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The farm bill, which Congress will likely vote on
this fall, will affect environmental, consumer, industrial, trade, and
anti-poverty policies, as well as the prices and subsidies farmers receive
for producing commodity crops such as corn, wheat, and soybeans. Legislators are now conducting hearings and readying
proposals, but the outcome is “more up in the air than it has been in
30 to 40 years,” says senior policy analyst Dennis Olson at the
Minneapolis-based Institute for Agriculture and Trade Policy. A small opening exists for a new progressive farm
policy based on some old principles.
C onventional wisdom about federal farm policy holds
that the villains are American farmers, who have in recent years collected
about $20 billion a year in subsidies. But the government provides the
subsidies because commodity prices have been so low that most farmers would
have gone bankrupt without them. And prices have been low because
legislators have written farm policy to drive those prices down to aid big
business rather than farmers — or anyone else. “The important thing for policymakers and the
public to be clear on is that the people who get checks written for them
under the farm bill are generally not the beneficiaries of those
programs,” says Timothy Wise, deputy director of the Global
Development and Environment Institute at Tufts University, “so the
obvious question is ‘Who benefited?’ ”
Consider for a moment Big Chicken — the
industry that turns out more than 16 million tons of poultry each year.
Once highly diversified, with nearly every farm producing chickens, the
industry is now highly concentrated: The top four processors, led by giant
Tyson Foods, control more than 56 percent of production. Tyson and other giants have consolidated their power
by purchasing chicken feed for, well, chicken feed. As soybean and corn
prices dropped by 21 percent and 32 percent, respectively, after the
passage of the 1996 farm bill, the chicken industry effectively collected a
subsidy of $1.25 billion a year, according to Tufts researchers Elanor
Starmer, Aimee Witteman, and Wise. The subsidy — worth $2.59 billion
to Tyson from 1997 to 2005 — represents the savings for the industry
compared with paying for the full cost of producing the grain in its feed. The cheap subsidized grain also gave big factory-farm
operations an edge over diversified family farmers. By feeding animals
their own grain rather than buying government-subsidized grain on the
market, these farmers have to pay the full cost of producing grain they
feed to their livestock. Politically, however, it remains “hard for
farmers to make the case that they’re not the welfare cases,”
says National Family Farm Coalition executive director Katherine Ozer,
“but it’s Tyson and Cargill that are the real welfare
cases.”
Big Chicken is not alone. International grain traders
(such as Cargill), industrial users of food and fiber products (ranging
from the biggest users, the livestock and meat industry, to processors such
as Archer Daniels Midland and the vast array of junk-food manufacturers),
and the corporate producers of seed, fertilizers, and equipment, all profit
from overproduction and low commodity prices. Even after a long history of
consolidation, tens of thousands of independent farm operators still must
compete with highly concentrated agribusiness corporations that have the
power to set both the prices of products sold to farmers and the prices
paid for farmers’ products. “You’re talking about a huge savings in a
huge industry that never is getting a subsidy check written to it,”
says Wise. Until biofuel demand recently drove up prices, most farmers sold
corn or soybeans for less than it cost to produce. Government subsidies
covered only some of their financial loss, and many had to take jobs off
the farm to make up for their farm losses. Grain traders then sold that corn and soybeans abroad
at below-cost prices. Such dumping drives millions of peasants in
developing nations off their land. The displaced peasants flood urban labor
markets and thus depress wages. Their exodus from the land also fuels waves
of immigration to more developed countries, including the United States
— where many get low-wage jobs processing chicken.
F armers who produce 90 percent of all chickens in
the United States work under contracts with the big processors. The
processors own the chickens and dictate how they are raised. They also
require that the farmers make major investments, suffer most of the market
risks, and typically make poverty-level incomes. Farmers also face the
danger of losing their contracts on a whim. Mississippi poultry growers Roy
and Nelda Gatlin, for example, claim that in 1997 Sanderson Farms Inc.
