The Perversity of Farm Bills
Hal Hamilton and Elizabeth Sawin
February 1, 2002.
This column appeared in Farming, The Journal of Northeast Agriculture (www.farmingmagazine.com).
Right now Congress is trying to hatch a new Farm Bill. But like every congress charged with writing farm policy for the past fifty years, the legislature is ignoring an important reality — farm policy keeps on delivering less of what we want and more of what we don’t want. Congress doles out big checks to the farmers producing crops we have too much of, and few resources are left for conservation or rural development.
New England gets left out of the whole affair because the Midwest and South are so “needy.” There are no enemies here, however, because everyone is caught up in a system that doesn’t really work for anyone.
Remember Ross Perot’s “great sucking sound” that he predicted from jobs moving south to Mexico in a post-NAFTA world? Well, the world of agriculture has its own great sucking vortex. Low commodity prices prompt subsidies and increases in production that further reduce prices, creating the need for -you guessed it – more subsidies. The vortex sucks public resources away from worthy policy initiatives, including payments for environmental services, marketing infrastructure for regional food, and sustainability research and education. Until we put in place policies that weaken the sucking vortex, these initiatives are like a doctor offering tiny sips of ginger ale to rehydrate a hemorrhaging patient. The agriculture system needs triage, and the first step must be to stop the bleeding which results from the cycle of overproduction, subsidies, and falling prices.
At Sustainability Institute, we’ve been working with farmers, nonprofits and policy makers to model decision-making in agriculture, forestry and fishing, and we find that all these natural resource economies have their own version of the great sucking sound. For fishermen or sawmill operators, like farmers, the response to insufficient income is to get a bigger boat or a bigger sawmill. Our models illustrate in sophisticated computer runs what farmers know intuitively – success under the current rules requires the greatest possible productivity, and productivity results in surpluses, low prices, and pressure on land and water.
If farmers already know that overproducing is killing their way of life, why don’t they just slow production?
There’s a story told in farm meetings of two backpackers at a campfire. A hungry looking bear lumbers out of the woods, and one backpacker starts to put on his running shoes. The other backpacker asks why he’s doing that because, “You can’t outrun a bear.” The answer is, “I don’t have to outrun the bear; all I have to do is outrun you.” The number of farmers keeps declining as each “successful” farmer outruns his neighbors.
For decades, in both Europe and the US, chronic surpluses of feed grains and dairy products have bedeviled policy makers. Farm bills try all sorts of things: subsidizing income, subsidizing exports, and paying farmers to idle land. Occasionally, in response to the difficulties of these policies, legislation will try to “wean” farmers from government controls so that the prices finds their “natural” level and farmers receive a “market signal” to reduce their production to the level of demand. This “market oriented” approach has been half-heartedly part of European policy since 1992, and it was tried most dramatically with the US “Freedom to Farm” 1996 farm bill.
Lawmakers promised farmers that foreign markets would expand, but that never happened. Production soared, incomes plummeted, farmers labeled the policy “Freedom to Fail,” and politicians responded with the most massive income supports in history. The trouble with these attempts at “market oriented” policies is that farmers don’t reduce their production when prices drop; they either raise their production or sell their farm to someone else who will raise its production. At the individual level this is entirely sensible. Collectively it is disastrous.
Direct government payments to U.S. agriculture in 2000 totaled $22.9 billion. Ninety-two percent of the money went to commodity and disaster programs; 8 percent to conservation and miscellaneous programs. Nearly 40 percent of agriculture’s 2000 net cash income was derived from direct government payments. In 1980, only 4 percent of agriculture’s net cash income had been government payments.
Farmers are like hamsters on a treadmill, pedaling faster to stay in the same place. Is there a way out of this trap? Sustainability Institute computer simulations of the corn economy tell us that we won’t solve the underlying problem without some way to limit production and some way to limit the drain of farm income into land and technology costs. But these solutions require farmers cooperating in their own self-interest. Reaching these solutions will only be possible when people stop trying to outrun the bear and stand together to take the bear on.
And here lies the dilemma for policy makers, farm advocates and environmentalists. Tweaking the system just isn’t going to do it. Renaming the subsidy program won’t do it. Paying farmers to protect a small percent of their land while the rest of their acres are squeezed in the same old trap won’t do it either. It is going to take setting up a system that makes it feasible to cooperate with your neighbor to hop off the treadmill together.
This will take a lot more work and a lot more creativity than the politically easy road to the same old traps. But anyone who can see the toll that the last fifty years has taken on the families and landscape of farming regions knows that it is high time to try something different.