That is the question: Whether 'tis nobler in the mind to suffer the slings and arrows of outrageous activists, or to take arms against a sea of farm subsidies and by opposing, end them.
Okay, sorry for the cheesy Shakespeare rip-off.
However, anyone with even a cursory interest in national politics understands that every one of the federal government’s big-ticket budget items gets skewered during congressional debates. Budget hawks versus special interest lobbyists inevitably battle over how much such spending should be curtailed.
Even programs that have a long history of renewal and a cadre of supporters face the budgetary knife these days. In fact, there’s now a group of representatives for whom the starting point of the debate isn’t reduction, but curtailment.
One huge target for politicians determined to slash federal spending is USDA’s myriad of farm support programs, and the Wall Street Journal recently published a debate between a pair of agricultural economists taking opposite sides of the debate.
Vincent H. Smith, a professor of agricultural economics at Montana State University and a visiting scholar at the American Enterprise Institute made the case for letting farmers stand on their own, while W. Robert Goodman, a retired associate professor at Auburn University and an extension agricultural economist at the Alabama Cooperative Extension System, argued that farm subsidies need to be preserved.
Let me summarize their positions.
Smith claimed that farmers no longer need subsidies, and worse, they impede innovation. He noted that the average farm household has an income about 15% higher than a comparable non-farm family, and the minority of farmers (about 10 to 15%) who receive as much as 85% of the total value of farm supports have incomes multiple times larger than the mythical “average American family.”
Smith further claimed that farming is no longer a risky business, as evidenced by the fact that the average debt-to-asset ratio in U.S. agriculture is only about 10%. He noted that less than 1% of all U.S. farms go out of business each year, mostly caused by catastrophic health-care costs, divorce and/or poor management.
Finally, he argued that livestock producers and “specialty farmers,” the folks who raise fruits and vegetables, are able to grow and thrive without any significant government subsidies. Shouldn’t that fact alone be proof that most of the billions taxpayers invest in farm supports annually are simply handouts to the already wealthy and successful?
In contrast, Goodman argued that because only a small percentage of Americans are responsible for all domestic food production, subsidies are needed to ensure food availability and affordability — especially as global population swells to a projected 9 billion people in just 30 or 35 years.
Goodman wrote that subsidies help keep farming profitable and stable by supporting profitability, providing a platform for accessible financing and implementation of new technologies to drive farm productivity. The current farm bill focuses on subsidizing crop insurance, which gives farmers the income security necessary to secure the loans they need to produce crops.
That’s important because average annual income comparisons aside, margins in any type of agriculture are often quite minimal. He noted that it costs as much as $500 to grow an acre of corn in the Midwest, yet with commodity prices hovering around $3.50 a bushels, the typical yield of 160 bushels an acre doesn’t leave a lot of breathing room if bad weather or other variables negatively affect the harvest.
Perhaps most important, Goodman pointed out that farm programs have made a major, positive impact on agriculture’s eco-impact. To qualify for subsidies, farmers must comply with such erosion-limiting practices as conservation tillage, riparian protection and buffer strips that have collectively reduced agricultural soil losses by as much as 40 percent over the last 30 years.
One could argue—as Goodman did—that even at $20 billion a year, farm subsidies are but a mere slice of federal spending. And if agriculture subsidies keep food prices low, they represent transfer payments from taxpayers to consumers— in other words, to themselves.
So who’s right? Here’s my take.
No one argues against the notion that increased farm productivity through adoption of more efficient technology is critical to ramping up food production without disastrous ecological effects. And on balance, ag subsidies have encouraged the development of advanced methods by farmers who may otherwise have been unwilling to take the financial risks such investments represent.
On the other hand, over the last 40 years, pandering to certain farm states for political gain — I’m looking at you, Iowa — has corrupted the farm bill funding format and undermined the legitimacy of public investment in national food security.
We need to re-think how we support all of agriculture, at the same time that we need to reform the very business of farming itself.
There are other, equally important uses of precious farmland besides growing endless acres of commodity crops.
Dan Murphy is a food-industry journalist and commentator