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Food progressives, mainstream media and conservatives misunderstand how the farm bill has worked historically, and almost always give false analysis and call for false advocacy, related to farm subsidies.  The recent diary, “Sugar Politics and Why Our Children are Paying the Price,” is a prime example of these trends.  The case of misunderstanding sugar is a special case, and calls for a separate line of corrective explanation.

I have no argument with the many concerns in the diary about high fructose corn syrup, and with sugar in general, though that is not my area of expertise.  My concerns are with discussions of the policy, programs and politics of the issue.  

(Note:  I wanted this to be shorter, but as with other diaries, the myths always come in a package.  It’s hard to justify omitting to correct half of them.  This is, then, an opportunity to show how the package as a whole is characterized by myth, relativism, and contradictions.  It’s a fairly comprehensive, interconnected false paradigm.  The sugar part is a sub-package that helps to illustrate the whole problem, and it's much needed solution.)

In the second paragraph we’re told that “Nothing illustrates the perverseness of subsidies and our political system better than the politics of sugar.”  In fact, however, sugar represents an exception to the rule, as I show below.

You then must scroll down a long ways to try to find an explanation, a further discussion of "sugar politics."  (It’s a little like trying to find the farm bill analysis that’s scantily scattered far and wide across hundreds of pages in Michael Pollan’s Ominvore’s Dilemma!)

The first explanation is about how House Republcians are fighting some spending on “healthier eating.” Ok, I don’t object to that small point.  

Then you scroll down quite a ways further and you get to “the high price of sugar..., we pay twice as much for sugar than the rest of the world.”  That then is a reason for the prevalent use of high fructose corn syrup.  That point is Ok too, except for the fact that it raises a crucial question.  How high is  high?  This is my point about relativism.  “Twice as high” is a relative standard.  Which level should be the standard, the lower or the higher?  Why, on what basis?  

We then find a quote from wikipedia, with footnotes.  It describes “sugar tarrifs” and “sugar quotas” from 1977.  Wikipedia (below the quote) then states that “the  price of corn is kept low through government subsidies paid to growers.”  That is false, as is proved 4 ways in the YouTube videos, “Michael Pollan Rebuttal 1” and  “Michael Pollan Rebuttal 2”.  The Wikipedia sources are Tom Philpott at Grist and the Institute for Agriculture and Trade Policy.  (Mark Muller and Heather Schoonover).  IATP generally gets these issues correct, but Muller and Schoonover have made a number of errors in their writing on the farm bill (for example,they've confused price floor loans with supply management).  The IATP piece sort of sounds like it’s saying that subsidies are the cause of the low prices.  That’s false, as IATP makes very clear elsewhere.  

Tom Philpott also misunderstands this issue, and his (referenced) sugar article, has similar weaknesses to the Daily Kos diary.  I find no reference there to subsidies causing low prices, though Philpott has made that mistake elsewhere, spreading myths by not understanding crucial online analysis.  I’m showing here that these myths are widespread, as I asserted at the start.  

Ok, we’ve got the part where sugar prices are much higher, which is true, and that helps cheap HFCS, also true, but subsidies aren’t the cause. The cause is that corn doesn’t have policies and programs like sugar.  We once had these programs for corn.  We have long had the dominant export market share for corn.  We’ve been bigger than OPEC in oil, but while OPEC used it’s clout to raise prices, we used ours to lower them, to lose money on US corn exports.  

Ok, we then find more explanation, (quotes) of “why is HFCS used,” and yes, “cost” is surely correct.  Part of the explanation, “because the government wants it that way” is correct, and again, “Sugar Tarriffs” are part of higher sugar prices.  “Corn and Sugar Subsidies” are not, however the government answers.  We have corn subsidies, but they don’t cause low prices, as I proved above, with support from IATP. Sugar does not have subsidies, it has price floors and supply management, so that part is false.  

Ok, here I make my point about contradictions.  Corn has usually been cheap, with help from  government programs, sugar has been higher.  So why is it claimed that subsidies cause both high and low prices?  Subsidies are in the news, and people are against them, and they’re in the farm bill, so it must be subsidies, whatever the problem?

Next we read about the politics, about  how “none of the above would exist without at least tacit complicity between the Sugar Industry, the Corn Industry and the United States Department of Agriculture.  Remove any one of those three players from the equation, and the tariffs and subsidies most likely go away.”  Ok who is the source on this?  Where’s the logical explanation?  Surely progressives can do better than that!  So often, however, on sugar, they don’t, and it gets spread around.

