Today's farm program: welfare
By Brad Wilson
The Aug. 26 article, “Farm Bill inaction could turn clock back to 1949,” offers spin and little else. The Senate and House proposals are described as “modern,” “market-based,” “21st century,” the trend for “more than 60 years,” but are not described or supported. The argument is that we didn’t have them in the past.
In criticizing earlier programs, some details are given but are framed with negative words: “controls,” “limits,” “mandatory,” and fear mongering: “nightmarish scenario is looming,” “cascade of disruptive changes.”
In fact, however, the earlier farm programs were run “like a business,” not a welfare program like today. They balanced supply and demand with set asides and reserve supplies, as needed. They put a floor under prices at fair trade, living wage levels, to protect farmers from exploitation by mega-agribusiness grain buyers, and to insure that the United States made a profit on farm exports.
In contrast, under the increasingly “market-based approach,” corn prices were below full costs every year 1981-2005 except 1996 (USDA-ERS). Adjusted for inflation, even with greatly increased yields, corn income averaged only 88 percent of the 1942-52 average.
Since 1942, most farmers have gone out of business, and most of those remaining have lost livestock. It’s even worse for other commodity crops. Wheat prices continued to fall below costs even through 2010.
Missing is the real reason for the earlier farm bills: to manage markets that lack price responsiveness, on both supply and demand sides. Price and supply didn’t self-correct in the deregulated free markets of the past, so U.S. Agriculture Secretary Henry Wallace fixed that.
Today, we lack any price floors or ceilings or supply management, and can easily prove the spin wrong. From 1997-2005, we saw the lowest farm prices in history for various commodity crops and dairy. Below-cost feed ingredients secretly subsidized individual hog and poultry CAFO (concentrated animal feeding operations) corporations at the multibillion-dollar level. Iowa saw 8-cent (per pound) hogs and voted down the pork checkoff. Economic multipliers dried up, and small towns boarded up Mainstreet businesses.
This was followed by severe volatility, where corn prices spiked to double, triple and quadruple the 2005 price (which was the lowest in 146 years).
These omitted facts totally destroy the article’s thesis, and three econometric studies translate it all to further debunk the farm policy claims. The studies, by the University of Tennessee, show the absurdity of today’s welfare-based farm programs, finding that market-management approaches save billions in costs and much better protect both the crop-farmer and the consumer/livestock/processor sides of the farm and food economy.
At bottom, it’s not about “turn(ing) back the clock.” It’s about “taking back the clock.” Congress has abdicated it’s responsibility to face the realities of inelasticity and volatility, giving us expensive welfare programs instead. Farmers, the first victims, get the blame.
There are two excellent proposals that end the touted “modern” welfarism. The Food from Family Farms Act of the National Family Farm Coalition, and the Market Driven Inventory System of the National Farmers Union. A third proposal, NFFC’s Federal Milk Marketing Improvement Act, does the same for dairy.
To paraphrase Lewis Mumford, an authority on technology, Congress should let USDA “take command” and set “the clock” to the correct standard of time (price) and speed (supply). Bottom line, a farm program “clock” that’s not set for 21st century market realities doesn’t really “save time.”Brad Wilson of Springville represents Iowa Citizens for Community Improvement on the board and executive committee of the National Family Farm Coalition. He blogs on farm justice issues at http://www.zcommunications.org/zspace/bradwilson. Comments:email@example.com