An Open Letter to Secretary of Agriculture Dan Glickman
Steps to strengthen family farms and rebuild rural America from the Nebraska-based Center for Rural Affairs
Dear Secretary Glickman,
We are writing to suggest steps that you could take to stem the loss of moderate-size family farms and begin rebuilding rural America by establishing a new generation of family farms.
Like many Americans, you have expressed concern with the continuing decline of moderate-size family farms and wondered aloud about what can be done. We are writing to state emphatically that much can be done. The loss of family farms is not the result of inevitable forces of nature. It is the result of decisions and choices made by people -- choices that can be reversed by people. You are in a position to take the lead.
Ensure Fair and Open Markets
Most studies show that modest-size farms can produce as efficiently as large farms. But they cannot compete if large corporate operations use their economic power to gain unfair advantages through volume-based discounts on inputs and premiums for their production.
We urge you to use your authority to require mandatory price reporting by meat packers to expose price discrimination based on volume of production. Use your broad powers under the Packers and Stockyards Act to aggressively move against discriminatory pricing. Team with the Department of Justice to investigate and prosecute violations. Enact rules preventing packers from gaining captive supplies through livestock ownership and contracts with large producers. Ensure fair and competitive bidding for livestock produced by family-size farms and ranches.
Ask Congress to Stop Subsidizing Farm Consolidation
While virtually every federal agricultural program has at one time or another been justified on the basis of helping family-size farms, many have actually contributed to the demise of such farms by subsidizing the growth of the nation's largest farms.
One recent example is the expansion of farm revenue insurance. This program provides federal funding for a portion of the cost of insurance that covers risk of price decline, as well as crop failure.
Under this program, the bigger you farm the more federally subsidized insurance you get. There is no limitation. Through revenue insurance, the federal government effectively subsidizes the nation's largest farms to bid land away from moderate-size and beginning farms.
We urge you to fight for limits on volume of federally subsidized insurance that any one farmer/investor can acquire. Use the savings to provide better insurance for family-size farms.
We also urge you to provide leadership in the current debate over tax policy. Congress is poised to reinstate the capital gains exemption, with the blessing of the President. In the past, the capital gains exemption has provided deep subsidies and powerful competitive advantages to the largest farms and high-income investors who have the capital and incomes to play the tax-shelter game. Help prevent agriculture from again becoming a playground for tax-motivated investment.
Redirect USDA Research and Education Programs
No area of federal policy has been more powerful in shaping agriculture than publicly funded research programs. The public sector still controls nearly half of all agricultural research. Decisions about where research funds are invested and what types of technologies and farming systems are developed profoundly shape agriculture and the future of family farms.
Too much emphasis has been placed on developing technologies that enable farmers to spend more money to produce raw commodities on a large scale. Too little has been placed on developing the knowledge and technologies to enable farmers to use their management and skills to produce products of higher value and reduce the need for capital and purchased inputs.
We urge you to promote a different approach to agricultural research. Pull together a team to identify new research strategies to strengthen moderate-size family farms. Focus on research that enables farmers to earn a better living on a moderate-size farm by cutting purchased input and capital costs and producing and marketing higher value products.
One example is hoop houses for swine, developed by Canadian researchers. These facilities can be constructed for about a third of the cost of total confinement buildings. They require more intensive management in the barn. But that is the principle competitive advantage that family farms have over corporate farms that must rely on unskilled, inexperienced and poorly motivated employees.
The net cost of production in these systems is comparable to large total confinement systems in spite of the fact that the public has invested tens, if not hundreds, of millions of dollars on research to perfect confinement production. In contrast, almost nothing has been spent to perfect hoop house systems by U.S. research institutions. Perhaps we have been missing the boat.
At the time when the nation most needs a new generation of beginning farmers, the federal government is abandoning them. Federal funds for direct farm-ownership loans to beginning farmers have been cut by two-thirds over the last two years, far deeper than most other agricultural programs.
Now is a critical time for you to take the lead in renewing the commitment of the federal government to beginning farmers. Fight for reasonable funding levels for beginning-farmer loan programs. A many-fold increase in beginning-farmer loans could be funded with savings from minor adjustments in payment-limitation loopholes that enable the nation's largest farms to receive six-figure farm-program payments.
The nation needs new and creative approaches to establishing new family farms. For example, investment of a small portion of the USDA's Fund for Rural America in programs that link beginning and retiring farmers could yield big dividends.
The Extension Service can do much more to enhance beginning farmer opportunities. We urge you to join with farm and rural organizations in providing educational programs to beginning farmers, their families and their communities focused on innovative means of getting started in farming without sinking a million dollars in debt. We stand ready and willing to work with you.
New Markets for Family Farms
There are growing opportunities to strengthen family farms by developing new markets that reward them for producing the kind of food consumers want, in ways that they support. Surveys indicate that over half of all consumers are willing to pay some premium for food produced in an environmentally sound way. Many consumers seek better tasting food, such as free-range chicken, and foods that address health concerns. But farmers lack access to markets that reward them for producing the food consumers want.
We urge you to use the rural development and market development programs of USDA to support development of new markets and new cooperatives. But focus that support where it will strengthen family farms.
Focus on cooperatives that reach out to moderate size and beginning farmers and enable them to gain access to fair markets, rather than merely serving the largest farms with the most capital to invest. Focus on cooperatives that provide markets for farmers who use their skills and management to add more value to their products on their farms.
Hope and Vision
Above all Mr. Secretary, give rural Americans hope for the future of family farming by providing vision and leadership. Demonstrate with the action we recommend that there are not only options to vitalize family farming, but a commitment to do so in the highest levels of USDA.
-- Chuck Hassebrook
Chuck Hassebrook is executive director of the Walthill, Neb.-based Center for Rural Affairs.
©1997 Committee for Sustainable Farm Publishing
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