Sugar is not storable until it is processed, so it has a unique program, which involves the processors. That, perhaps, is why there is political clout for sugar price floors instead of subsidies.  The processors plus the farmers are more united.  With corn, the huge corporate buyers are for cheap prices, so they (and corporate friends) called for running 1/3 of commodity farmers off the land within 5 years, and essentially won the changes.  The politics is therfore very different.  USDA implements what Congress passes, so Congress has been left out of the equation.  Congressaional progressive rural Democrats (ie. 1980s-1999) supported much higher price floors instead of low/no price floors and subsidies for corn and similar crops, until Tom Harkin became Senate Ag chair.  Then they caved in and went the Republican way of zero price floors.  Sugar and corn have separate interests.  There is no shared interest in sugar making a profit for farmers while corn is below cost, giving more market share to HFCS.  The diary quote of “Remove any one of those three players from the equation, and the tariffs and subsidies most likely go away,” is a fabrication by someone.  Changing sugar does not change corn policy and visa versa.

Ok, next there’s another common myth I’m glad to debunk in the part about ADM and subsidies.  Yes, ADM is at the heart of it big time!  Thanks for exposing that!. But the diary got it wrong here too.  The basic falsehood (debunked above) is that subsidies cause the low prices that ADM benefits from.  No, the economic cause is that corn doesn’t self correct in free markets (inelasticity, lack of price responsiveness). The policy cause is NOT the PRESENCE of subsidies, it’s the ABSENCE of price floors and supply reduction programs, as is proved in the video links above, which have further sources and data.  Charts in the videos show that when Congress lowered price floors, prices followed them down, every step of the way, except for occasional price spikes and rises.

Ok, one point of clarity:  ADM doesn’t get farm subsidies from the government, it gets “subsidized” by cheap market prices.  The diary sort of gets this correct here, but is not explicit about this specific point, which is widely misunderstood.

There is, however, a second myth here.  It’s the point about relativism and the lack of a standard for fair prices, such as for “fair trade,” or “living wage” prices.  We read that taxpaers pay subsidies, so citizens are assumed to pay unfairly.  Farmers get market prices (lower and lower, 1953-2005 and not quite so low today,) plus subsidies.  In truth, however, the two together add up to a much reduced price (as documented with USDA data in the videos above, in both constant dollars and as a percent of parity).  This is true even for the prices in recent years, which have been significantly higher than the lowest price year in history (ie. 2005 for corn, lowest going back to 1866, adjusted for inflation, GDP deflator).  

We then find more analysis from Tom Philpott, whom I debunked in the link above.  Here Philpott describes corn as “our most lavishly subsidized food crop” (see rebuttal comments on this point at the link).  Here again we’re dealing with relativism.  He gives no standard for how much corn prices have fallen.  Philpott’s term “lavishly” is relative, in that it doesn’t address the question of drastic reductions in corn prices.  It’s the equivalent of the “King Corn” myth.  Corn is a pauper.  It’s been harshly penalized.  EWG’s most recent subsidy figures, plus USDA data for feedgrain subsidies for earlier years, put in constant dollars, might get us $200 billion in corn subsidies (since 1961 when they started).  But price floors started dropping in 1953, and we have zero price floors today.  The last 20 years were the lowest in history. So too, the last 30 years were the lowest 30 years ever.  One illustration to compare the subsidy figure is to compute corn prices vs previous prices using parity as the standard.  Corn averaged just above 100% of parity 1945-1952, years for which I have figures because price floors were set to achieve that. Since then Congress lowered price floor levels.  If you plug in production (yield x acres) x actual prices, then corn fell in value by $1,500+ billion, but got compensated by $200 billion.  Taxpayers then complain about paying the $200 billion, the speck in the eye, but don’t see their $1,000+ billion in benefits, the log.  The speck, that’s “lavish.”   The (“lavish”?) trillion dollar farmer subsidization (below fair trade or parity prices) of consumers/processors, that’s left out of the paradigm. Get the point?  Again, these questions are not even discussed, not even mentioned in this and similar articles, like those of Tom Philpott.

Next we read about managing the supply of sugar.  That’s a good thing, not bad, if done properly, which the government hasn’t always done.  (Previously we had both bottom side supply reductions for corn and other similar crops, for fair prices for farmers, plus top side reserve supplies, to protect consumers and keep prices fair for them.) And yes, the HFHS issue was a “bomb” for sugar growers! Farm programs must be consistent across key crops to make them work. That didn't happen here.

