The Case Against CSPI's Food Day's Farm Bill Analysisi
By Brad Wilson at Oct 13, 2011
1220 L Street, NW, Suite 300
Washington, DC 20005
Food Day is a great idea, (assuming you get the nutritional information right, which is another issue).
Unfortunately, your policy advocacy position is flawed, (and not science based). I see it stated in various places, such as your "Message to congress, and your press release (ie. at Common Dreams).
You state: "limit subsidies to big agribusiness"
"Reduce wasteful subsidies to big agribusiness and shift funding into research, conservation, and extension programs that support sustainable farming practices and small and mid-size family farms that are the backbone of rural communities."
Part of the problem lies with the myths which your audience brings to these statements. These statements, (with help from the myths,) lead your audience to advocate in favor of policies supporting corporate agribusiness at the expense of justice, sustainability, health and nutrition. These falsehoods are so widespread on the internet and in the mainstream media that it is no wonder that you end up on the wrong side of the issue. On the other hand, proving my points is quite easy.
To your audience, "subsidies to big agribusiness" will usually mean government checks to large farmers, as emphasized by the Environmental Working Group. Those arguments are invalid for a variety of major reasons.
First, EWG, hundreds of mainstream media editorials, and most other sources do not put farm subsidies in a factually accurate historical or economic context. (Note, I can provide you with independent data sources proving all of this, and I will link sources showing it in charts below.) Specifically, farm subsidies are not put in the context of farm income for the various subsidized crops (ie. corn, wheat, rice, cotton). Subsidies are assumed (falsely) to be huge benefits, with no accounting for how low prices have been at the time subsidies are given. Thus we easily see that 2005 was a year of large corn subsidies, but the various hundreds of sources follow EWG's method of not mentioning that corn prices in 2005, adjusted for inflation, were the lowest in history. Even recent prices, which are much higher (than the lowest in history) for corn, wheat and rice, (2007-2009) were in the bottom 25% of all time prices, with 1 minor exception). It is not mentioned that subsidies plus prices have never been higher than previous fair price standards (from when we had just farm policies and programs). In fact, they've almost always been much lower than previous "fair trade" etc. price standards.
Second, Data on farm subsidies showing that big farmers get 75% of the subsidies is clearly invalid, and the facts are nowhere near to that amount. Here’s what makes it invalid. First, there is no standard for what subsidy amounts should be. I’ve already made the point that there’s no standard for comparing subsidies to farm prices to know what the net amounts are. Additionally, there is no standard for how much subsidy a full time working farm that is not a large farm should get. As a result, tiny extremely part time farmers are compared with full time working farmers (on relatively small farms) Then, full time working farmers are blamed and labeled as “corporate agribusiness,” etc. Consider, for example, how full time farmers get so much more subsidy money than, say, a farmer who retired in 1997 and then died in 2001, and got no subsidies since retirement. They also get much more than someone with an acreage that is so small that it’s equivalent to only 1/20th of full time, especially if that person has also died. EWG’s farm subsidy raw data must be adjusted for these flaws to be valid. When adjusted, (and I can explain my method if you’re interested,) I find that instead of 75% going to the largest 10% of farms, it’s often only about 20%, for example, for Iowa zip codes and corn and soybean farmers.
What I’ve described above is only the tip of the iceberg. More fundamentally, farmers (including big farmers) are not the beneficiaries of farm bills and programs, nor are subsidies the relevant problems in farm policy and programs as has been claimed thousands of times (surely) on the internet (nor, therefore, do farmers have much clout in farm legislation).
It is widely argued that “cheap corn” and other crops are associated with health related food problems. That makes cheaper transfats, high fructose corn syrup, and meat from CAFOs, for example, as widely argued in food books and films such as Food Inc. and King Corn. Cheap prices here that drive down global prices also hurt other countries, such as Least Developed Countries that are 70% rural and in need of fair trade farm prices. My point here is that subsidies did not cause these cheap prices. Subsidies resulted from the cheap prices, from the other policies that actually cause the cheap corn, cotton, wheat, rice, soybeans, and other feedgrains. Well, scientifically and economically, price inelasticity, the lack of price responsiveness on both supply and demand sides, caused the usual low prices we had from the 1800s to the 21st century. The policy solution was price floors and supply reductions (and also we had price ceilings with reserve supplies for occasional times of high farm commodity prices). This solution was a nonsubsidy solution [Government Payments: United States by Program 1933-2010]. No farm commodity subsidies are ever needed. We run farm programs like a business and make fair trade prices for the US, the dominant player in global farm commodity export markets and the “price leader” for crops like corn, soybeans, wheat, and rice.
