Farm Bill FACTs: Commodity Title: A Family Farmer's View
By Brad Wilson at Nov 04, 2009
There are a number of major myths floating around related to US federal farm policy, all part of a simple, clear, false paradigm. The false paradigm was widely circulated during work on the 2007-2008 farm bill by the food movement, the environmental movement, certain church and hunger groups, mainstream media, and articles at progressive sites like Common Dreams. Here are some examples of the facts, the myths of the false paradigm, and online documentation to set the record straight.
FACT: The purpose of traditional Farm Programs was to manage supply and demand because farm commodities lack "price responsiveness" on both supply and demand sides. This is not an issue that has ended. The need continues.
"It's Price Responsiveness! It's Price Responsiveness!! IT'S PRICE RESPONSIVENESS!!!." Daryll E. Ray, APAC, University of Tennessee, http://agpolicy.org/weekcol/248.html
Daryll E. Ray, APAC, University of Tennessee, "Are the five oft-cited reasons for farm programs actually symptoms of a more basic reason," http://agpolicy.org/weekcol/325.html.
MYTH: The purpose of traditional Farm Programs was to temporarily give aid to poor people during the Great Depression.
FACT: There were no Commodity Subsidies for decades in Farm Programs.
Agriculture Fact Book 1994 U.S. Department of Agriculture Office of Communications, Table A-3; online: http://www.ers.usda.gov/Data/farmincome/FinfidmuXls.htm, scroll down to United States by Program 1933-2008.
MYTH: Traditional Farm Programs were subsidy programs.
FACT: Farm Bill "Program Crops" (ie. Corn, Wheat, Cotton, Rice, Soybeans, Grain Sorghum, Barley, Oats,) fare WORSE than Fruits and Vegetables.
That the program crops fare very badly (1981-2006) is seen: Commodity Costs and Returns: U.S. and Regional Cost and Return Data http://www.ers.usda.gov/Data/CostsAndReturns/testpick.htm. Fruits and vegetables almost always score higher than food and feed grains in percent of parity, return on equity, and shares of the food dollar. See ERS figures and Agricultural Statistics (yearly publication).
MYTH: Farm Bill "Program Crops" are "PRIVILEGED" or "FAVORED" compared to Fruits and Vegetables.
FACT: Farm "SAFETY NETS" compensate for massive losses, and have left farmers worse off.
See "Effects of Government Programs on Costs and Returns, at Commodity Costs and Returns: U.S. and Regional Cost and Return Data," http://www.ers.usda.gov/Data/CostsAndReturns/testpick.htm. U.S. farmers had net losses vs. full ownership costs overall for each commodity and time period studied. For more recent years see Daryll Ray, APAC, University of Tennessee, "Payments are Decoupled from Production, but is Production Decoupled from Payments," for a simple chart.http://agpolicy.org/weekcol/011.html, for a simple chart. Or see similar charts in his presentation: Rethinking U.S. Agricultural Policy: Changing Course to Secure Farmer Livelihoods Worldwide," pp. 13 & 14; or the full report at: http://agpolicy.org/blueprint.html.
MYTH: Anyone who cares about farmers should favor "SAFETY NETS."
FACT: America has lost billions on EXPORTS of farm Program Crops, subsidizing foreign processors, animal factories, and consumers with BELOW COST grain.
Multiply figures above (costs per acre) by planted acres to get the billions (planted acres at from USDA NASS Crop Production Historical Track Records, April 2009, http://usda.mannlib.cornell.edu/MannUsda/viewDocumentInfo.do?documentID=1593). Or do the same with dumping stats at IATP, "U.S. Dumping on World Agricultural Markets: February 2004 Update" at http://www.iatp.org/iatp/publications.cfm?accountID=451&refID=26018; or stats in Sophia Murphy, et al, "WTO Agreement on Agriculture: A Decade of Dumping," "http://www.iatp.org/iatp/publications.cfm?accountID=451&refID=48532, or going back to 1986 for corn and soybeans: Elanor Starmor, Aimee Whitteman, Timothy A. Wise, GDEI, Tufts University, "Feeding the Factory Farm: Implicit Subsidies to the Broiler Chicken Industry," http://www.ase.tufts.edu/gdae/Pubs/wp/06-03BroilerGains.pdf.
MYTH: America's Farm/Trade policies are "COMPETITIVE" and good for America.
FACT: Subsidy elimination proposals, by themselves, offer no significant PROTECTION against massive dumping (exporting below our costs).