Here we have quotes from “The Freedom Foundation,” a “free market” group as the source of sugar policy analysis.  Remember at the top I mentioned that conservatives made many of the same mistakes. You see that here.  Free markets don’t work for farm commodities.  That’s doumented with abundant economic data, as seen in the videos linked above, but that makes no difference to ideologues like the ones quoted here.  

We read then that “the high price of sugar has destroyed almost 9,000 US. jobs in food manufacturing since 1981,” and caused other problems.  It’s blamed on the supply management, “the quota program,” and the tariffs.  Ok, free markets don’t work, so to establish fair prices we need supply management, and we need to prevent outsiders from coming in and destroying prices, our ability to make a profit.  Sugar is somewhat different in that we don’t dominate the market like we do in other crops, but the same is true for corn and soybeans.  We have dominated export markers so we especially have had the ability to make a profit by managing supply of corn as well as stopping export dumping into the US (except in that we've signed onto free trade agreements that can't work for agriculture, and that undermine supply management in support of export dumping and cheap prices).  

Ok, so here the Freedom Foundation is cited, but they too use relativist arguments.  It sounds like it’s all great for business, unless you stop and think it through.  It’s not mentioned that we might want to make a profit on corn exports by selling corn at above our costs. (Corn and other major commodity prices were below full costs almost always 1981-2006, as USDA-ERS data shows; this is generally reinforced bydata from Land Grant Universities like Iowa State University.)  It then becomes an argument for lowering our profit on farm exports generally, but that fact is kept hidden.  On jobs, for example, there is no mention of the thousands of jobs lost by that lowering of corn prices by more than a trillion dollars, and by lowering all of the other commodity prices by similar amounts (ie. cotton, wheat, rice, barley, soybean, oats, grain sorghum, peanut). It’s argued that when our farmers lose money, (but that’s not mentioned, and the factual basis of it is not considered,) then that’s great for the economy.  And we’re the world’s dominant farm exporter.  

I hope readers see the fundamental contradiction here.  Corn is bashed for the low prices.  Great.  But then sugar has better prices, but it is bashed too.  You can’t have it both ways.  It’s really not that complicated.  

You also can’t make a profit by increasing export volumes if you lose money per unit on the exports.  Look at OPEC in oil.  Oil and corn were the same price in 1947.  Imagine if corn had increased as much as oil, (with the same acres and yields)!  Corn income would be about $11,000 billion higher than even parity prices!  The relativism of so many analyses leaves out this kind of context, for comparison, thus leaving us with a package of absurdities.

This, then is the “sugar politics” that is summarized at the end of the article. Again, I don’t disagree with the problem.  I (and other corn farmers who have fought against these trends for decades,) don’t disagree that “This is nothing sort of an emergency.”  We said that in the 1950s, 1960s, 1970s, 1980s, 1990s, 2000s.  I disagree with the false analysis, the relativism, and the contradictions.  

The solution is for the US to make a profit on corn exports and corn production, along with the other program crops.  We’re making some profit now.  We’re above zero, but that’s a rare price rise, an exception, as far as we know.  It (US profit making) is not protected by policy.  There are good reasons to believe that it won’t last. With some profits, there are many desperately poor regions that could grow a lot more of various crops if they  could afford to better fertilize them.  Daryll Ray has estimated that there is close to a billion acres that can be brought into production to feed the world (see slide 8).

Basically we need a return to Democratic nonsubsidy farm policies, and we need international agreements to support them, much like we have in the case of sugar.  Criticisms of the sugar program, that is, are essentially criticisms of the Democratic New Deal.  The diary ignores this fact, and fails to mention that the sugar program counteracts export dumping (the US losing money on exports) of sugar to impoverish poor sugar growing countries.  Least Developed Countries are 70% rural.  They need these higher farm prices, just as our farmers and farming states need them.  In fact, the "Undernourished" are 80% rural (see p. 3 of this link).

In short, we need price floors and supply reduction programs on the bottom side of prices, and price ceilings with reserve supplies on top.  These are the policies of the Democratic New Deal, of the Harkin-Gephardt Farm Bill of the 1980s and 1990s, and of the Food from Family Farms Act of the National Family Farm Coalition, the leading advocates for Democratic farm and food policy.  These programs worked well when implemented well. They were supported by econometric studies during the 1980s (see Farm Bill Primer: Econometric Support here) and in recent years, (see full report here, pp. 43+,) as I’ve shown in the videos above.

We can do better.  Facts can replace myths. Identifiable values, such as the cost of production and a reasonable return, can replace relativism.  On this basis, logical contradictions can be replaced with consistent analyses.

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