[imgcontainer left] [img:grainshot.jpg] [source]Peter Pearson[/source] The way to help farmers is to make sure that supplies of grain don’t depress prices. But that’s not in the ‘stew’ now being cooked up in the Farm Bill. [/imgcontainer]
Every time our Farm Security Acts come up for renewal the topic turns to wasteful spending, like people who bilk the system out of food stamps, welfare Moms, and greedy farmers paid for growing nothing. But big corporations that refine food from the things farmers grow have more say than we do. In a lot of ways, it’s really their Farm Bill.
It’s true, in old Farm Bills there was something called set aside also known as conserving acres. And farmers did get a payment based on having non-producing acres along with actually growing crops that were in the program. That was because the government was trying to reduce surplus supplies of cotton, grain, and oilseeds so that prices could be profitable again.
Every year USDA did the math to see what it would take to do that, and then told us how much we could plant and still be eligible for government support, including a price safety net with low price deficiency payments, and maybe something extra in land diversion payments.
But we haven’t done that for years.
Ever since 1996, farm programs called for more production, not less. The theory was that with more production and no controls, abundant supplies would create new markets and better prices.
Corporations that make money buying and selling — like multinational grain merchants, vertically integrated livestock operations, and foreign-based textile manufacturers — loved the idea. Fact is, they may have thought it up, because markets would be flooded with cheap supplies of the raw materials they use to make a profit.
No farmer in his right mind would want that.
Every good stew has carrots. The carrot in the stew for farmers was the same old thing: Federal payments when prices dipped too low. We were assured that if overproduction didn’t work, counter cyclical payments would.
The lower prices got, the bigger the check at the end of the year. We all started selling feed grain, oilseeds, cotton, wheat and rice below cost of production. The money we got was less than what we needed to pay land costs and inputs (seed and fertilizer), not to mention a living for ourselves and our families.
Government made up the difference.
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Bank loans were repaid on time as big crops came to market no matter what the price as government checks found their way into farm mailboxes. Livestock and poultry production became more concentrated every year because meat buyers were not required to compete with each other in fair and open markets.
More farmers gave up unsubsidized livestock ventures as big pig, big chicken, and big beef took over. The big meat buyers’ control over livestock markets grew to the point that if farms were to raise livestock it had to be under contract to the packers.
Year after year of overproduction got people thinking of things to do with food that weren’t related to eating. Oil prices went higher and crops were cheap enough to burn. So ethanol started going into the stew along with HFCS. And biodiesel. Grain prices worked higher.
The World Trade Organization said that paying farmers for cheap prices is wrong, but giving farmers money just for being farmers is okay by international rules. Counter-cyclical deficiency payments became direct counter-cyclical payments. Then they became just plain old direct payments — money farmers got every year no matter what.
Federal money floated to the top of the stew like excess fat.
About the only real crop price safety net left is crop insurance. It’s expensive, and it still doesn’t apply to small farm-to-market growers or livestock operations. Even though it’s heavily subsidized, farmers who can get it still pay a lot of money for crop insurance
Federal All Risk Crop Insurance used to be one of those sleepy little programs administered out of county FSA offices. Insurers got involved, and before long crop insurance had a new face and a bigger price tag. I have to say it actually works pretty well for me, because in years like 2011 when I lost most of my crop to the Missouri River flood, I was paid enough to recover my operating costs. But just like fat in stew that adds flavor and texture, if there’s too much someone will skim off the excess.
Crop insurance works great as a safety net when prices are rising, because what it pays is determined by the value of crops it insures. That’s partly why it’s gotten so expensive, because prices have doubled and tripled in value. Per acre dollar guarantees have done the same.
But If crop prices go into sharp decline the formula doesn’t take production costs (including land) into account. Farm production costs always follow prices higher and decline after the fact on the falling market. In that case, farmers find themselves paying a bill for insurance that only guarantees a loss.
Too many cooks almost always spoil the stew. Big Ag offered plenty of help stirring the pot. That may be one reason why there are no vegetables in this stew. Not only are vegetables excluded from farm programs, but growing large acreages of vegetable crops has actually been discouraged.
[imgcontainer left] [img:showPicture.png] The Senate Agriculture Committee marking up the Farm Bill. [/imgcontainer]
There’s plenty of meat, because inaction by USDA and Congress has allowed livestock and poultry monopolies to thrive while individual family livestock operations are fewer every year. Even profitable beef cow herds are in decline, partly because plowing up pastures for corn is more profitable than growing grass.
We’re at another one of those familiar crossroads in US agriculture, where we always miss the turn and multinational corporations steer us into the ditch.
We now follow WTO rules instead of our own food conscience, and policy and currency valuations are making food into a global shell game of ingredients. Food independence hangs in the balance, because country of origin labeling in the farm bill has been deferred for years.
Corporate ‘people’ want unfettered access to everything the world has to offer at the lowest price, assuring consumers it’s all just plain old food. One thing they don’t want is a label telling consumers what’s really in the stew and where it came from.
The US Senate is working on the Farm Bill now. Senator Chuck Grassley has introduced an amendment calling for enforcement of laws against packer monopolies. There are proposals to limit benefits from farm programs so that large farms can’t keep growing at the expense of their neighbors and taxpayers. But Congress has largely ignored the fact that the farm safety net is riddled with holes in the event of a market meltdown in commodities even as they have weakened enforcement of rules to prevent that. But some have offered up a shallow loss plan for crop insurance that would pay farmers crop insurance deductible practically every year.
That amounts to the same thing as a subsidy because government would underwrite the cost.
The only people to seriously address the problem of potential overproduction and market price collapse are Daryll Ray and Harwood Shaffer at University of Tennessee, and National Farmers Union. Their Market Driven Inventory System for major crops would allow farmers to hold excess production off the market. That would keep prices from becoming depressed due to increased supply. And in the process it would support profitable prices without huge additional taxpayer cost.
This plan is the cheapest and best ingredient we’ve got to support farmers, but it’s nowhere in the Farm Bill because no one has put it in the pot.
Richard Oswald is a fifth generation farmer in northwest Missouri, president of the Missouri Farmers Union and a regular Daily Yonder columnist.