Introduction
It’s been a busy season here and I missed the comments to my recent blog, “Republican Strategy Opposes Farm Bill Stimulus.” Now it’s apparently too late to comment. In general, those commenting had false ideas about the farm bill. Here I explain some of these farm subsidy myths, in order, from that blog. Not surprisingly, no one offered any documentation to back up their claims.
See my further explanation at the bottom. For now I want to get you right to the point where I rebut what most progressive Democrats believe about the farm bill (because they don’t know the real history of Democratic farm bill policy, and end up advocating for Republican policies and programs). My point is that most comments about farm subsidies really have no validity to them at all. They’re about all based upon widespread gross misunderstandings
Disclaimer: before you get too hyped up with these smashing rebuttals, remember that I’m opposed to all farm subsidies, but only under certain conditions (ie. a return to the excellent Democratic farm policies of the past). I’m not here to bash Democrats or progressives, I’m here to help them to become great progressive Democrats again.
I provide links to certified progressive documentation at the bottom.
Exposing the Specific Myths in the Comments
MYTH STATEMENT by docb: “corporate farms, [Monsanto, Cargill, et al] MUST NOT GET ANY MORE SUBSIDIES...just like the Big Oil Companies should have to pay their taxes and get NO SUBSIDIES!”
Facts: The benefits that Monsanto (ie. agribusiness input complex, selling to farmers) and especially Cargill (agribusiness output complex, buying from farmers,) get in the farm bill are not farm commodity subsidies. They each own some farmland that has “Base” and “Yield,” apparently, and get some subsidies, but that’s a minor point, compared to the enormous secret, off books benefits of the output complex.
On this matter, to advocate for justice is not docb suggests, ending “subsidies.” That has no impact on the hidden benefits. It’s a pro-Cargill farm bill policy position. Because so many progressives advocated in Cargill’s favor and against diversified farmers in the last farm bill, I’m writing these blogs. You must stop spreading these falsehoods folks! (See further explanations below.)
MYTH STATEMENT by rhetoricus: “A breaking up of the big commercial farms and a supporting of smaller family farms” means what? A review at recent progressive policy initiatives suggests that this refers to subsidy caps. Subsidy caps do not address the mega-main issue at all, however. The mega-main issue is that farm prices have usually been low. The US corn price issue from about 1952 through 2006 (in 2010 dollars, GDP deflator) has been that that it (price X production) has been about $1.6 trillion below the traditional fair trade/living wage market price (parity) standard that was in the farm bill 1942-1952 under excellent Democratic leadership. We must consider all “program crops,” the fact that we often have set world prices because we’re price leader (dominating export market share and clout), and the impact on these reductions on wealth and jobs creation world wide in farming countries (ie. LDCs are 70% rural). This, then, in today’s dollars, is a multi trillion dollar issue, probably a deca-trillion dollar issue. On that problem, the suggestion of rhetoricus would not really help in a noticeable way. (More below and in my other blogs.)
MYTH STATEMENT Visceral: “The vast majority of the farm bills are subsidies and tax credits of one form or another.” Ok, look at my previous paragraph about the multi trillions. Farm bill spending has not been in the multi trillions. For corn, it’s been about $200 billion in today’s dollars, vs the reduction mentioned above of $1.6 trillion, and that’s just the impact inside of the US (remember, corn is one of those crops where we’ve been the huge gorilla in export markets, setting world prices as we choose, setting them to where we lose money, unlike OPEC in oil).
(Visceral) “and the vast majority of that money goes to big and highly profitable agri-businesses.” Those who get farm subsidies, whether big farms or small, always have gotten them as partial compensations (almost always small, ie. the $1,600 billion reduction [1953-2006] compensated by $200 billion [1961-2006]) for reductions below previous fair-trade/living-wage levels, and often also below full costs (ie. every year 1981-2006 except 1996 for the sum of prices x production for corn, wheat, rice, cotton, soybeans, barley, sorghum grain, oats). Ok, I know that’s a bit hard to sort out, but it’s this: Even the bigger subsidy recipients get them because of reductions in profitability, including reductions below any profitability. In contrast, the hidden, off-the-government-books benefits, the below cost gains, the benefits to the buyers, the agribusiness output complex and CAFO complex from cheap market prices-- these are not given on the basis of any need. They got those even on years of record profits, and in fact, they often got the biggest benefits on years when they had the biggest profits, because these benefits significantly cause their profits to be records. This is fairly easy to document in a general way.
