U.S. Taxpayers Are In The Farm Business, In a Big Way - And It's A Loser for Everyone

November 3, 2003

By Joe Rothstein

Editor, USPoliticstoday.com



Speaking of food, here are a few facts to chew on:

Since Congress passed the "Freedom to Farm" Act in 1996, the average price to the farmer of the four major U.S. crops: corn, wheat, cotton and rice has dropped by about 40%.

All of these commodities sell for far less than it costs the farmer to produce them.

The difference is made up from direct federal subsidies totaling between $15 and $20 billion a year. From 1999 to 2001 nearly half of all farm income from these crops came from government payments.

Say that again?

Yes, nearly half of all farm income came from checks the U.S. government writes to farmers to fill the gap between production costs and selling prices.

So the farmers are on a gravy train? Not exactly. About half of those billions in farm payments goes to a few giant corporations such as Monsanto, ADM and Cargill. Meanwhile, between 1996 and 2001, net farm income declined by about 16˝% and the exodus from small family farms accelerated.

And in case you are internationally concerned, here's another fact to chew on: 96% of the world's farmers live in developing countries and those farmers and their countries are being devastated by current low prices.

What's wrong with this picture?

Sounds like everything's wrong, doesn't it?

U.S. farm policy is costing U.S. taxpayers tens of billions of dollars and not helping U.S. farmers survive. Meanwhile, it is destabilizing developing countries, causing the unrest we saw recently at the Cancun trade conference and crippling our relationships with otherwise friendly governments around the world.

Coalitions of protest are forming, and they include U.S. farm groups and rural organizations. A few weeks ago many U.S. farm and rural groups met with their Mexican counterparts in Iowa to share their experiences and talk strategy at a forum sponsored by the National Catholic Rural Life Conference and Catholic Relief Services.

Feelings there ran very high. The vice president of the Iowa Farmers Union said under current policies, "Rural America is dying on the vine. The U.S. government basically wants to turn us into tractor drivers and barnyard janitors."

Note to editors: Look for mass action protests in November and December.

So what's going on? To render a complicated story down to its bare essentials, it's this:

The free marketers have done it again. They've applied free market ideas where they don’t work. By saying any farmer can plant any thing, any time, anywhere, they have insured that there will be an oversupply. Oversupply drives down prices.

When you have this situation in business, corporate decision-makers lay off people and cut back on production and inventory until the market adjusts and prices recover.

In agriculture, individual farmers, making individual decisions, don't lay themselves off. Instead, they plant more crops to make up in quantity what they are losing in price. But with all that extra food supply, consumption doesn't increase. People can only eat so much. So prices keep dropping here and on the world markets where the transnational grain traders are dumping the excess U.S. production at less than it costs our farmers to grow. It's a deadly cycle.

The answer is obvious, and it's one the free marketers don't want to hear: manage the marketplace, specifically the supply. Get a lot of the land out of production so that prices will rise and everyone can make a living.

The U.S. used to have such a program. Excess crops could be stored until climate or other conditions caused production shortages. Then the stored crops would be sent to market to stabilize supply and prices, or donated through our private voluntary organizations to the millions of poor around the world who are going hungry despite the record low grain prices. The government loaned the farmers money for storage and got its money back when the stored products were sold. If farmers defaulted on their loans (only a small fraction did) the government sold the grain and kept the money, usually at higher prices than it paid for it. It wasn't a perfect system by any means, but it was a lot cheaper for the taxpayers and more predictable for the farmers.

That type of system doesn't fit in with the Deregulate Everything, Laissez-Faire Above All philosophy that's now driving all White House and Congressional decision-makers. Besides, Congress just renewed the farm program in 2002 for six years. Let sleeping dogs lie.

Problem is, this dog is not asleep. In fact, it's getting very angry. So far you've only heard the growls from farmers and governments in underdeveloped countries. You're about to hear a lot of loud snarling from the American Heartland -- just before all of those red states go in to vote.

Joe Rothstein, editor of http://www.uspoliticstoday.com  USPoliticstoday.com, is a former daily newspaper editor and long-time national political strategist based in Washington, D.C.

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