unfairly terminated their contract on the basis of a complaint that proved
untrue, destroying the Gatlins’ business. Most workers on the farm and in chicken-processing
plants, increasingly new immigrants, lack union representation and earn
around $8 an hour for jobs that pose grave threats to their health and
safety — but workers and other victims of agribusiness are fighting
back. The United Food and Commercial Workers continue to organize at a
giant Smithfield pork-processing plant in North Carolina despite widespread
company violations of labor laws. The Coalition of Immokalee Workers
recently forced McDonald’s to guarantee higher pay for tomato
pickers. The Campaign for Contract Agriculture Reform, a group of more than
200 local and national farm and agriculture groups, is lobbying to change
this year’s farm bill to protect rights of contract farmers, who now
account for 36 percent of all agricultural production. Consumers count as partial winners: They get cheap
chicken, even if much of it is contaminated with Salmonella, antibiotics, and other
undesirable pollutants. As the world’s biggest chicken producer, the
United States is also the leading exporter of chicken, particularly those
parts other than the breast meat that Americans prefer, which is sold
overseas at rock-bottom prices. Those dumped exports in turn decimate the
chicken industry in many developing countries. Tally it up. Losers: farmers, farm laborers,
food-processing workers, rural communities, the environment, poor
countries’ peasants, many developing-country agricultural industries,
and urban laborers in both developed and developing countries facing wage
competition from rural migrants and U.S. taxpayers. The winner: corporate
agribusiness.
During the Great Depression, the federal government
adopted many of the ideas of President Franklin D. Roosevelt’s
progressive secretary of agriculture, Henry Wallace. Wallace argued that
the farm market is different from other markets and requires regulations
that manage how much land is planted or kept in reserve. Managing supply,
with the aid of an inventory of stored commodities, conserved the
environment and smoothed price hikes and slumps. The farm market is different because it’s so
basic to people’s lives. Demand is only modestly affected by prices
— one can only eat so much. And thousands of independent producers
make a decision that can’t be changed once a crop is planted and then
depend on weather to determine their success. When prices drop, farmers may
shift crops, but they rarely take land out of production in the way that a
manufacturer might close down a production line in slow times. If market
slumps drive some farmers out of business, other farmers will simply buy up
their land and expand. In the mid-’60s, the government began to
abandon supply management. President Richard Nixon’s Secretary of
Agriculture Earl Butz promised unlimited exports for farmers who planted
“fence row to fence row.” Then the 1996 farm bill ended the old
policy of managing both prices and production through a system of loans,
target prices, and stored surpluses. Instead, it provided subsidy payments
to farmers that were “decoupled” from production. The intent
was to steadily wean farmers from all support. But when prices crashed,
pressure for subsidies was politically irresistible and continued with the
2002 legislation, despite criticism from other countries that such
subsidies violated global free-trade agreements.
Progressive farm experts and advocates say that the
government should return to supply management and at the same time bring
antitrust lawsuits against corporate agribusiness. They want to expand
measures to protect the environment, encourage better nutrition, and help
farm workers. Unfortunately, on Capitol Hill, corporate agribusiness
lobbyists and campaign donations rule. The Bush administration has proposed to leave the
basic farm-bill principles intact but reduce subsidies. U.S. Rep. Collin
Peterson, D-Minn., and Sen. Tom Harkin, D-Iowa, will take the lead in
pulling together Democratic alternatives in the House and Senate. Neither
legislator is likely to fully embrace the Food from Family Farms Act,
developed by the National Family Farm Coalition and supported by many
progressive groups, but some of the core progressive ideas may enter the
legislation. The surge in biofuels, pushing up the prices of corn
and soybeans, “has really shifted the whole debate,” Olson
says. Most agribusiness interests want to push prices back down. They could
do that by eliminating the tariff on ethanol imports. Cheap Brazilian
ethanol would undercut the domestic industry, reducing demand for, and thus
the price of, corn. On the other hand, the Congressional Budget Office
projects no need to budget for subsidies, assuming that
agricultural-commodity prices will stay high. But Congress made a similar,
incorrect assumption about higher prices in 1996, and simply eliminating
subsidies now without guaranteeing a floor for grain prices could be
disastrous. Olson says that Congress could write the farm bill to
subsidize the development of a new market for sustainable cellulosic
ethanol, which would encourage the construction of farmer- or
community-owned ethanol plants that would guarantee fair prices for
farmers. The government could expand conservation programs and at the same
time encourage production of sustainable crops, such as perennial grasses,
for ethanol. It could also create a reserve for both food and fuel needs.
Such a strategy could stabilize prices for both farmers and consumers at a
reasonable level. If the field must is left to the agribusiness and
energy giants, the biofuel boom could turn out to be a variant of the story
of Big Chicken: good for big business, bad for everyone else. It depends on
whether the 110th Congress recognizes that farming is too important to
leave to the whims of the market and the power of agribusiness.
David Moberg is a senior editor at Chicago-based In These Times. Moberg’s
examination about the perils of biofuel production appeared in the April 19
edition.
This article appears in Jun 7-13, 2007.
