Farm Bill Economics: Think Ecology
By Brad Wilson at Jan 03, 2013
An Ecological Analogy for Economics
In the ecology of farming, the idea is to follow the designs of nature as much as possible, to work with, not against nature. To undertake a farming operation that ignores the realities of nature, of ecology, is to court peril. This view of the ecology of farming makes a great analogy for understanding the economics of the Farm Bill, such as the role of farm subsidies.
Consider the view that is widely held in the Food Movement, that Farm Bill spending is the key to Farm Bill economics. The basic goal is to remove subsidies (spending) from what is not desired, and pour them in to what is desired.1 Thus we see that corn and soybeans, for example, receive a lot of subsidies, but people will be healthier if they eat more fruits and vegetables, so why not transfer this money to fruits and vegetables?
In light of the analogy of ecology, such a strategy is completely arbitrary. It’s like ignoring nature. It fails to take into account the underlying economy of agricultural production and marketing. To follow such a strategy, then, is to court peril.
What is most fundamentally needed in the Farm Bill is economic management, not elaborate schemes for writing out massive checks and spending huge sums of scarce money in arbitrary ways. Save the spending for more minor, more highly valued purposes, as a way to make up for past mistakes.
Farm Commodity Crops
We find, then, that the major farm commodities strongly tend to fail to self-correct in deregulated “free” markets. Prices are usually low, and are often destructive of our food system, as in the case of the dairy crisis, where, failing to address these economic realities, we’re continuing to drive most surviving dairy farmers out of business.
Fortunately a balanced and effective method of market management was developed in the New Deal to address these economic realities. Instead of arbitrarily writing out checks, (there were no farm commodity subsidies in these programs,) the government balanced supply and demand, and set a floor under, and a ceiling over prices, protecting both farmers and consumers/processors/retailers. These programs worked with the economic realities of agriculture, (the ecological analogy,) merely moderating the extremes (too cheap, too expensive). In this way, the programs were much less expensive, and for many years more than paid for themselves,2 as farmers paid interest on price floor loans.
Fruits and Vegetables
Alternatively, consider the case of fruits and vegetables. In the “Food Subsidy” or “Subsidy Transfer” paradigm of the Food Movement, the goal is to take subsidies away from commodity farmers, who are thought to get them unjustly, and give them to fruit and vegetable farmers, and in other ways stimulate more production of these crops. Such goals don’t take into consideration the economic realities that farmers face, and the impacts of them.
First, commodity farmers only started receiving subsidies after years of government (chosen) reductions in the effectiveness of market management programs. By creating oversupply, Congress lowered market prices, creating a need for subsidies to reduce the speed at which farmers were driven out of business, (to reduce farmer anger at Congressional ineptitude and injustice). To arbitrarily increase fruit and vegetable production would likewise drive down those prices, driving these farmers out of production at similar rates. By ignoring economic realities, such a strategy damages our food system.
Unlike commodity crops, fruits and vegetables, (like dairy,) are perishible. For that reason, reserve supply programs don’t work well. On the other hand, because they are perishable, they cannot as easily be stored by corporate buyers, to drive down prices in future years. Prices don’t tend to be as low as in the case of commodity crops which, even with subsidies, tend to fare more poorly than fruits and vegetables.
The programs developed in the New Deal for fruits and vegetables were marketing order programs, (similar to those for dairy). Surprisingly, these programs have been largely ignored by the Food Movement.
One goal in the Food-Subsidy/Subsidy-Transfer paradigm has been to take money away from commodity farmers (the Farm Bills most severe victims,) and use some of it to increase the SNAP program (Food Stamps). That would be great if only these proposals included measures to address the major economic realities, if only they included market management, “The Major Farm Justice Proposals for the 2012 Farm Bill.”3 No farm commodity subsidies have ever been needed except to compensate farmers for irrational Congressional choices, such as the choice of having the US lose money on farm commodity exports for decades (to secretly subsidize the huge US and foreign commodity buyers).
Here too, however, we can apply the ecological analogy for economics. Economically, a lot of the money for Food Stamps is needed only because Congress has set the minimum wage rate too low, because it’s so far below a living wage rate. Like Congress’ chosen failures in the area of farm commodity profits for farmers, farm states and US farm exports, this is another hidden, “free” market “subsidy” entitlement for corporations. Fixing this, however, is not a Farm Bill category. It greatly increases Farm Bill spending needs, but it’s not handled by the Agriculture Committees.
The ecological analogy for economics also applies to the ecological issues of the Farm Bill. Switching money from the Commodity Title to the Conservation Title has been a major goal of the Food Movement. Here too, though the values seem great at face value, the strategy, in ignoring the larger economic realities, is, in important ways, anti-ecological and counter productive.
For example, for 2007, Conservation Title spending was about $4.8 billion. The Food Movement goal has been to increase that amount significantly by taking money away from other categories, especially the Commodity Title. Here again, these proposals have had no market management component to them. Economically, however, we find that, for 2007, Commodity Crop Farmers were reduced below previous standards (when we had price floors set at fair trade levels) by more than $86 billion (in the US, not counting global impacts, which are much larger. Here we see, on the one hand, a focus on a few billion dollars of government spending, and on the other hand, an ignoring of market influences in the tens of billions of dollars.