“Businesses with no need for assistance end up getting the most assistance.” First, “assistance” here surely meant subsidies. As I’ve argued, there was always a need for assistance. In fact, there was a need prior to the subsidies, because price floors were lowered 1953-1960 for corn, wheat, and feedgrains like barley, oats, and grain sorghum, but there were no farm commodity subsidies, and none for cotton until 1961, and none for rice until 1977, and none for soybeans until 1998. Ok, but then I’m arguing that the really big, much much bigger “assistance” isn’t subsidies at all, so yes, they do not need it, but they get it. The principle is correct, but when you pack it in the various myths, then you end up advocating, as Democrats and progressives did for the 2008 farm bill, (ie. the House and Senate versions of the farm bill, Kind-Flake, Grsssley-Dorgan) FOR the much bigger real benefits, in direct contrast to Visceral’s obvious values.
MYTH STATEMENT by Visceral: “It's perfectly in keeping with the conservative idea that people who need help don't deserve it while the strongest players deserve everything we can do for them, but it's not fair at all.” Ok, here’s the one blog comment that actually addressed the theme of my previous blog. I appreciate that someone actually addressed my theme. Keep in mind the context, however, the myths from Visceral that I’ve already rebutted. Then understand my theme: Republicans advocate against the US making a (fair trade, or any,) profit on farm exports (in the past, and in the future if trends go the way they did following the 1970s price spike. Ok, discuss whether or not that is “perfectly in keeping with ... conservative idea[s].”
SIDE POINT from Nastarana: “I can't believe someone is actually willing to introduce into discussion such far out, wild and crazy ideas as regulation and price controls! Thank you for a welcome voice of sanity in the wasteland.” I hope this person is not framing spin for the Democratic party!!! Ok, let me rephrase that: “I can't believe someone is actually willing to introduce into discussion such common sense, vastly agreed upon ideas as making a profit on farm exports. Thank you for a welcome voice of sanity in the wasteland of economic illiteracy.”
MYTH STATEMENT by Christy1947: “Do remember that all members of US society have to bear their share of the hits that deficit reduction require. The notion that there should be an area of the country, and an area of the economy which is free from that, and is protected by a regime that guarantees them income is inconsistent with the kind of economic equality in hard times which all must share, not excluding farmers” At no time have farm commodity subsidies been associated with farmers having a positive guarantee. They’re always associated with reductions below “parity” with their urban counterpoints. Since 1953, the income they have been “guaranteed” by farm programs has been, increasingly, a guarantee that they’ll get less, (given the nature of farm markets, and we know, in hindsight, that that happened,) that they’ll have to subsidize the cities with below cost farm products. Farmers in the government programs subsidized you consumers every year 1981-2006 (except 1996, except for some crops for 1996). This is all easy to generally document, and I’m glad to do so more specifically, if people are willing to enter into discussion. You can also look at farm share of the food dollar. Stewart Smith’s research projected that to decline to zero by 2020. Farm sales for dairy products have recently been below zero. Basically, if you remove both the agribusiness output complex share, AND (as USDA does not,) the agribusiness input complex share (Monsanto, John Deere), you find that, as of 2006, the farm share had declined to less than 1/3 (29%) of what it was in 1950, while consumers have paid 51% more, and the combined agribusiness share (output and input) grew by 90%. Ok, that 29% vs 1950 is not a positive guarantee. The reduction of $1,600 biillion for corn + the 200 billion compensation is not a positive guarantee.
