Subject: Re: 40,000 U.S. farmers, but not one ounce of reason

From: [email-masked] (Bob Wilson)
Date: 12 Nov 1994 04:16:33 -0000

Jim Chen painted a somewhat dismal - if pragmatic - picture of how
U.S. commodity price supports influence the motivations and goals
of American agriculture.  He provided an excellent "thumbsketch"
analysis of the mechanisms currently in play to supplement farm
incomes, and how these same mechanisms have driven small farmers
off the land.  He notes:
     "Together, these mechanisms encourage so much live-for-today
     production that the largest commercial farmers flood the
     market with program commodities."
and
     "Federal farm policy rewards production at all costs."
and
     "Either way you look at it, bigness wins."

He concludes that the moral of the story is to restore small-scale
consumption and small-scale personal ambition.  He bases this moral
on a premise that could have been taken from the script of Oliver
Stone's "WALLSTREET" --- I can almost hear Michael Douglas saying,
"Greed is GOOD!!! ---- and will rule as long as this earth spins."

I don't disagree with Jim - at least not within the legal and
economic value system he employs.  I enjoy his writing, and almost
always come away having learned something new.  But perhaps I
simply see the problem from another value system - another paradigm
- another way to motivate change.

Sustainable agriculture does not deny the economic realities of
farming, but rather attempts at every turn to integrate other value
systems into farming.  Conserving the topsoil, reducing or
curtailing the poisoning of food and land, protecting the culture
of rural communities, enhancing the diversity of wild plants and
animals - these elements are also valuable to our society.  Notice
that I said "integrate", not "replace".

The 98% of the American public not in farming has become
increasingly intolerant (read "angry") about threats to both human
and environmental health, be they real or imagined.  I would argue
that if farmers - regardless of operational size - really want to
remain farming the land, they would do well to listen to what their
countrymen expect from agriculture...

... I also suggest that the participants of a sustainable agriculture
are in an excellent position to facilitate such a dialogue.

A basic premise of sustainable agriculture is to conserve the
land upon which farming is done AND the persons who actually do the
farming.  When the value system - the point of view - is shifted to
this conservation motif, the future of American farming becomes
considerably less bleak.

The task for us in sustainable agriculture is to help the person on
the land perceive and implement the other value systems at play, AS
WELL AS the economic system they already know so well.  All we can
rightly ask of farmers on the land is that they make an INFORMED
choice about their farming practices.  We also have the
responsibility of attempting to integrate those other value systems
into Farm Policy - at whatever level.  Society may indeed express
other non-economic values it expects from agriculture, but that
same society must then also accept the economic reality of
compensating the farmer for those expectations, one way or another. 
Subsidizing the farmer for those things the society values is not
only ethical, it is also good business.  Removing the subsidy for
that which is shoddy, wasteful, or unsustainable is likewise good
business.

In the book "New Roots for Agriculture", Wes Jackson writes:

     "There has always been a minority in our country who make a
     practice of meeting the land's expectations first.  Can we
     ever expect this number to increase?  Is there any reason to
     believe that most of the countryside will ever have the chance
     to respond to the touch of a people who believe in and cherish
     such a relationship?"

And like Mr. Jackson, I too offer a qualified "yes"... but it is
going to take a mix of value systems to accomplish.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Bob Wilson    
Fayetteville, Arkansas  USA
[email-masked]
-----------------------------------------------------------------
   Opinions expressed above belong to me - my employer has
         nothing to do with what I think is true.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

---

From: [email-masked] (Bob Wilson)
Date: 12 Nov 1994 04:16:33 -0000

---

From: [email-masked] (Jim Chen)
Date: 11 Nov 1994 01:37:34 -0000

This newsgroup's raging debate about the role of agricultural price and 
income supports in the loss of farm entrepreneurial jobs by and large 
misses the point.  My complaint here is not normative (as it often is), but 
rather frustration over the lack of descriptive precision.

As I understand it, the argument is that government subsidies have driven 
down the price of agricultural commodities and (concomitantly) the price of 
food so far that many farmers can no longer make a living off the land.  
Generally speaking, federal agricultural policy does *not* reduce commodity 
prices; it raises them.  I do agree, though, that price and income 
regulation plays a very significant role in blowing small farmers out of 
the market and off the farm.