And just what is the impact of this market money on conservation and sustainability? Over the decades since 1953, Congress has massively lowered the prices for crops like corn, soybeans and feedgrains leading to a quarter century in which price levels fell below full costs. This then ran most farmers out of business, and, more significantly for our ecological analogy, used market prices to massively subsidize the transfer of livestock off of diversified farms and into highly concentrated, anti-ecological animal factories. That’s a huge market impact on conservation. Basically, by reducing and eliminating market management (ie. to hold farm commodity prices up to fair levels,) the government massively subsidized (not with checks, but through the markets,) CAFOs with feed ingredients priced well below fair trade levels and even below costs.
Here then are farmers who have been run out of the “value-added” livestock business by Congressional choices, (choices that also involved the US losing money massively on farm commodity exports). Basically, CAFOs could buy the feed ingredients cheaper than farmers could grow them. Without livestock, then, farmers lost the option of implementing the best Resource Conserving Crop Rotations. Ideally Iowa farmers might grow, for example in a four year rotation, a small feedgrain, alfalfa or clover (powerful legumes to take sustainable forms of nitrogen out of the air for free,) corn, and soybeans. Without livestock, however, farmers have no economic reason for growing the legumes, (and without adequate price floors for feedgrains, they have little incentive to grow them).
We see, then, that the Food Movement, instead of helping provide an economic reason for conservation, sustainability and diversity for commodity crop farmers, would arbitrarily penalize and victimize them further, while providing massive hidden subsidization for unsustainable CAFOs. They would then try to fix the system by providing a few billions of dollars of subsidies to encourage sustainable crop rotations. They would continue to support Congress in secretly subsidizing the removal of livestock from most farms, while calling for comparatively small subsidies to support crop rotations that cannot be viably implemented without the economic support of livestock production.
Here again, this is the ecomomic equivalent of violating the principles of ecology in the biological system of agriculture. The ecological analogyf or Farm Bill economics is violated. By ignoring the larger economic realities of agriculture, in it’s Farm Bill advocacy, the Food Movement repeatedly shoots itself in the foot,
The Ecology of Politics
A similar analogy from ecology can be applied to political realities. In the “anti-ecological” narrowness of it’s Farm Bill advocacy, the Food Movement has taken unwise approaches to political realities. Essentially, it’s whole strategy is to increase Farm Bill spending in order to achieve a variety of social goals. Meanwhile the political climate in Washington is to reduce spending. Meanwhile the entire country and world has encountered a massive economic crisis, and has already spent a lot of money to try to prevent an economic panic.
But note how different it all looks when the ecology of Farm Bill economics is understood. Through a market management strategy, larger goals can be achieved with less spending, as shown above. Farm Commodity Subsidies can be eliminated, not merely reduced, as market management tools again help farmers generally to take back livestock from CAFOs and implement Resource Conserving Crop Rotations. This then frees up more money for other purposes, while reducing the need for other kinds of spending. In addition to conservation and sustainability, less subsidized credit is needed. Less Rural Development money is needed. Globally, in preventing export dumping and maintaining fair trade prices, less food aid is needed long term in least Developed Countries which are 70% rural and dependent upon fair farm prices. A similar stand can be taken for raising the minimum wage to living wage levels.
This then changes the nature of the political debate. Against conservatives the Food Movement can then argue that they should support profits for America in farm commodity exports to foreign countries, not massive foreign subsidization (by cheap market prices) combined with massive US taxpayers subsidies. They should run farm programs like a business, not a welfare program. They should make sensible changes that eliminate the need for farm commodity subsidies.
The food movement is well aware of the absurdities that are involved when farming systems are designed to move farther and farther away from ecological principles, from the realities of nature. In our ecological analogy for farm bill economics and politics, the same kind of reasoning applies. Instead of looking for quick fixes in cookbook style, through mere subsidy changes, deeper and much larger changes in farming systems should be sought, through consideration of the larger farm economy, instead of relying on government spending to fix everything. Great solutions were created out of the New Deal and the Steagall Amendment of 1941, when farm programs were run as an economic stimulus. This history has been forgotten or severely misinterpreted by food movement leaders. The result has been “anti-ecological,” anti-economic, counter-political. It is a bad model for Farm Bill knowledge, for achieving justice and sustainability, and for strategy. These flaws have carried on in the Food Movement through the 2008 and 2012 Farm Bill cycles. They must be changed.
1. See the effort led by Anna Lappe, Dan Imhoff and Kari Hamerschlag “Experts Tell Congress: Support Healthy Food System, Not Big Ag,” Common Dreams, 6/5/12, http://www.commondreams.org/headline/2012/06/05-6.
2. See data charts, "When Farm Bills Made a Profit," zspace, Brad Wilson, http://www.zcommunications.org/albums/288.
3. Brad Wilson, “Primer: Farm Justice Proposals for the 2012 Farm Bill,” zspace, 5/11/12, http://www.zcommunications.org/primer-farm-justice-proposals-for-the-2012-farm-bill-by-brad-wilson