Cover
story
Playing with the big boys
By KATHRYN CASA Special
to the National Catholic Reporter
Americas agriculture subsidies date back some 60 years to
the New Deal, but it was during the 1960s that Washington developed a system of
support payments for farmers who produced the major commodities -- wheat, corn,
cotton, rice, sorghum, barley and oats.
Three years ago, however, the Freedom to Farm Bill upended those
subsidies, opened the way to a market model for farming, lifted restrictions on
what farmers could plant and generally raised expectations of greater profits
for farmers.
The promise has not materialized. In fact, the plight of small
farmers, by most measures, continues to worsen.
For the past 20 years, farmers have received federal assistance
for setting aside, or not planting, a portion of their land to compensate them
for prices below the governments target price. In 1987, when support
payments were at their peak, the U.S. government paid farmers $17 billion -- 30
percent of farmers net income for that year -- to make up the difference
when market prices fell below government-set target prices for those crops.
Sen. Pat Roberts, R-Kansas, who as a congressman two years ago
chaired the House Agriculture Committee and was an architect of the 1996 farm
bill that shaped the nations current agricultural policy, reasoned in an
interview that year: Worldwide agricultural competition usurps markets
when we reduce production. In short, the supply-management rationale not only
fails under close scrutiny but also has enabled international competitors to
increase their production by more than we set aside.
Federal policies in 1987 began putting downward pressure on prices
by freezing target prices, lowering loan rates and subsidizing exports. At the
same time, then-Agriculture Secretary Clayton Yeutter helped give U.S. farmers
a stronger entry into foreign markets by urging reductions in agricultural
subsidies worldwide through GATT (General Agreement on Tariffs and Trade).
In 1990, Washington reduced the amount of acreage eligible for
government payments to farmers and laid the groundwork for the 1996 Freedom to
Farm Act, which lifted government restrictions on what farmers could plant. It
was aimed at encouraging crop rotation, which generally means less use of
insecticides for pest control and less soil depletion. It also took a
market-oriented approach by eliminating target prices and phasing out
government subsidies to farmers by 2002 via a gradual reduction in
payments.
But according to Brad deVries, communications director for the
Washington office of the Midwest Sustainable Agriculture Working Group and the
Sustainable Agriculture Coalition, the farm bills potential has borne
little fruit, in part, because the lumbering federal bureaucracy itself has
found it difficult to shift gears.
There was a real opportunity for the Department of
Agriculture and farmers to explore different systems that would get them off
the roller coaster of boom-and-bust commodities prices, to find ways to connect
more directly with consumers or find alternative crops that would reduce their
costs and increase their returns rather than producing corn yet again and
taking whatever price they give you at the elevator.
Unfortunately, one thing weve seen is the (USDA) and
the commodity organizations continue to encourage people to do the same thing
over and over again -- to continue with corn and soybeans, said deVries.
So consequently were in a spot where corn prices are in the gutter.
Soybean prices are in the gutter. Wheat prices are down. Wheat harvests are
down, because they plant wheat for so many years in the same ground.
Observers say the 96 farm bills sunset on subsidies
failed to anticipate the dawn of the Asian markets crisis. In 1996, with Asian
economies growing and trade restrictions shrinking, the demand for grain was
expected to go nowhere but up. But today, the cascading dominoes of the Asian
financial markets crisis are heading straight for U.S. tables.
With American farmers heavy reliance on foreign markets, as
long as international markets remained strong, prospects for Washingtons
newest free-market farm policy were sunny. But when the markets began to cloud
over, so did many experts predictions that the nations smaller
farmers could survive the roller-coaster ride without the safety net of federal
subsidies.
As Archer Daniels Midlands senior vice president Martin
Andreas sees it, U.S. agriculture has been over-regulated. Farmers have
not been able to work in free, open markets and capitalize on the best
opportunity to make a dollar. Freedom to Farm changes that and says you can
plant what you want where you want, when you want. But freedom has its risks
also. No sooner did they pass that act than grain prices plummeted. Farmers are
at risk, but they also have more opportunity to make more money than before.
... You have to let the Freedom to Farm Act have an opportunity to
work.
Thirty-two states saw personal farm income drop sharply between
1996 and 1997, and the Department of Agriculture predicts that 1998 farm income
will be down about $11 billion from 1996. In some states, such as the Dakotas,
the plummeting commodities prices paired with weather disasters translated into
a 90 percent decrease in farm income. Iowas farm income is expected to
drop by half between 1997 and 1999.
Huge industry giants ... can ride out low prices and take
advantage of high prices in the way a small grower cant, said
Judith Redmond, a walnut grower and executive director of the Community
Alliance with Family Farmers in Davis, Calif.
What farmers are facing, predicted Joan Allsup, an Iowa chicken
farmer who directs the Land, Church and Community project of the National
Catholic Rural Life Conference in Des Moines, Iowa, could be the onset of
another farm crisis that, depending on how long commodities prices stay low,
could pack a punch every bit as devastating as the economic wallop of the
80s.
The situation is unlike the 1980s, when there were low
commodity prices and high interest rates, but basically what we have is really
low prices and no programs by which to keep production in line with
demand, said Allsup.
Theres nothing to create a balance. There used to be a
federal program until they took it apart. ... Food is very different from any
other business. We all need it to survive. We cannot play games with it. The
stakes are way too high.
And the stakes are highest for family-owned farms. Observers say
when market forces replace government intervention, the result is more farm
consolidation as small-scale farmers, unable to produce at prevailing prices,
sell out to larger operations. Iowa State University economist Maureen Kilkenny
predicted in 1996 that that years farm bill would accelerate the
trend toward fewer and bigger farms.
But well before Milkennys prediction, Agriculture Secretary
Bob Bergland in 1981 issued a report, A Time to Choose, in which he
warned: Unless present policies and programs are changed so that they
counter, instead of reinforce or accelerate, the trends towards ever-larger
farming operations, the result will be a few large farms controlling food
production in only a few years.
Almost two decades later, Agriculture Secretary Dan Glickman
appointed a 30-member National Commission on Small Farms that was asked to
examine the status of small farms and determine a course for the department to
take. In the commissions January 1998 report, A Time to Act,
the panel agreed that Berglands warning had gone unheeded and that
policy choices made since then perpetuated the structural bias toward
greater concentration of assets and wealth in few and larger farms and fewer
and larger agribusiness firms.
The 1998 study acknowledges that federal farm programs
historically have benefited large farms the most, largely through tax
advantages for capital purchases and exemptions from federal labor laws that
allow large operations to hire low-wage-earning farm workers. Yet, it states,
large farms are no more efficient than small operations at producing crops.
The pace of industrialization of agriculture has
quickened, says the document. The dominant trend is a few large ...
firms controlling the majority of food and fiber products in an increasingly
global processing and distribution system. If we do not act now, we will no
longer have a choice about the kind of agriculture we desire as a
nation.
At the University of Missouri, John Ikerd, professor of economics
and coordinator of the sustainable agriculture program, does not dispute that
the 1998 study was done in good faith but, he continued, the
dominant power base within the USDA is not with the family farmers, whatever
the rhetoric may say. The dominant power base is with the ag establishment, and
the focus is on those who produce the major part of the output. That is who
influences policy. What it all comes down to is being able to get legislation
through.
National Catholic Reporter, February 12,
1999
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