There is a failure to distinguish between *price-reducing* incentive 
payments and the price-enhancing troika of mechanisms known as (1) price 
support through nonrecourse loans, (2) income support through deficiency 
payments, and (3) supply management through acreage reduction, conservation 
reserve, and naked antiproduction measures.  Direct incentive payments as 
such are quite rare; with the death of the wool, mohair, and honey 
programs, they will be even scarcer.  The mechanism lives on in the guise 
of export enhancement -- that's right, subsidies to ship U.S. commodities 
abroad using fossil-fueled vessels.  Price-reducing mechanisms do exist 
under federal law, but they blast farm incomes in foreign countries.  
Because these farmers don't vote, the only real restraints on export 
enhancement are international pressure (GATT, NAFTA, etc.) and fiscal 
watchdogs who dislike the amount of direct federal spending.

Price-based income support, on the other hand, is quite popular.  First, 
the government sets a support price by lending funds secured only by the 
value of an expected crop.  If the market price is below the loan rate, the 
farmer simply defaults, and the Commodity Credit Corporation takes title.  
If the market price is higher, the farmer sells, repays the loan, and 
pockets the difference.

But there is usually a separate mechanism for supplementing farm incomes.  
The AgSec may declare a target price for, say, wheat.  If the eventual 
market price or loan rate per bushel (whichever is higher) falls below 
the target price, all farmers participating in the wheat program will 
receive a deficiency payment covering the difference.  There are some 
modest acreage retirement and environmental compliance requirements, but 
the basic idea is allow participating farmers to characterize their overall 
income as the product of their labor -- and not as a welfare payment, which 
is why many farmers opposed "decoupling" as a reform that would make the 
real nature of federal income support too obvious to deny.

Together, these mechanisms encourage so much live-for-today production that 
the largest commercial farmers flood the market with program commodities.  
That's why the federal government spends so much time and taxpayer money 
devising creative supply management strategies -- tobacco acreage 
allotments, peanut marketing quotas, the Conservation Reserve Program, to 
name just a few.  This is the element of federal farm policy that is most 
often mocked as "paying farmers not to farm."  If successful, this last 
step gets taxpayers to spend huge amounts to suppress commodity supplies, 
which in turn relieves the pressure on the nonrecourse loan and deficiency 
payment initiatives but also raises food prices.  Is it any wonder that the 
"hunger lobby" of the 1960s and 1970s -- mostly urban, Northeastern members 
of Congress -- insisted on food stamp legislation as the price for their 
continued acquiescence in the conventional price-and-income programs?

So how does all this blow farmers off the land?  To state the case 
(over)simply: Federal farm policy rewards production at all costs.  
Because each year's participation is based on the previous year's acreage 
committed to a program crop, program farmers can't afford to rotate crops.  
To make up the shortfall in soil nutrients, they turn to chemical 
fertilizers.  To enhance yield -- remember, each bushel harvested means 
additional deficiency payments -- they apply chemical pesticides.  Targeted 
and capped payments, for reasons far too complicated to explain concisely, 
do not keep the bulk of federal payments from flowing into the hands of the 
largest, most industrialized farmers in the United States.

Of course, wholesale repeal of the Agricultural Act of 1949 would expose 
farm prices and farm incomes to the vagaries of the commodity markets.  The 
farms likeliest to survive such violent swings in market prices are the 
largest, the ones that are most thoroughly integrated into the 
agribusiness/processing sectors of the food delivery system.  Smaller farms 
can survive, primarily by submitting to vertical coordination and top-down 
management by seed companies and/or forward contractors.  To borrow animal 
farming analogies for just a moment, the former model characterizes hog 
production, while the latter characterizes the poultry industry.

Either way you look at it, bigness wins.  For my part, if bigness has to 
win, I'd rather trust the market to discipline the terms by which 
agribusiness feeds the masses than rely on the government to figure this 
monstrosity out.  I feel, on balance, that my consumer dollars land with 
greater impact in corporate boardrooms than my votes do in congressional 
offices.  Perhaps not this past Tuesday, but the long-run trend will likely 
bear me out.

Moral: If you really want to restore small-scale farming, you must restore 
small-scale consumption and small-scale personal ambition.  Now there's a 
daunting chore, one that makes price-and-income farm policy look like 
child's play by comparison.  "Man is conceived in sin and born in 
corruption.  From the stench of the didie to the stink of the shroud, there 
is always something."  Greed will rule as long as this earth spins.  Sad, 
perhaps, but undeniably true.

Regards,

Jim Chen
Associate Professor of Law
University of Minnesota Law School
229 19th Avenue South
Minneapolis, MN  55455
voice: (612) 625-4839
fax:   (612) 625-2011