COLUMN:Time to make farming viable again
January 28, 2002
America’s farm policy is broken beyond repair – there’s no better way to put it. Our system of crop subsidies and counter-cyclical payments have failed to make farming an economically viable profession for individuals. In fact, it’s achieved just the opposite. According to the Department of Agriculture, 47 percent of commodity payments go to commercial operations with household incomes over $135,000. This hardly represents the populist picture of “American Gothic” invoked by proponents of our current system – in fact, such farms represent only 8 percent of our nation’s 2.2 million farms.
What makes matters worse is that 60 percent of American farms receive absolutely nothing in subsidies, yet these farmers still must contend with the effects of overproduction and price depression largely created by subsidized entities. Ultimately one is looking at a vicious circle of dependence – farm subsidies directly encourage large farms to violate the laws of supply and demand by maintaining high production even when supply is plentiful, driving down prices and creating losses for farmers. This in turn causes more farms to become dependent on counter-cyclical payments (payments which occur during years in which prices drop below set levels), thus keeping the supply high and the price low.
Rinse, lather, repeat and you have a recipe for disaster.
Some proponents of our current socialist schema of payments and subsidies as necessary given the vast systems of crop subsidies that depress prices for exports from the European Unoin. Yet, a tit-for-tat contest of subsidies and trade barriers is no solution to the enduring problem of unprofitable crop prices – rather, it simply escalates the problems inherent in an unsustainable system of price subsidies – after all, if farming becomes absolutely unprofitable, who will farm? The government? State-owned farms are more reminiscent of Soviet Russia, not America.
A better solution in this case is arbitration – subsidies represent an unfair trade practice which clearly undermines the premises of free trade. Much like the E.U. sued the United States in the World Trade Organization recently over tax breaks given to exporters as a closet subsidy, the United States should take the E.U. to task on its vast system of subsidies which encourage even more overproduction and depress prices even more.
Perhaps most galling in this whole debacle, however, is the silence of both supposedly “free-market” conservatives as well as the denizens of the corporate-raiding Naderites of the “ber-left.” Even President Bush, who in his presidential campaign criticized our current farm system, was cowed into signing a reversal of the market-oriented 1996 Freedom to Farm Act. After all, the largest portion of farm subsidies went to the very same states in the South and Midwest Bush claimed in the 2000 election.
But perhaps more shameful is the silence of the “crusaders of corporate welfare” on the issue of farm subsidies, one of America’s most prominent pork projects. Seeing as the majority of farm payments go to corporate operations to begin with, one would think that a strange alliance of free-market Libertarians and Greens would suddenly materialize.
Don’t hold your breath.
The only rumbling that came from the Green Party during the 2000 election about farms mainly concentrated on grain subsidies – i.e., the (conservative) Midwest. Absent from their diatribes were the smattering of dairy and fruit compacts that dominate agriculture in the more liberal East – perhaps because just like the president, they’re cowed under the pressure to garner votes.
Our currently broken system does not wait for votes. Every year any more is a “bad year” for agriculture and subsidies keep going up. According to the Congressional Budget Office, Congress is expected to spend almost $410 billion on farm subsidies through the 2002-2011 period. Obviously, the problem isn’t getting any better.
Rather than pumping money into a system which self-perpetuates its own destruction, Congress should end our socialist subsidies to large farms and allow market forces to control supply, thereby allowing farming to once again become a viable profession. After all, no nation has ever taxed itself into prosperity – or subsidized itself into prosperity, for that matter.
Steve Skutnik is a senior in physics from Palm Harbor, Fla.