“not excluding farmers, no matter how happy farmers are to tinker with their guaranteed and preferred position.” Substitute “preferred position” for my words “positive guarantee” above. Farm subsidies have never been a “preferred position” for farmers. Christy1947 is apparently unaware of just how “happy” farmers have been with their “position.” Here’s some recommend historical reading: “Mad as Hell: An Inside Story of the NFO,” by Willis Rowell; “Angry Testament,” by Charles Walters; “Raising Less Corn and More Hell: Midwestern Farmers Speak Out,” by Jim Schwab, or see this video at YouTube: “Food Movement 1985: Were You There? We Were.” By the way, farmers are also not happy that uninformed progressives are supporting the bad policies, against their own professed values, as is shown here at YouTube: “Michael Pollan Rebuttal 1: Debunking Pollan's "Corn Subsidy" Argument,” (ie. at about 11 minutes 20 seconds until about 12:43.)
“When we've got Congresscritters who are getting big bucks for not farming, and one of them running for president, it's something you need to think about, with an eye to protecting those who genuinely need it, not everybody, and getting rid of the waste and such in that system, at least.” There is no mention here, (or at the farm subsidy database of the Environmental Working Group,) that those “big bucks” 1981 through 2006 came under conditions of massive losses. There is no mention here of the $1,600 billion drop in value below fair trade levels since 1952, which was a benefit to Cargill, Continental, Bunge, ADM, Tyson, Smithfield. The largest entity in EWG’s farm subsidy database, (a rice co-op with 9,000 members) got only $0.5 billion from the govenment, while both Tyson and Smithfield got 5 X that amount in below cost gains (more than $2.5 billion), and in fewer years. The subsidies were compensations for massive losses. We had the lowest farm prices in history, (adjusted for inflation) 1998-2005. At the same time, the unmentioned gains for Tyson and Smithfield, also caused by the farm bill, but off books, hidden, were not given in compensation for any losses at all. Cargill and ADM each get much much more than these figures, in the multi trillions annually, also not at all as compensations for any losses. And that’s what your Congress critters did. Democrats such as Harkin, Gephardt, Wellstone, Daschle, fought against. The truly alternative policy, the Farm Policy Reform Act (Harkin Gephardt Farm Bill, like today’s Food from Family Farms Act of the National Family Farm Coalition) was voted on in 1985. But then, in 2002 when Harkin became Senate Ag chair, all of these Democrats switched to a green version of the 1996 farm bill, (ie. in the 2002 and 2008 farm bills, Kind-Flake, Grassley-Dorgan, and all other recent Democratic proposals).
MYTH STATEMENT by LindaW47: “Ending farm subsidies is a good place to start cutting the budget.” Linda did not understand my blog. Ending farm subsidies is a terrible place to start! This should be clear from my various points. Ok, specifically why? It does nothing to address those enormous hidden below cost gains, (ie. $1,600 billion for corn historically) the lowering of farm prices, and then takes away the small partial compensations that farmers get (ie. the corn subsidy compensations that were only 12.5% of the reductions). African American and other disadvantaged farmers would especially be hurt by those policies. Those at the Federation of Southern Land Cooperatives Land Assistance Fund, (members of NFFC) support my views, and have written about this very question in Price Floors Not Subsidy "Scapegoat". See also “U.S. Cotton Program & Black U.S. Cotton Farmers, by Jerry Pennick and Heather Gray. At the same time, this does nothing for the concerns of the Africa Group at WTO and La Via Campesina. See “WTO Africa Group with NFFC, Not EWG,” and “Via Campesina with NFFC: Support for Fair Farm Prices.” Ending subsidies without first adding any price floors and supply reduction programs (for when needed) would cause a massive farm crisis, much worse than the 1980s, (except that fewer farmers remain,) under most market conditions over the past 140 years. It would be something like the recent hugely devastating dairy crisis, only worse, or the hog crisis of the 1990s (8¢lb hogs).
“National Summary Analysis, by Ken Cook $246.7 billion in subsidies 1995-2009.” Cook and EWG do not mention the arguments I’m raising and documenting here.
