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How a fraction of farm bill money supports ‘bright spot’ of U.S. international trade

The Senate signed off Thursday on the highly haggled over and long overdue farm bill that the House passed last week. President Barack Obama is scheduled to sign the bill Friday in Michigan, a move that will solidify American food policy for the next half decade.

There’s been plenty of talk about what’s in the Agricultural Act of 2014. Much of the focus has been on the $8 billion cut over 10 years to food stamps (now called SNAP, Supplemental Nutrition Assistance Program) — a program that along with other nutrition benefits make up about 80 percent of the bill — and the shift from farmers receiving direct payments to expanded subsidized crop insurance programs instead.

Nutrition programs and commodity programs together total $845.9 billion, almost 90 percent of the $956.4 billion bill. That leaves roughly $110.5 billion for everything else the bill covers, such as conservation, forestry, rural development and energy.

Note: due to the vastly different amounts earmarked for programs, we turned off some of the larger amounts so it’s easier to compare values between the previous and new bills. To add them back in, simply click on their label in the legend.

One of the smallest line items has traditionally been trade: $3.5 billion (see Table 3) will be spent between 2014 and 2023 on promoting agricultural exports, international food aid and technical assistance for farmers in developing countries, among other things.

The U.S. has had a consistently negative trade imbalance — meaning overall we import more than we export — since the mid-1970s. “But,” notes Robert P. Martin, Program Director of the Food System Policy Program at Johns Hopkins Bloomberg School of Public Health, “there are two bright spots: airplanes and agriculture.”

The new farm bill comes on the heels of a record year for American agriculture exports — $140.9 billion in fiscal year 2013.

“The reason why in dollar value terms we have record exports is because worldwide, we have record prices for the crops we traditionally export: soybeans, corn and wheat,” said Vincent Smith, an international trade economist at Montana State University. This comes at a time when more people across the globe have more money and access to foreign goods. “The increase of per capita incomes in China and India, and especially [their] demand for food and feed grains, have been some of the biggest drivers of those higher prices.”

According to Veronica Nigh, an economist for the American Farm Bureau Federation, the record year was also boosted by a strong dollar relative to other currencies and strong demand from developing nations.

“The U.S. sells about 65 percent of all agricultural exports to developing countries,” she said. “They weren’t hit as hard by the recession so they recovered faster — China and India included.”

Trade agreements are a factor as well, making it cheaper in some countries to import food rather than growing in locally, Martin said. He points out that there’s an interconnected trickle-down effect — it’s not just American soybeans, corn and wheat being exported. Corn, for example, is used in livestock feed.

“What’s happening globally, which has impact on corn and soybeans, is that the demand in China for pork and demand for poultry in India, one of the main drivers is the improvement of the stand of living of developing nations,” he said.

Like trade, there are other little-known items in the bill — allowing colleges to grow hemp for research purposes if their state allows growing it, for example. The Washington Post has a nice roundup of what else is in the farm bill: What’s in the farm bill?

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