In May 2008, at a time of high market prices and record farm incomes for US farmers, a new US Farm Bill was passed. The Bill provides policy directives and sets down support prices and arrangements for the period from 2008 to 2012.

The 2008 Farm Bill strengthens US agricultural protectionism at a time when there was an opportunity for real reform. The Bill contains increased support opportunities for most major crops, greater certainty for disaster relief, extension of payment thresholds for dairy, and sugar arrangements that minimise imports.

Mr Glyde noted that in addition to being important for US farmers, the Bill is also important for farmers around the world including Australia, as US policies markedly affect world agricultural trade and prices.

“Most of the support under the Farm Bill is for the major grains, oilseeds, cotton, dairy products and sugar which together account for about 40 per cent of the total value of US agricultural production,” Mr Glyde said.

Mr Glyde said the changes in the Bill extend the opportunities for US farmers to receive government support, even in instances when market prices are well above historical support prices and the target prices set in the current Bill.

The buoyant market conditions when the Bill was developed might have been expected to provide an opportunity to reduce or eliminate the market distortionary effects of US farm protection with few adjustment costs.