Farm Subsidies: Rebuttal to US PIRG Video: “Stop Subsidizing Obesity”
By Brad Wilson at Sep 21, 2011
Here’s a quick rebuttal to materials I’ve recently found that spread myths and support corporate agribusiness (unknowingly), even as they argue strongly against “giant agribusiness.” Behind this is a new report that is set to come out. It all comes from highly respected US PIRG. Sadly, this failure on the issue trashes US PIRG’s credibility, as it already has for many other public interest groups.
Below are my notes from the video, in bold, followed by my responses. The video can be found here at YouTube.
why are twinkies cheaper than carrots
Brad says: Twinkies are made out of those storable farm commodities. Economically they lack price responsiveness on both supply and demand sides, so the farm prices are usually low. This was fixed by price floors and supply reductions (as needed) but those programs were reduced (1953-1995) and eliminated (1996-). That’s not mentioned in the video. Subsidies compensate farmers for a small part of the reductions, but did not cause them, as I prove 4 ways in “Michael Pollan Rebuttal:”
short answer: tax dollars to mega farms
Brad says: False. Subsidies do not cause the cheapness, and correlate zero with the lowering of prices 1953-1960 for corn, other feedgrains and wheat, 1953-1963 for cotton, 1953-1976 for rice, 1953-1997 for soybeans.
you already bought many of the ingredients of twinkies long before it hits store shelf.
Brad says: Actually, via reductions below fair trade prices (since 1953) and below cost (1981-2006) farmers subsidized more reductions in these prices than you paid back to farmers in taxes, 6 times as much for corn. Look at the actual data.
longer answer: Depression, congress, poverty & drought, in danger of collapsing
Brad says: Though they don’t say so directly here, they spread a common and easily refutable myth. Depression era farm policies and programs had no commodity subsidies like today for corn and other feedgrains, wheat, rice, and soybeans, and early cotton subsidies only lasted 1934-9. That’s what we need today. These were nonsubsidy programs, price floors and supply reductions (as needed) on the bottom side of price, and price ceilings and reserve supplies to protect consumers and other buyers on the top side of price. These were never antipoverty income or subsidy programs, but rather were market management, running US agriculture like a business, balancing supply and demand to get fair prices (like OPEC in oil, but mostly focused domestically).
over next 60 years fewer farmers, giant agribusiness
Brad says: There are multiple reasons for the changes in this direction, but this comment exaggerates the results. Since there were no subsidies from 1933-1961 for corn, (etc., see other dates above, but from 1933 instead of 1953,) then that was not the cause. In the 1962 corporate report, “An Adaptive Program for Agriculture,” they called for getting rid of 1/3 of US farmers within five years by lowering price floors, thus fostering concentration (Committe for Economic Development, pp. 25,34, 40, 42, 59; also online here ). And that was their goal for only 1 decade. They called for programs to get rural youth to move away.
Depression ended long ago, subsidies (graphic ADM, Cargill, Monsanto) didn’t.
Brad says: Subsidies started much later, and Depression era price floors were reduced, more and more, 1953-1995, then ended. We don’t have the Depression era programs any more for these crops (except reduced program for sugar). They get it just backwards. (Here, scroll down to Government Payments: United States by Program, 1933-2010, download appropriate spreadsheet). ADM, and Cargill, don’t get these subsidies in any significant degree if at all, they benefit from below cost gains, like CAFOs do (see Tufts U study here) but by much bigger amounts. ADM and Cargill get far bigger benefits than the subsidy amounts, but that’s ignored here.
Since ending subsidies doesn’t raise prices, ADM and Cargill get benefits whether there are any subsidies or not, so the implied policy changes are irrelevant, and ultimately a pro-Cargill, pro-ADM position. We had 7¢ per bushel corn here during the Great Depression. That was (economically) from the lack of price responsiveness and (politically) the lack of price floors, as the programs hadn’t started yet. Farmers called that Hooverism, and that’s what US PIRG is advocating in the video: no subsidies AND zero price floors AND zero supply reductions (when needed), etc. But ADM and Cargill have never shown ANY need for these hidden, off-the-government-books benefits, but rather have repeatedly made record profits and returns on equity).