To see some results of some of the main econometric studies see: Timothy A. Wise, GDEI, Tufts University, "The Paradox of Agricultural Subsidies: Measurement Issues, Agricultural Dumping, and Policy Reform Timothy A. Wise May 2004 Tufts University Medford MA, http://ase.tufts.edu/gdae/Pubs/wp/04-02AgSubsidies.pdf. See especially APAC, which can also be seen here: (presenttion) Rethinking U.S. Agricultural Policy: Changing Course to Secure Farmer Livelihoods Worldwide," pp. 23 -25; or the full report, pp. 37 (43 pdf) to 42 (48 pdf) at: http://agpolicy.org/blueprint/APACReport8-20-03WITHCOVER.pdf.
MYTH: Subsidy elimination by itself would end dumping on export markets at below cost.
FACT: The Farm Share of your food dollar has fallen for a century. The farm share is only about 8%, generally much less for grains.
As of 1997 they were below 8% for domestic sales, (search Stewart Smith at http://denali.asap.um.maine.edu:16080/mcs/?q=node/794 I have his yearly data, or see his, "The Decline of Farming in the U.S.," in Choices, First Quarter (1992):8-10);). Farm share is much less for food grains. (Compare figures where input share (Monsanto, John Deere, big ag pharma,) which is more than double of farm share are NOT removed from farm share. Farm share in cereals, breads, etc. are among the lowest of farm shares, which may have been below 1% for some cereals in 2005, see http://nfu.org/issues/agriculture-programs/resources/farmers-share).
MYTH: Higher Farm Prices are the main cause of high food prices. The farm share is about 20%.
FACT: Recent higher FARM PRICES are NOT as HIGH as we've had in the past. They rose from very low levels, (even as low as 25-32% of parity in 2005, which was extreme dumping) to usually less than the full parity we had in the past as a yearly average, even on the one day of our highest prices (ie. corn) in 2008.
Put farm prices from USDA NASS Crop Production Historical Track Records, April 2007) http://usda.mannlib.cornell.edu/usda/current/htrcp/htrcp-04-30-2008.pdf in constant 2008 dollars. $7 corn is not in the top five. As of September 2005, key farm prices were very low, in need of quadrupling (corn, cotton, rice, sorghum grain) or tripling (wheat, soybeans) compared to a fair-trade or living-wage price, (ie. using parity as a standard,) see the Farm Price Barometer on page 2 at http://www.nfu.org/documents/nfunews/2005/1105_nfunews_wb.pdf; also at
MYTH: Farm prices are "SKYROCKETING" beyond all previous records. The lower the price the better for hungry people in LDCs.
FACT: The worlds farmers should not be forced to provide below cost food to solve this food crisis. When they make money with fair-trade, living-wage prices it helps local economies. Least Developed Countries, (LDCs) are more than 70% rural. Their economies are farm economies. They need higher farm prices.
The crisis of poverty and starvation was caused, to a significant extent, by a quarter century of U.S. losing money on exports. See data on dumping above, (US Dumping on World Agricultural Markets ...) Note: IATP, Planting the Rights Seed: A human rights perspective on agriculture trade and the WTO, 2005, p. 1, Box 1: Percentage of rural population. Developing countries Nepal 93% Burkina Faso 92% Rwanda 90% Tanzania 80% China 70% Niger 88% India 60% Bangladesh 60% Pakistan 53% Thailand 52%. Overall Least Developed Countries are 73% rural (2005), or 70.6% (2010): http://esa.un.org/unup/index.asp.
MYTH: Lowering farm prices is the cure to the food crisis in LDCs.
Fact: Grain prices have risen only a small fraction of the amound that fuel prices have risen in the long haul. The days when you could buy a barrel of oil for a bushel of wheat or 2-3 bushels of corn are long gone. For 2008, oil was $91.48 but "skyrocketing" wheat was only $6.80 per bushel. Likewise, the "skyrocketing" price for 2.5 bushels of corn was only $10.75, not $91.48.
Compare historical oil prices: http://www.inflationdata.com/inflation/Inflation_Rate/Historical_Oil_Prices_Table.asp with crop prices: "USDA NASS Crop Production Historical Track Records, April 2009," http://usda.mannlib.cornell.edu/MannUsda/viewDocumentInfo.do?documentID=1593).
Myth: Grain and oil have risen in price by very comparable amounts.