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Historically, farm bill politics relied on an urban-rural logroll in which farm state lawmakers voted for food stamps in exchange for urban votes on agricultural subsidies. This year’s debate shows how much this has changed. Republican efforts to cut nutrition programs, including passage of an amendment adding strict work requirements as a condition of eligibility, all but assured Democratic opposition. When ultra-conservative Republicans split ranks because they felt these cuts did not go far enough, they effectively killed the bill. …

Splitting off farm subsidies from nutrition programs would be enormously consequential. In political terms, it would formally tear apart the urban-rural coalition that has been in place since the 1960s. In policy terms it would expose SNAP funding to deep cuts so long as Republicans hold a majority in the House. However, breaking the coalition would also expose farm subsidies to cuts as rural lawmakers could no longer lean on urban members for support. Interestingly, neither side wants to see less money going to its constituents yet this may be what happens as polarized policymaking makes cross-partisan coalitions less stable.

From a fascinating post last week by Johns Hopkins political scientist Adam Sheingate over at The Monkey Cage.

Adam is also the author of the 2003 book The Rise of the Agricultural Welfare State, in which he looked at agricultural protection from a comparative perspective and concluded that agricultural lobbies are not as powerful as one commonly hears.

Gabriel, who knows a thing or two about commodity prices, comments on yesterday’s post in which I talked about how Aulerich et al. find no evidence that speculation caused the food crisis:

I would just add:
(1) Granger-causality is not causality as is typically understood, and is best interpreted as “predictability.” Thus, if knowledge of speculative positions does not improve our price forecasts, it is reasonable to conclude that speculation does not affect prices.
(2) Speculators can profit either by taking long (buy) or short (sell) positions, so there is no reason to believe they would have an interest in strictly rising prices.
(3) Prices have gone up for some commodities for which there are no financial instruments (i.e. speculation); and prices have not gone up for some commodities for which there are financial instruments.

Yet more evidence that speculation has not caused the food crisis:

The “Masters Hypothesis” is the claim that unprecedented buying pressure from new financial index investors created a massive bubble in agricultural futures prices at various times in recent years. This paper analyzes the market impact of financial index investment in agricultural futures markets using non-public data from the Large Trader Reporting System (LTRS) maintained by the U.S. Commodity Futures Trading Commission (CFTC). The LTRS data are superior to publicly-available data because commodity index trader (CIT) positions are available on a daily basis, positions are disaggregated by contract maturity, and positions before 2006 can be reliably estimated. Bivariate Granger causality tests use CIT positions in terms of both the change in aggregate new net flows into index investments and the rolling of existing index positions from one contract to another. The null hypothesis of no impact of aggregate CIT positions on daily returns is rejected in only 3 of the 12 markets. Point estimates of the cumulative impact of a one standard deviation increase in CIT positions on daily returns are negative and very small, averaging only about two basis points. The null hypothesis that CIT positions do not impact daily returns in a data-defined roll period is rejected in 5 of the 12 markets and estimated cumulative impacts are negative in all 12 markets; the opposite of the expected outcome if CIT rolling activity simultaneously pressures nearby prices downward and first deferred prices upward. Overall, the results add to the growing body of literature showing that buying pressure from financial index investment in recent years did not cause massive bubbles in agricultural futures prices.

From a new NBER working paper (ungated version here) by Nicole Aulerich, Scott Irwin, and Philip Garcia. Here is a discussion of the paper by Aaron Smith, who writes:

I commend [Aulerich et al.] for emphatically refuting the Masters Hypothesis. It is important for economists to bring facts and rigorous data analysis to bear on issues that have received such publicity, especially if they appear to be influencing policy

In short, the Aulerich et al. findings fly in the face of what many food policy “experts” love to believe about food prices.