“62 percent of farmers in United States did not collect subsidy payments - according to USDA.” In 1962 the corporate think tank, the Committee for Economic Development called for Congress to reduce price floors, (note: they asked for no adding of corn subsidies, as subsidies don’t lower prices,) in order to drastically lower farm market prices (as a hidden subsidy to the agribusiness output complex,) and run one third of US farmers off of the land within five years, (to help drive down wages in the cities). (They also asked for programs to stimulate a rural brain drain.) These programs were essentially enacted. (See Mark Ritchie, “Crisis by Design,” online at IATP.) The crops listed for decline were: cotton, wheat, rice, feedgrains (ie. corn, barley, oats, grain sorghum). These penalized crops are what were called above, “preferred.” Note that there are no fruits and vegetables listed. Data of various kinds (ie. return on equity, share of the food dollar, percent of parity prices) shows that fruits and vegetables, both fresh and processed, have generally fared much better than the listed “program crops” that got the reductions plus the compensatory subsidies. Both categories have dropped since the 1950s, but fruits and vegetables have always been higher, and the percent of drop seems to be clearly more for the program crops, in a rough comparison, with (4 major) program crops falling to about 33% of parity in 2006, and (15-17 major) fresh and processed fruits and vegetables down to about 47% (average of average prices, a guesstimate that is quite consistent in the various individual cases).
MYTH STATEMENT by jestbill: “Why should farmers have a guaranteed income when the rest of us do not?” Factually the rest of you have a guaranteed minimum wage, but not a guaranteed living wage. Farmers, have a guaranteed income that is far below the cost of production, so it involves massive losses. This is easy to document, like most of my other points, and I’m glad to do so again if jestbill dares to participate in a back and forth discussion.
“I don't care if they are ADM or the farmer in the dell, they don't need subsidies.” As usually, there is no documentation for this claim, nor even any rationale. ADM does not get compensatory farm commodity subsidies, unless they get a little for owning some land. They get massive below cost gains because US policy is to price farm commodities at below US costs of production and export them at a loss. ADM has no need related to this. They’e made massive profits along the way. The “farmer in the dell” is different. He is the victim of Congressional policy where we’ve lost money on exports. (It was not in any practically significant way caused by subsidies.) Farmers have had massive reductions, and more recently they’ve dropped to massive losses. Given these stupid policies, farmers have massively “needed” subsidies. During this time, however, the US has had, by far, the most farm-commodity-export-market clout of any country in the world, so we’ve never been forced to lose money on exports, we did it on purpose. Therefore, there was never a need for the low prices in any way. In that way, there has never been any ultimate “need” for any farm commodity subsidies. They’re only needed in the incredibly stupid context of the US choosing to lose money on farm exports for a quarter century (to secretly subsidize the Output Complex, ADM, etc., in the US, and in foreign countries.
“As soon as you start talking about ‘parity' or some silly ration of the price of a barrel of oil to the price of a bushel of corn, you are wading out into the deep end of the lake. The word is ‘obfuscation.’” Beautiful quotation. I love rebutting such apparent arrogance. Here’s my case. Consider these terms: “minimum wage,” living wage,” “fair trade price.” Is using such terms “obfuscation,” “wading out into the deep end of the lake?” Probably not if you’re raising a family on something close to a minimum wages. Probably not if you’re living on $2 per day because of export dumping (caused, not by subsidies, but by, for example, our lack of bottom side price floors and supply reduction programs). The poor and hungry world wide are primarily rural people, dependent upon a farm economy. LDC countries average 70% rural (UN ESA) and 80% of the Undernourished are rural (FAO). Let’s not confuse ignorance about farm subsidies with “obfuscation.” Parity is simply the traditional standard for “fair trade” or “living wage” farm prices.
“some silly ration of the price of a barrel of oil to the price of a bushel of corn” In 1947 corn averaged $2.16 per bushel (USDA) and oil averaged $2.16 per bushel. In 2008 corn was $4.06 and oil was 71.21. A 1947 dollar was worth $7.90 in 2008, and $4.03 in 1982. That’s not a barrel of laughs to corn farmers. Ok, who wants to work for 1982 wages. Seriously, farmers haven’t needed to keep up with inflation, because of increases in efficiency, (though that changes with peak oil). Parity prices have increased more slowly than the rate of inflation, for example. Actual farm prices, however have been much lower than this. Corn is lower (X production) by about $1,600 trillion, minus about 200 billion in subsidies. Various groups (ie. UNEP, “The Environmental Food Crisis,” fig. 2 p.13, Bread for the World, “Hunger 2009: Global Development: Charting a New Course, fig. 1, p. 5) have claimed, in spite of these facts, that farm commodities have risen about the same as oil (using an index instead of raw data, considering only a few recent years, and starting with some of the lowest farm price years in history (ie. 1998-2005).
