Commentary––

US Farm Policy Is Pretty Rotten

 By George Naylor

When I arrived at the recent World Trade Orgaqnization (WTO) negotiations in Cancun, I met with fellow farmers from around the world. I found that low commodity prices were destroying their rural communities, just like they are destroying rural communities in Iowa and throughout the country. The prices I sold my corn and soybeans for during the past couple of years have been lower than prices I received in 1978. Likewise, Mexican farmers now receive about half the price they received for their corn before passage of the North American Free Trade Agreement (NAFTA) in 1994. Mexico’s importation of cheap US corn forces its rural residents into urban centers and the United States looking for work. Is this what we want from “globalization”?

The US subsidy system is often blamed for the current farming crisis around the world. As the argument goes, getting rid of US subsidies would discourage production and make the price of grain rise for all farmers. Sounds reasonable, but it doesn’t add up — because farm communities in the United States experience economic demise that resembles those in Mexico and other countries, even with subsidies. Most people, like the farmers I talked to in Cancun, are surprised to learn that the US subsidy system is actually a disaster for American farmers, too. Let me try to explain why that is.

In 1933, during the Great Depression after the total collapse of crop prices in the United States, a floor was placed under prices to get the farm economy moving again, bringing some economic justice to family farmers. Starting in 1985, Congress began dismantling this system, culminating in a total change in 1996 with the farm bill known as “Freedom to Farm.” This free-market oriented farm bill eliminated price floors, food security reserves, and conservation programs. Under this system, every bushel produced must be dumped on the market. Therefore, farmers respond to low prices by trying to produce more, not less, damaging the land and only making the price problem worse.

Without a price floor under basic commodities and not knowing how low prices can go, how many bankers do you think would loan farmers the money they need to plant the next crop? How could a modern farm system operate under such uncertainty? It couldn’t.

That’s the little secret corporate agribusiness won’t tell you. US taxpayers have to underwrite this nonfunctional system with billions of dollars just to keep the US farm economy producing millions of tons of cheap commodities. Cutting US subsidies will hasten the demise of US farmers but it won’t change overall production to improve prices. This means cutting US subsidies will not improve the situation for farmers in other countries –– contrary to the argument used by developing countries in Cancun.

A recent study from the Agriculture Policy Analysis Center (APAC) at the University of Tennessee, “Rethinking US Agricultural Policy: Changing Course to Secure Farmer Livelihoods Worldwide” (www.agpolicy.org/) explains why subsidies have become an integral and destructive feature of US farm policy. The APAC study cites a 2003 study by the International Food Policy Research Institute indicating that total elimination of US subsidies would result in world price increases by 2020 of only 1.6 percent for rice, 2.9 percent for corn, and 0.8 percent for wheat!

Corporations benefit from the subsidy system, not farmers. Corporate profits rise when corporations buy cheap commodities for export or to feed their huge factory livestock operations. This system is corporate welfare in disguise. It’s enabling big corporations to further industrialize the food system. It’s time for a civilized farm policy that values family farm production, fresh food, a countryside with fresh air and water, and the right of family farmers to survive and contribute to their nation’s food sovereignty. Progressive farm groups like the National Family Farm Coalition call for ending the subsidy system, restoring a price floor and food security reserve that provides fair prices for our farmers.

At the WTO in Cancun, the US trade representative wanted developing nations to lower their trade barriers even more, allowing multinational grain exporters to further globalize the curse of low farm prices. We called on the US trade representative to take actions that work for farmers, not against them.

Let’s all work together for that change.

(George Naylor raises 470 acres of corn and soybeans with his wife and two sons near Churdan, Iowa. He started farming the family farm in 1976, and has served as president of the National Family Farm Coalition since February 2003.)