I present four proofs against the argument that subsidies cause cheap prices, and provide data charts and links, in my 2 YouTube videos “Michael Pollan Rebuttal 1” and 2. For example, there is a scientific correlation between cheap (lower) prices for rice and the presence of rice subsidies, 1977-today. Prior to 1977, however, rice prices dropped for many years, from 1953-1976, with zero scientific correlation with rice commodity subsidies, as there were no rice subsidies. The missing data (as I show in the videos) is that price floors were lowered on rice (measured either in constant dollars or as a percent of parity), more and more, from 1953-1995, and then they were reduced to zero. The same holds for other crops for similar subsidy dates (wheat, corn and other feedgrains: 1961; cotton: 1964). This historical data is supported by recent and historical econometric studies [p. 21], experience in countries that got rid of subsidies, [full report pp.] etc.
I see no links at your site to any information for teachers to use in getting the facts on these matters.
Conclusion: you’re calling on people to advocate for the very zero price floor farm programs that you claim to oppose. (Unfortunately, you’re not alone!)
You make no mention that the beneficiaries of farm programs are, (not farmers, and not even big farmers, but,) first, agribusiness buyers (exporters like Cargill & ADM, food and feed mills, ethanol and other processosrs, CAFOs like Tyson and Smithfield, grocery chains like Walmart). [These corporations] often get much more benefit than even the largest entity in the farm subsidy database (a rice coop with 9,000 farmer members). Tyson and Smithfield, got $2.5+ billion each, (in a Tufts University study) five times as much ($0.5 billion) as the rice co-op, and in fewer years, and that’s only benefits below zero, not for reductions below fair trade levels. Cargill likely gets even more multibillions just for corn exports, not counting all of the other crops, and all of their other uses, such as processing and feedling animals. Additionally, unlike farm subsidies, these benefits are given with no demonstration of any need whatsoever, but rather with repeated record profits and returns on equity, (as farmers had record losses, 1981-2005, USDA-ERS, and as most farmers went out of business). Other beneficiaries include the input complex, which benefits from the absence of supply reduction programs and from the low feed prices that have driven livestock off of farms and into CAFOs, thus expanding the amount of tilled land and land with very limited crop rotations (ie. no alfalfa/clover, no hay and pasture, only corn-soybeans).
Obviously, no educational curriculum which omits these major factors in discussions of these matters is of much worth.
The data on these matters is easily available only if you know where to look. I include a variety of references in links and blogs here: http://www.zcommunications.org/zspace/bradwilson, and I can give you whatever you need upon request.
I realize that I’m describing a paradigm change here based upon verifiable data and obvious logical analysis (ie. vs the lack of needed standards in EWG data). Thomas Kuhn, in The Structure of Scientific Revolutions argued that most scientists will stick with the old paradigm for a long time, in spite of having glaring anomalies exposed. Is that what I should expect from CSPI? Or can you correct your mistakes on this issue.
Obviously, you’ll want to verify my claims independently, and that takes time.
I look forward to your response.
From: Food Day <FoodDay@cspinet.org>
Subject: Re: scientific anomalies for Food Day
Date: Sat, 3 Sep 2011 23:32:05 -0400
To: "Brad Wilson" <firstname.lastname@example.org>
Dear Mr. Wilson,
We recognize the potential value of counter-cyclical payments that were heavily criticized by the WTO. The direct payments are one of the main problems now.
We, like you, give no credence to the notion that corn subsidies lower the price of corn, which leads to cheap HFCS and obesity. (And, in any case, we maintain that HFCS is no worse than sucrose---though it's just as bad---for health.
We, of course, recognize that large farms get bigger subsidies because subsidies are based on acreage.
The corn ethanol subsidy to processors, and indirectly to corn/soybean farmers is something that just about everyone (but the recipients) believes makes no sense.
I suspect that direct payments, if not ethanol subsidies/mandates, will be restricted because of the budget deficit.
Another problem, of course, is the restrictions on sugar imports. Those hold up the price of sugar and cost consumers at least a couple of billion dollars a year.
[A Food Day staff person]
From: "Brad Wilson" <email@example.com>
Subject: Re: scientific anomalies for Food Day
Date: Mon, 05 Sep 2011 16:22:49 -0500
To: Food Day <FoodDay@cspinet.org>
[A Staff member]
Dear [Food Day]:
Thank you for your response. I gave you a very different perspective, and it’s not clear that you understood the information I presented regarding what I see as anomalies in the position of CSPI. Here is some information to clarify these issues, based upon your specific responses.
