There is an interesting article in Sunday's NY Times that I thought
sanet-mg folks might be interested in.
August 8, 1999
It's Raining Farm Subsidies
By TIM WEINER
WASHINGTON -- CITY slickers may think there was some
connection between the withered cornstalks they saw on
the nightly news last week and the Senate's passing a $7.4 billion
"emergency" agricultural aid bill on Wednesday.
In fact, there is a crisis in American farming, but it has
little to do with this summer's drought, and a lot to do with Washington.
Federal farm policy is creating bigger and bigger farms and fewer and
fewer farmers, converting tens of billions of taxpayers'
dollars into cattle fodder, creating big profits for the biggest
agribusinesses and underwriting cheap hamburgers.
But that policy is bringing precious little benefit -- and,
some argue, great harm -- to small farmers trying to make a
living, critics say.
These critics include the conservative Senator Phil Gramm of Texas, the
centrist National Farmers Union, which represents 300,000
farmers and ranchers, and the liberal Environmental Defense Fund. Though
they marshal their arguments in different ways, they generally agree that a
system begun back in the Depression to help farmers survive is now
"planting a seed that is going to destroy American agriculture as we know
as Gramm said last week.
The Government will plow close to $24 billion into agriculture this year,
assuming the Senate bill becomes law. That Federal money will
account for nearly half of all farm income, Agriculture Department figures
show. No other American business receives this kind of subsidy.
Very little Federal largesse goes to small farmers growing food. Most of it
goes to the increasingly industrialized production of a few basic
like wheat, soybeans and corn -- not the sweet corn of summer, but the corn
that animals eat. One-third of the wheat, three-quarters of the corn and
almost all the soybeans are used for feed, not food.
And much of the market for those commodities is controlled by corporations
like Cargill, the nation's largest privately held company, and
Archer-Daniels-Midland, the politically connected conglomerate recently
fined $100 million for price-fixing. These two companies control 60 percent
of the export market for American grain.
"Agriculture policy does not protect the person you or I think of as a
farmer," Tom Buis of the National Farmers Union said. "It benefits the
largest operations and the processors. And the processors want cheap grain.
There are a lot of different interests in agriculture, and the
farmers are the least powerful."
The number of small farmers -- those with annual gross incomes below
$250,000 -- has declined by 75 percent since the 1960's. With tiny profit
margins, farmers must have bigger farms, pricier machines,
more fertilizers, fence-to-fence plantings. Yet this often gets
Midwestern corn farmers' gross earnings per acre are about the same as they
were in 1950, though their yields have doubled, Agriculture Department
Forced to adapt or die, fewer farmers are running bigger and bigger
operations. Hog barns and chicken coops become huge meat factories; these
economies of scale affect farming and ranching everywhere.
Farmland is concentrated in fewer and fewer hands: Five percent of the
landowners now own 50 percent of all farmland.
And just as no other industry gets the kind of Federal subsidy that
agriculture does, no other industry suffers from overproduction on the same
scale. One big reason that prices are plummeting is that farmers are growing
too much. There is no market for half this fall's wheat crop-- close to a
billion bushels, growers say. F EDERAL farm law iscontributing to that
the critics say. The law was revised by the Republican Congress
in 1996 to remove the set-aside subsidy, which paid farmers to let part of
their fields lie fallow. The old law had many critics, but thechange
"accelerated this trend of overproduction," said Buis. "It encouraged more
production without any measures to control supply."
Tim Searchinger, a senior attorney at the EnvironmentalDefense Fund in
Washington, said: "The subsidies mean that farmers produce toomany basic
crops, taxpayers pay them for the excess, and farmers keep doing it. They
mean millions more acres of corn and wheat fields, more tons of fertilizer
Before the Senate's new bill, the Agriculture Department forecast farm
income declining very slightly this year, from $44.1 billion last year to
$43.8 billion. Congress, by passing a bill of that size, would push the
up above $50 billion -- with $24 billion coming from the Treasury. The
same forecast shows the total value of farm assets rising and farm debt
declining this year.
The new farm law was supposed to let the market rule. To an extent, it has.
The agribusiness giants like overproduction because it keeps prices down.
But Congress pumps more and more money into the system -- including a $6
billion "emergency" package last October along with the $7.4 billion offered
by the Senate -- and the total payout has been greater than or equal to what
would have been paid under the old law, according to Agriculture
Department figures cited by Searchinger.
"We are paying so much money that we are actually encouraging more
production rather than compensating people partially for their losses,"
Senator Gramm said. "We are going to end up exacerbating oversupply and
driving prices further and further down." There is a farm crisis, but it
seems to be that the market, supported by the Government, is forcing
America's small farmers to get big or get out.
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