MYTH STATEMENT by Stumptown Dave. “I'm personally hoping that fruit/vegetable farmers, especially family farms get more support encouragement by Federal Farm Policy. It seems counterproductive to have the bulk of subsidies go to mono-crop commodities.” I strongly agree with Dave’s goals in the original comment. Fruits and vegetables are perishable and have different kinds of programs that, for example, (storable) grain farmers. Grain can be stored to drive down prices in future years, for example, but can also be stored in positive ways. Ok, if prices for fruits and vegetables fell, then they would be like the other commodities. (ie. as of 2006, 15 major fruits and vegetables were priced about 42% higher than 4 major farm commodities, using the standard of parity for comparison purposes). So if fruit and vegetable farmers had those very same low prices, and subsidized consumers in a comparable way, at their own expense: is that what you mean by “support?” You can plug in farm commodity subsidies to these parity comparisons, and fruits and vegetables still come out ahead. I have data to do that for some years, and the result is that, even with subsidies, the commodities get less income, so they’re supported less, because they need price floors and supply management, but it’s been inadequate (by living wage standards) since 1953 (and below costs, when USDA studied a sample of it in later years). The farm program is very counterproductive. If commodity prices were raised (supported), then fruits and vegetables would be relatively cheaper, and many more benefits would be gained, as in my blog “Missing Plank in the Democratic Foodie Platform.” At present, farmers growing only the main commodities are prevented from growing fruits and vegetables (ie. they’d lose their subsidy compensations). This prevents them from causing a fruit and vegetable “farm crisis,” like other farmers had during the 1980s.
MYTH STATEMENT by glass house: “Tough call I get infuriated when I drive down the road and in front of the big farms are the ‘Eliminate Welfare,’ ‘Stop Socialist Obama’ signs. Drives me nuts.” That ticks me off too, and I ridicule other farmers for it when I write letters in the farm press. On the other hand, most farmers have always preferred alternatives to the subsidy system, and about 2/3 have supported the proposals I describe, and that’s what it is now for the dairy part, which is the same principle (price floors, make a profit on exports, then no subsidies are needed). Since 1996, there have been no real alternatives proposed in Congress by anyone, though Kucinich, for example, understands these issues well. I don’t think he generally mentioned them in his Iowa caucus campaign, (I couldn’t find that online anywhere,) although he once held up Charles Walter’s book Unforgiven, on Iowa Press, and I’ve discussed these matters with him.
Some EXPLANATION: “I am small business and I get no breaks on fuel, vehicle licenses, electricity and other things. I get no tax exemptions on any supplies and get no breaks on property taxes. I wonder in my frustration if I am justified or am I just playing into some game where I am getting screwed so they should too.” Farmers have almost always been big losers on the biggest issues, especially nationally, but also, for example, in pro CAFO state legislation where we’ve lost our livestock value added flexility to those massively benefiting from below cost feedgrains, (& this is not caused by subsidies, but rather mostly by federal drops/elimination in price floors, etc.). However, for many years, the family farm movement has advocated for the policies that really make a difference, the ones I’ve emphasized here. (They’ve known all about much of my reasoning here.) We need that now, since, if the food movement knew about it, more farmers would join, and we’d be more powerful than we’ve ever been since Depression era days (since the new bad policies that started in 1953). Ok, so one point is that, with price floors you really challenge corporate agribusiness, whereas subsidies don’t hurt the buyers at all. When we have a strategy like this, it also helps us to win side issues. It helped farmers win improved farm credit legislation in 1987.
Ok, I know this is a bit long-winded but here’s my point, my view of the statement by glass house. Farmers have not really ever won on the price issue since the Depression, (or since 1953) but we’ve won a few bones along the way. So we’ve won a bunch of tax write-offs, which also help us to cope with low prices. You need to make a profit to get the benefits, however. You then get a bigger write-off if you’re in a bigger tax bracket (ie. it’s 28% instead of 15%). It then favors tax loss farming. It then brings in rich outside investors, and that’s what really drives up farmland values. In principle, then, it’s like zero price floors plus subsidy compensations, as explained in the black cotton farming article. You need them, but you’re also worse off with the package. Also older farmers with more capital hold onto land, because it’s all they’ve got, and that helps it inflate. I see the fuel credit in the same way, and various state level matters.
