is beginning a four-day swing through Iowa, where farmers have been suffering as a result of falling commodity prices, losses from flooding and President Donald Trump’s trade war with China. She plans to visit Pacific Junction, a city recovering from a March flood, and a farm in Harlan, as she seeks to build support among rural voters who overwhelmingly backed Trump in 2016.

With a campaign motto of “I have a plan for that” that calls for “big structural change,” Warren is betting on her detailed policy proposals and experience to prevail in a crowded Democratic primary contest dominated so far by former Vice President Joe Biden, who released his plan for rural America in July.

On Tuesday, Trump hinted he would add to the $28 billion in aid he has approved for farmers suffering losses amid the escalating trade conflict with China as he kicks of his own re-election campaign.

In her plan, Warren pledged to level the playing field for U.S. farmers by reviewing and reversing anti-competitive agriculture mergers while holding corporations accountable for environmental abuses. Warren said she’ll increase annual payments to farmers who practice sustainable farming from around $1 billion to $15 billion. Another $400 billion from her proposed $2 trillion “Green Manufacturing” plan would go toward reducing the carbon output of the agricultural sector.

Jonathan Coppess, who ran the U.S. Department of Agriculture agency that oversees farm subsidies during the Obama administration, said Warren’s proposal was “a mixture of good and bad.”

“Seeking to revamp conservation and farm programs to better invest in things like soil health and carbon sequestration, etc. needs to be a big priority” and Warren’s plan moves in “generally a positive direction” on that goal, Coppess, now director of the agriculture policy program at the University of Illinois, said in an email.

But he said her proposal to revamp the subsidy system is largely a step back to a New Deal era approach that the U.S. abandoned because of its shortcomings.

“The history of farm policy provides a lot of cautionary tales about efforts to support prices, control supplies and the like,” Coppess said, citing failures to manage supplies during the 1950s and 1960s.

He added that guaranteeing farmers a price based on their costs also ends up subsidizing suppliers of seeds, fertilizers, pesticides and other inputs, industries that have strengthened their market power through consolidation.

Major farm groups didn’t immediately comment on the proposal.

In a separate Medium post also released Wednesday, Warren introduced a plan for an $85 billion federal grant program to expand broadband internet access for rural communities and increase in funding for community health centers by 15% per year over the next 5 years. She’d direct the Federal Trade Commission to block all future mergers between hospitals without proof that the combined entity would improve access to care, and implement measures aimed at strengthening FTC oversight of health care organizations.

To contact the reporters on this story: Misyrlena Egkolfopoulou in Washington at megkolfopoul@bloomberg.net;Mike Dorning in Washington at mdorning@bloomberg.net

To contact the editors responsible for this story: Wendy Benjaminson at wbenjaminson@bloomberg.net, Joe Sobczyk

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