First I ask, on what grounds are you arguing that “direct payments are one of the main problems now?” Direct payments and other subsidies merely compensate farmers for part of the reductions in market prices. The main problems are the reductions in market prices that create the need for any subsidies in the first place, (the absence of price floors and supply management programs). Reducing subsidies to big farms is only a small spending matter [relative to multrillion dollar, in today's dollars, farm price reductions] that does nothing to restore fair trade market prices.
With good policies, (and no need for subsidies) much more money would be available for the kinds of policies that you want to find money to fund (“research, conservation, and extension programs that support sustainable farming practices and small and mid-size family farms”).
The question of political advocacy for money is even bigger than that.1 The political climate is much against the “gimme gimme gimme” approach. On the other hand, with an understanding of the price floor issue, you could primarily advocate for giving a private sector stimulus to the government at the same times as subsidies could then be eliminated. In other words, your advocacy could be for a much better funding of your goals (primarily private sector) even as you greatly reduce the need for funding for your goals.
This also requires a major paradigm shift and a learning of the correct historical context behind these issues. Price floor programs were passed through the banking committees in the Steagall Amendment of 1941 as a private sector economic stimulus. See my writing on this topic for further explanation. 2
A second category of information is also needed here. The benefits of a Commodity Title based on adequate price floors for other titles is rarely understood, so see my other writing on this matter.3
Most of the main goals for a sustainable and healthy food system are dependent upon the family farm system of agriculture, which then can be renewed in a variety of important ways. The family farm system, though it has been devastated over the years, is still out there, all over the place ( as can be seen in the farm subsidy database, if you know what to look for). On the other hand, like most advocates on almost all sides of these issues, you seem to show no understanding of the risk to the family farm system from market conditions similar to those following the 1970s high price period combined with the 2008 farm bill, which maintained zero price floors (as you do) and also drastically reduced farm commodity subsidies (ie. gave no cost of production adjustment to CC and LDP subsidy triggers, or increases in Direct Payments). Clearly, should we find market conditions equivalent to those following the 1970s (especially the first quarter century post 1980), what remains of our family farm foundation could be destroyed. Short of adequate (nonsubsidy) price floors in the next farm bill, subsidies, including the Direct Payments from recent higher price years, will be wholly inadequate to address the massive farm crisis. I realize you may never have heard about this issue, but that doesn’t make it false. The data to demonstrate it are readily available, including data on why prices could drop in the coming decade (though, of course, future market conditions remain unpredictable).4 [my other writing]
You discuss ethanol subsidies, which relates to your call for advocacy against “subsidies for big agribusiness.” On the other hand, you haven’t responded to my charge that you support the much bigger “implicit subsidies,” (below cost gains, and below fair trade gains,) not to larger farms (that are then usually falsely labeled as “agribusinesses,”) but to the huge and hugely concentrated agribusiness input complex (and output complex, and CAFO complex). This is largely unknown in the mainstream media and food movement, but that doesn’t mean that it’s not real.
I appreciate you discussion of sugar imports, as it helps me to understand your paradigm, and respond specifically to the anomalies that I see in it. Your statement that programs that “hold up the price of sugar” “cost consumers at least a couple billion dollars a year.” That is a claim that can only be made on the basis of relativism and partial data. You can certainly claim that the sugar program leads to sugar prices that are relatively higher than they would be without it. That’s not the same as claiming that sugar prices are high, or expensive for consumers. You can’t really claim that there is any cost to consumers at all, as you provide no adequate standard on which such a claim must be based. This is, of course, a point that I made repeatedly in my previous email to CSPI. So you here take an approach that I’ve previously refuted.
A much stronger case can be made that the sugar program, (like the programs for corn, wheat, cotton, rice, soybeans, sorghum grain, barley, and oats,) is a case where sugar beet farmers subsidize consumers by millions “of dollars a year,” and that these consumers are the ones with the true vested interests in these horrible programs that are bad for conservation, for diet, for the poor in Least Developed Countries, for the government budget, for the economy as a whole, etc. Of course, on all of these latter points, hidden costs come back around and hurt consumers economically, even as they reap the billions in direct benefits.
What we need, then, is a standard for fair prices. The traditional standard is parity or 100% parity pricing. Parity has always been a living wage (not minimum wage) price level, a fair trade price level. By that standard, clearly, sugar beet farmers have long subsidized consumers with below fair trade, and below full cost prices, as have all of the other farm commodities listed above. Meanwhile, most farmers have gone out of business. For the other crops, price floors were lowered from 1953-1995 then eliminated (dropped to zero). For sugar, price floors were lowered, but not eliminated.