“I want the big agra welfare to end.... In Many ways that huge tractor is the Welfare Caddy the big farms throw in my face every day I drive to work so I can eek by” Bring back price floors to end mega-big agra (Cargill, ADM, Tyson, Smithfield) welfare. Farm commodity prices lack price responsiveness on both supply and demand sides. They don’t self correct. They’re usually low, below the cost of production, and we usually lose money on farm exports, unless we hold them up with price floors. How does that compare to glass house’s small business market? A small business can close, and turn to something else, but the same is not true for farmland. The same range of options is not available. The substitutes are all pretty much in the same boat. A related paradox (see above about tax loss farming for the rich) is that farm prices fell so low that, more and more, only those with high off farm income could farm. Strangely, as farm income fell, farm household income rose! See the recent analysis by Tim Wise on household income vs farm income, (“Still Waiting for the Farm Boom: Family Farmers Worse Off Despite High Crop Prices”).
“and paying people to not farm land also has to go” Ok, prices don’t self correct, (see above,) so we must manage supply. During the Great Depression, motor vehicles and farm implements managed supply and had minor price drops. Farmers had no such mechanism, for a variety of reasons, and supply was not managed, and prices fell hugely. My family found that corn was only 7¢ per bushel here. Prior to the 1996 farm bill we had supply management, (acreage reductions, and topside, reserves supplies). You didn’t get paid to do it. It was required if you were in the program. When corporations worked to weaken farm programs, one strategy was to make supply management voluntary. The buzz word “mandatory” was used to spin against effective programs. Voluntary programs were paid programs. The beneficiaries of the elimination of supply management have been the agribusiness output complex, which benefits from the cheap prices, the CAFO complex for the same reason, and the agribusiness input complex, (Monsanto, Dupont, John Deere, etc., selling inputs to farmers) which benefits from keeping all land in production (more sales). See links to discussion of supply management by business at the zspace link below. See also the video playlist from Scott Marlow of RAFI at the YouTube link below.
Concluding Thoughts
Beyond explaining these myths, we can talk about why these myths came to be believed by progressives. To what extent was it a lack of peer review. These topics have not received enough peer review to correct them. People have been reluctant to admit that they are wrong, but rather just move on, away. I’m trying to be provocative here, not to pick on people, but because, one purpose I have here is to get people to try to defend these myths or stop spreading them, rather than just run away from the discussion. “Where’s the beef?” in your claims? It isn’t. It’s not that I’m saying “put up or shut up.” Keep blog commenting, but please do so factually from here on out.
Beyond the peer review questions, the issue is surely about paradigm change. Simply giving people the facts won’t cause them to change, even though alternative advocacy positions are offered. They’ll still advocate for Cargill and against family farm justice and justice for peasants in Least Developed Countries. Thomas Kuhn studied this challenge in The Structure of Scientific Revolutions. Anomalies build up (ie. people can’t rebutt my criticisms of their myths, and surely don’t know enough about the alternative view to do so).
Surely, if it’s often the case that no one even knows enough to discuss these matters, they need some serious attention! Please keep this title/link handy, to paste in anywhere that you see similar myths being spread. Hopefully we can get some good discussion of these matters right here.
For More Information:
See blogs, links and links to more blogs here: http://www.zcommunications.org/.... See, for example, “Farm Bill Primer,” “Food Crisis Primer,” “Movement, Media Reviews.” Many of the blogs have numerous footnotes documenting my various points
See video documentation, including charts and links, here: http://www.youtube.com/...
See 25 similar myth rebuttals (partial comments and links to rebuttals to 25 separate blogs) here: “False on the Food Poverty Crisis: 25 Online Examples,” http://www.zcommunications.org/....
For dozens of additional examples of false ideas about farm subsidies, google “Brad Wilson” and various terms such as “price floors”, “farm bill”, “farm commodity subsidies”.
See also my blogs at Daily Kos, which mostly address these questions.