Farmers who got subsidies have shown huge needs! See charts in my 2 videos at YouTube, “Michael Pollan Rebuttal 1.” Monsanto primarily benefits from the lack of supply reductions and because farmers have lost livestock to CAFOs and plowed up crop rotations, (hay, small grains, pasture) and therefore need more inputs, (more dependent, less free to farm). They don’t get free nitrogen rom the air from clover and alfalfa, or stop weeds and insects by full crop rotations. So Monsanto sells more products. Monsanto gets no significant government commodity subsidies.
Since 1995 they keep growing and growing and growing.
Brad says: Yes! But note: in 1996 they eliminated price floors and supply management (and price ceilings and reserve supplies)! It was so bad for farmers that they had 4 successive emergency farm bills prior to the 2002 farm bill. Again none of this is mentioned in the video. Yes, and subsidies plus market prices have often been below full costs, as seen in 5 studies for 5 crops (USDA-ERS, removed from web site? but I have all 5 spreadsheets). Mostly farm income, (subsidies plus market prices), in today’s dollars, has gone down, not up. Subsidy triggers for countercyclical and LDP subsidies were greatly reduced in the last farm bill, as there was virtually no cost of living (cost of production) increase since 2002, but costs have gone up, sometimes by 10% per year.
Today, most subsidies don’t go to struggling farmers, instead they go to the largest and most profitable agribusiness.
Brad says: We’ve never (ie. 1942-1952 with “living wage” “fair trade” price floors) needed any of these subsidies (except to compensate farmers for bad farm bills). We’ve had an alternative, (good farem bills,) but chose to lose money on farm commodity exports, unlike OPEC in oil, to secretly give below cost gains to agribusiness. Here in Iowa, with the huge corn and soybean subsidies, most go to struggling full time family farmers. ALL recipients of all sizes have had huge reductions in market prices, much larger than the subsidy amounts. None of these facts are mentioned. Large farmers have been repeatedly labeled as “giant agribusinesses” as here and at the Environmental Working Group. In fact, EWG’s analysis of the raw data is invalid, and so are the percentages that come from it, (as seen below).
4% of farms get > 50% of subsidies
Brad says: In fact, most “recipients” in EWG’s farm subsidy database are retired, dead, or small acreage farmers, while the fewer, larger recipients are full time working farmers. For example, a farmer who retired in 1997 and then died in 1999 is said to get an extremely unfair amount of subsidy compared to a full time farmer working every year 1995-2010. The same holds for someone farming a small acreage who farms 1/90th or less of full time. A valid analysis finds much different results, such as the top 10% getting 20% or 30% of the subsidies, not 75%.
EWG and here give no standard of what a large farm would be and how much subsidy money they would receive. Adjusted for inflation, a very small (typical Iowa corn and soybean farm at poverty level on a good year: corn "Base" = 97.5, soybean "Base" = 52.5; corn "Yield" = 125, Soybean "Yield' = 38; these numbers are used to calculate typical, minimal subsidy amounts); (or see my newer analysis;) farm that made enough (on corn and soybeans) to reach poverty level (in 2 very good years, 1975 and 2008 marketing year,) would get about $112,000 in subsidies (1995-2010, the EWG database years), and would lose money massively overall, especially 1981-2006, for example.
For example, see the middle to bottom recipients in these Iowa zip codes: Springville or Rhodes or Churdan, or any of hundreds of others. Click on names. You'll then see, that most of the lower half participated only part of the time, not as full time farmers. For example, here is someone who probably retired just 6 years into the data (out of 16), and who surely did not farm very much land anyway, and yet the person is ranked 125 out of 263, well into the top half. Here is someone ranked 161 out of 221 who was only in the program (and database) 1 year. Here are recipients ranked 161-180 out of 205 or so. They represent little dinky amounts. They have small acreages or have retired and/or died. They cannot be validly be said to be unfairly treated relative to full time working farmers who worked full time every year out of 16, 1995-2010. If you figure for it all years, then their subsidies are less than $43/year, on average, because they only participated 16% of the time, and then only with a very tiny amount of land, on average, (compared to the farm program numbers for a typical Iowa corn/soybean farm that is so small that the income is just at the poverty level for a family of 4 in a very good year). That's just 6 tenths of 1% of that minimal full time. or 1/164th of full time. So this average represents 20 out of 200 or so, or about 5%. All together, (all 20 added together,) they worked just 20/164ths of 1 full time very small Iowa farmer (by this standard). That's how invalid the EWG data is, the data that is behind the percentage numbers used here, that claim that all of these tiny acreages, retired farmers and dead farmers (and various combinations of the 3) are getting the shaft compared to those who work at farming full time.