Your stand then, is with no support for any price floors, plus opposition to the sugar program. You seek to take subsidies away from the victims without doing anything to help them to get fair prices. On the contrary, you oppose fair prices. Clearly, your stand in this goes against your values, as illustrated elsewhere throughout your site.
Here is some data on sugar. Since the 1940s when we had parity prices, sugar beet prices have fallen drastically as measured in 2010 dollars with a GDP deflator or the CPI. They were well above $100 per ton. Now they’re below $50 per ton. As a percent of parity, prices have gone down from over 100% to under 50% [USDA-NASS, Agricultural Statistics, ch. 9, "Farm Product Prices" "Parity Prices"]. The Parity standard includes costs as well as prices. Adjusted for inflation, http://www.ers.usda.gov/Data/CostsAndReturns/testpick.htm,) have come down a little, from about $57/ton to about $47/ton, due to increases in yields. The combination of slightly lower costs and much lower prices has led farmers to lose money. USDA-ERS data shows increasing losses for sugar beets vs full costs, adding up to losses of more than $200 million since 1991 or nearly $13 million per year below zero.
This then ties in to the sugar import question.5 Free trade and market access are used to destroy price support policies and profits for the benefit of agribusiness exploiters. They’re used to give exploitative “implicit subsidies” (below cost gains) to agribusiness giants, in direct contrast to your stated goals. Restrictions on imports protect the US from export losses, and from the destruction of our agricultural system from export dumping. They also protect farmers and farming countries globally from the destruction of fair prices. In the case of our sugar program, we’ve allowed imports from countries (based upon agreements) at prices related to our price floors, to protect our prices and their prices. In criticizing this, you’re siding with those who call for programs to run farmers off the land in the US and world wide. You’re siding with those who call for the US to lose money on sugar and other exports (and we’re the world’s dominant farm commodity exporter, the price leader for major commodities).
Behind all of this is a politics of exploitation. Farmers, (in the US and elsewhere,) are the victims, but are blamed in mainstream media as discussions are dominated by agribusiness views. Well meaning groups are then influenced by corporate agribusiness through mainstream media and other sources, (including the land Grant University component of the agribusiness industrial complex), leading them away from the relevant data, and to narrow interpretations based upon inadequate data and standards. On this basis books are written, studies are conducted, and films are produced, as lesser blogs, blog comments and short videos multiply. Those intending to support justice end up as strong advocates against justice, without even knowing it.
Again, these continue to be my charges against CSPI. You have provided no data or arguments to refute any of my main themes (including my argument that “large farms” do not “get bigger subsidies” in the range of 75% going to the top 10%, but instead get closer to 20% in many cases, and those subsidies, unlike the “implicit subsidies” you do not advocate against, are compensations for losses, and not given to giant nonfarming entities that have made repeated record profits and returns on equity).
Any point you make about what “makes no sense” to “just about everyone” is largely irrelevant, since almost no one has placed these issues in proper context, including the relevant data that is needed to make and/or refute the various positions. (There are reasons for this, related to politics, movement history and media.) Almost everything out there is rooted in huge myths which are easily refutable, as I’ve illustrated here.
4. http://www.dailykos.com/story/2011/05/18/977094/-The-Case-for-Raising-Farm-Subsidies?via=user (Note here the 233 comments in response to the topic, and how I've addressed a large number of rebuttals based upon widespread misunderstandings of these issues. You're not alone in your views!)
5. Note: I've addressed additional sugar related issues here: http://www.dailykos.com/story/2011/06/03/981738/-Sugar-and-Subsidies:-Policy-Myths,-Relativism-and-Contradictions-?via=user
From: "Brad Wilson" <firstname.lastname@example.org>
Subject: data: the reverse sugar billions
Date: Mon, 05 Sep 2011 18:57:00 -0500
[a staff member]
Re: your argument that consumers are penalized by billions yearly for sugar policies.
I forgot to include any figures for sugar income below fair trade prices. I find that, using the standard of parity, sugar beet farmers have subsidized consumers by more than $77 billion since 1953 (2010 dollars, GDP deflator: [(parity prices x reduced production) - (actual prices x actual production)], with nearly $40 billion of that coming since 1991, (or nearly $2.5 billion annually since 1991, and nearly $1.4 billion annually on average since 1953). (My figures assume about 12.4% in extra supply reduction annually to support the higher price levels, with more of that reduction coming in recent years with lower prices.)
Collectively for the farm commodities I listed previously, the overall amount is in the trillions, with more than $1 trillion for corn alone (assuming 10% of additional supply reduction).
