The good news about this proposal (not that I imagine many people care) is that public investment in infrastructure projects is completely compatible with the WTO's Agreement on Agriculture [Annex 2, Paragraph 2(g)].

But we should be concerned about arbitrarily tying expenditure for one public purpose (infrastructure) to expenditure on another (commodity payments).

There are two problems.

First, investment in infrastructure should be driven by need (i.e., a determination that it will generate net social benefits). That need might be greater or lesser than 1/100th of the amount of money spent on commodity payments.

Second, tying a smaller, beneficial (or at worst innocuous) subsidy to a larger, more distorting one creates a new, unnatural constituency for maintaining the latter -- simply because, without the larger expenditure stream, there will be no money allocated to the smaller one.

By the way, isn't $129 billion divided by 100 = $1.29 billion (not $129 million)?

A competition title is of critical importance to the future of sustainable agriculture in this country. This is an issue the Center for Rural Affairs has long worked on and cared deeply about. In fact, Center staff member John Crabtree testified in Washington on these issues a week ago. Additionally, it is the topic of the letter Jim Knopik wrote to Senator Nelson a few days ago.

Thanks for bringing this issue to larger attention Tom.

Visit the Blog for Rural America: http://www.cfra.org/blog

Right you are about the $1.29 billion--now corrected.

Indexing to commodity support is a powerful rhetorical tool, but as you write:

Second, tying a smaller, beneficial (or at worst innocuous) subsidy to a larger, more distorting one creates a new, unnatural constituency for maintaining the latter -- simply because, without the larger expenditure stream, there will be no money allocated to the smaller one.

Valid point. How about this: Create mechanisms in the competition title that punish the behemoths--and then tranfer that money to infrastructure investment. That manipulated policy in a way that allowed them to profitably obliterate local infrastructure; can they not be expected to foot some of the bill to rebuild it?

Victual Reality

I don't think one can legislate fines on companies who have allegedly engaged in anti-competitive behavior. That has to be done through the courts. Some clarity on the enforcement of competition policies in the agri-food sector is nonetheless needed. I haven't studied the specific proposal you mention, but I would agree in principle that adding a "competition title" to the Farm Bill is probably a good idea.

There is plenty of precedent for legal action. According to a lengthy study published in January 2005 by ActionAid International, over the preceding several years 85% of all fines imposed on global price-fixing operations were paid by food and agriculture cartels. Some of the high-profile cases involved substantial fines and settlements: The US trading giant ADM [Archer Daniels Midland Company] paid US$400 million in 2004 to settle an antitrust lawsuit that claimed the company conspired to fix the price of corn fructose.
ADM was also fined US$100 million in 1996 for its role in the lysine and citric acid cartels.
AE Staley, a US subsidiary of UK sugar TNC Tate & Lyle, was accused of colluding in the corn fructose price-fixing cartel and agreed to pay damages of US$100 million in an out-of-court settlement. Tate & Lyle deny any wrongdoing.
Cargill agreed to pay a US$24 million settlement for its alleged role in the fructose cartel, while denying the charges.