If you figure a 40 hour work week, then these 20 "recipients" work less than 5 hours per week at farming, all 20 combined! According to US PIRG, these "farmers" aren't getting their fair share compared to full time working farmers farmers ("giant agribusiness"). In fact, by this poverty/full-time standard, only the top 30 recipients are full time family farmers or larger ($112,000 or more total). I can go more conservative and cut that in half, and you still get only the top 51 out of 190 (who have direct data) or 205 (including "farm owners"). You can then go all over and find much the same. You can even go to the famous zip code, 90210 in Beverly Hills, and find much the same. (Only 1, (or more conservatively 4,) out of 88 or so represent enough money to compare to full time family farmers, and therefore that barely-above-poverty-level farmer is the "giant agribusiness" of Beverly Hills. I guess that would be Jed Clampett.)
and big companies means corporate lobbyists, gobbling up subsidies like kids in a candy store
Brad says: The huge lobbyists lobby for free markets and free trade, for zero price floor, zero supply reduction (as needed) programs; and I’ve recently found more documentation). Subsidies to farmers (not to them) only cover up their huge gains, and lead groups like US PIRG way, way, way off track (in support of their free market farm bills).
since 1995 $245 billion
Brad says: And since 1995 farmers had the lowest prices in history (1998-2005). That’s why African American Farmers say they need subsidies (but only if we don’t have “living wage” price floors) (Sources: briefly here or in depth). Corn prices (x acres x yields) are down by $1.3 trillion since 1953, in todays dollars, while subsidies (since 1961) are about $0.2 trillion, for a net reduction of $1.1 trillion (for earlier subsidies, pre EWG, see the link here about when subsidies started; for corn prices see the Track Record Book cited elsewhere here; for the fair trade, living wage standard prices, see “parity prices” in various editions of Agricultural Statistics, usually chapter 9, Farm Resources, Income and Expenses: newer editions here; older editions here). This then is reflective of the gains agribusines buyers like Cargill and ADM have received below fair trade levels since 1953. They get a lot more than this little figure of $245 billion, so US PIRG is going soft on agribusiness. They get multitrillions in the US and more multrillions world wide (as the US is global price leader). Again, there’s never been a need for any subsidies, if we have fair trade price floors. Fair trade price floors are supported by Via Campesina and the Africa Group at WTO. Again, none of this is apparently known by US PIRG, which has been taken in by mainstream media’s influence on progressives.
90% go to 5 crops
Brad says: Yes and these are the five crops with the least price responsiveness, and without the needed price floors (very low in 1995 and zero ever since). These same crops had no subsidies 1933-1961 (except for a few early ones on cotton, and on to 1964 for cotton, 1977 for rice, 1998 for soybeans). Again, no subsidies are needed with adequate market management policies and programs.
33% to corn
Brad says: And corn has had, by far, the biggest reductions 1953-today, (more than a trillion net reductions in today’s dollars, farm more than what was compensated by the subsidies). Corn had the biggest losses below full costs 1981-2006 (USDA-ERS, Commodity Costs and Returns, [per acre, various crops], plus acreage data from Track Record Book: Crop Production, USDA-NASS. Again, this missing data debunks the half truths.
that’s why hfhc, ... didn’t even exist, ... is found in nearly every product
Brad says: No, I’ve proven that PRESENCE of subsidies did not cause it. It’s caused by the ABSENCE of adequate price floors and supply management (reduced 1953-1995, none 1996-). See “Michael Pollan Rebuttal,” cited above, including part 2. But this should be qualified with Timothy Wise and Alicia Harvey’short report.
giant food companies are making huge profits selling junk food, all on the taxpayer dime.
Brad says: No, it’s mainly on the farmers half dollar and more, as I’ve shown, prior to his getting back a mere dime, for a large net reduction.
twinkie mostly corn & soy .... meanwhile carrot has zero subsidized ingredients
Brad says: Yes, but carrots and other vegetables and fruits have made more money in the market place as measured in various ways (return on equity, share of the food dollar, prices as a percent of parity. I support fair trade prices for fruits and vegetables also. They’ve had marketing order programs, which are likely also greatly reduced. The subsidized commodities have generally had lower price levels even with subsidies. That is, corn, wheat, rice, cotton, soybean, etc. prices per unit (bushel, lb, cwt), PLUS subsidies per unit, are consistently a lower percent of parity than fruits and vegetables WITHOUT subsidies.
spend 10-30 billion per year to make junk food cheap.