These (largely unknown) figures can be compared to the farmer compensations that everybody hears about, the total subsidies in the EWG database (since 1995). For Sugar that figure is just under $300 million, (2010 $) or less than 1% of the reductions below the parity standard of farm value as I define it above. In other words, sugar farmers were compensated by $0.95 for every $100 of reductions. My similar figure for corn subsidies (using EWG data and other subsidy data going back to 1961 when corn subsidies began,) is that compensations since 1953 amount to about 1/6 of the reductions in value below the 1942-1952 (parity) standard. Other standards can be used, for example based more directly on costs of production. I find the same general results from a variety of data sets (Parity, ERS costs, Extension costs).
A major reason for this complete reversal of your argument that consumers suffer by the billions (ie. rather than receive billions in benefits), is that these farm commodities lack price responsiveness in free markets. So when you suggest that sugar prices are artificially high, you're using a free market standard, a standard in which farm commodity prices will usually be low, well below costs. While the spin is that it's more "competitive" for the US to lose money on farm exports, (except it's not framed that way,) in fact the free market, free trade approach for farm commodities, (given the abundant econometric data showing price inelasticity,) strongly contradicts commonly accepted standards (and practices) of business values: managing supply and making profits. (See sources on this in "Michael Pollan Rebuttal 1" [Michael Pollan Rebuttal 2] and in APAC documents by agricultural economist Daryll E. Ray, which are linked in my "Farm Bill Primer:" http://www.zcommunications.org/zspace/bradwilson.)
Politically we know that corporate America called for the drastic reductions in farm price floors, to run one third of US farmers off the land within five years, which was the goal for one decade. Most farmers have been driven off the land during the time periods of these policies and with the much lower prices, as the data show. I see the boarded up Iowa small town business windows daily, our former grocery stores, hardware store, restaurants, lumber yard, etc. This is the reality behind the many recent claims about "lavish" farm programs "favoring" crops like corn, with farmers themselves (the victims) seen falsely as dominating the farm policy lobbying arena.
Again, the subsidy data is prominently featured in the dominant paradigm of today, but as more and more evidence is uncovered, the anomalies glare back at us through the scientific data, the record of history, and, much more obviously from here, the physical structures of US (and global) rural life itself.
It's time for everyone to look more closely at the data and the analysis of it, stop blaming the victims, (US farmers,) and stop advocating for pro-agribusiness exploitation policies (zero price floors and zero supply management, plus zero price ceilings and zero reserve supplies). You should support the policies of the National Family Farm Coalition, the Food from Family Farms Act.
A related comment by Brad at Civil Eats somewhat updates this analysis:
"Faces & Visions of the Food Movement: Lilia Smelkova," http://civileats.com/2011/10/10/faces-visions-of-the-food-movement-lilia-smelkova/comment-page-1/#comment-14624
Here is the Food Day Resource I critiqued, p. 4 of the .pdf Coordinator's Guide.
Additions to the Civil Eats Comments: I did not include any discussion of farm (food) price ceilings and reserve supplies to protect the poor in rural areas and the inner cities, and all consumers, including global consumers. This relates to Food Day Principle #4, which I said I would talk about. Other specific connections to the "6 Food Day Principles" that I did not include in my comment there are:
"1 Reduce diet-related disease by promoting safe, healthy foods" To the extent that cheap farm prices (low or no farm price floors) have lowered the costs of junk food ingredients like transfats and HFHS, this is supported by Food Day's failure to understand price floors and supply management, and to instead advocate for the false solution of mere subsidy reforms, which do not affect prices in any practically significant way.
2 Included, my main focus.
3 See directly above.
"4 Protect the environment & animals by reforming factory farms" Cheap farm prices for animal feeds gives below cost gains that "subsidize" CAFOs and the removal of livestock from diversified farms, thus reducing pasture and hay ground (often on fragile ground), hay and clover which provide free/inexpensive, more sustainable nitrogen from the air, and diverse "resource conserving crop rotations" in general that are more ecological, and that also reduce pestidide use.
"5 Promote health by curbing junk-food marketing to kids" See #1 just above here.
"6 Support fair conditions for food and farm workers" When corporations, through the Committee for Economic Development, called for lowering price floors drastically, they specifically called for the elimination of "excess resources" "mainly labor," (eliminating "one third in a period of not less than five years,") they called for unfair conditions for farmers and farm workers. The specific policies that the corporations called for in these huge US and global injustices, reduced price floors, are, nevertheless, much better farm bill policies than those advocated by CSPI's Food Day, as (by default, by omission,) food day advocates for zero price floor farm policies and programs.