Brad says: False, that’s spent to partly compensate farmers getting stuck even much larger annual reductions in prices, on average, for decades. The cause is the absence of fair trade price floors, etc., not subsidies. Our choice to lose money on exports, (the opposite of OPEC in oil, even though we’ve had larger market shares and more leverage than OPEC for some of these crops). It’s all to secretly “subsidize” the buyers, off the government books (“implicit subsidies,” not government checks). It worked! US PIRG is NOT blaming the real culprits for the real problem, and not advocating against agribusiness, and not advocating FOR ending the subsidization of junk food (that requires advocating FOR adeqate price floors).
epidemic, obesity, ... it’s becoming more and more expensive to eat .... cheaper and cheaper to fill up on junk food. .... 1 study: 2,000 calorie diet, only junk food, $3.52/day .... 60 lbs hfhs per capita ... . 1/5 age 6-11 obese .... 1/3 born since 2000 on track to diabetes
Brad says: Yes, yes, yes, yes, but it’s NOT caused by subsidies in any economic way. Subsidies somewhat quieted down angry farmers as they went more slowly out of business.
Can’t solve by cutting wasteful subsidies alone.
Brad says: NO, you can’t really solve it at all by cutting subsidies. We had 7¢ corn here in 1932, with no subsidies, so that would not be any fix at all. Again, Hooverism didn’t solve anything.
it’s time to end wasteful subsidies that are underwriting an epidemic of obesity ... calling on congress to stop subsidizing obesity
Brad says: Subsidies are wasteful in that, with fair price floors, (fair prices,) we wouldn’t need any of them. As it is, however, with progressives almost always unknowingly siding with agribusiness, there is little hope of that short run. Therefore farmers need subsidies. To merely remove subsidies would drive the remaining diversified family farmers out of business. There are a lot of farmers waiting on the sidelines, on acreages, as smaller landlords renting to bigger farmers. They can help progressives meet a WIDE RANGE of POLICY GOALS, as well as key movement STRATEGY GOALS in this time of budget cutting and deregulation. Don’t destroy them! Enough already!
Ok, to fix all of this, progressives have a lot of homework to do! I’ve already done my homework, and provided all of these links (I stand on the shoulders of these others that I’ve linked,) to the mass of data that has been overlooked, so it won’t be quite so hard for you. Get to work. I’ll help.
Support the Food from Family Farms Act of the National Family Farm Coalition, to justly get rid of all of these subsidies.
Brad Wilson, "Most EWG Subsidy 'Recipients' Are Too Tiny to Be 'Farmers, '" ZSpace, 2/21/12, http://www.zcommunications.org/most-ewg-subsidy-recipients-are-too-tiny-to-be-farmers-by-brad-wilson.
Brad Wilson, "Corn Farmers Have Long Subsidized You, Not the Other Way Around," ZSpace, 2/23/12, http://www.zcommunications.org/corn-farmers-have-long-subsidized-you-not-the-other-way-around-by-brad-wilson.
Brad Wilson, "Subsidy Narratives: How Foodies Unknowingly Bash Family Farmers," 2/23/12, La Vida Locavore, http://www.lavidalocavore.org/diary/5099/subsidy-narratives-how-foodies-unknowingly-bash-family-farmers.
Brad Wilson, "Farm Bill Slides," ZSpace, http://www.zcommunications.org/albums/list/bradwilson.
Brad Wilson, "Talking Points for the 2012 Farm Bill," ZSpace, http://www.zcommunications.org/talking-points-for-the-2012-farm-bill-by-brad-wilson (short overview).
Brad Wilson, "Primer: Revenue Insurance in the 2012 Farm Bill," ZSpace, http://www.zcommunications.org/primer-revenue-insurance-in-the-2012-farm-bill-by-brad-wilson.
Policies for Fighting Junk Food & Obesity
Brad Wilson, "Fact Sheet: Farm Justice Proposals for the 2012 Farm Bill," ZSpace, http://www.zcommunications.org/fact-sheet-farm-justice-proposals-for-the-2012-farm-bill-by-brad-wilson.
Brad Wilson, "Primer: Farm Justice Proposals for the 2012 Farm Bill," ZSpace, http://www.zcommunications.org/primer-farm-justice-proposals-for-the-2012-farm-bill-by-brad-wilson