Rethinking federal farm programs

By John Stencel

The recent posting of all federal farm program recipients on the Environmental Working Group’s web site has raised the ire of farmers and renewed the debate of what role the government should play in production agriculture. I recently spoke with Randy Adler, a Longmont, Colo. farmer who was listed in the Longmont Times Call as the county’s largest recipient of farm subsidies.

“I don’t like having to depend on the government check as part of my income, but without it, I’m done farming,” Adler said. “I am glad to talk about the subsidies if we can also talk about the price of farm commodities. In most cases, farm prices are about the same as they were 30 years ago. When adjusted for inflation, farmers have taken a big hit. Under the current market structure, most farmers would be unable to stay in business without the subsidies.”

The market price of most commodities does not even cover a farmer’s basic input costs for things such as seed, fuel and fertilizer, not to mention the cost of equipment, land and interest. Farm program payments, or subsidies, are the only thing that enables farmers to stay in business . . . but just barely. The farmer’s return on investment is generally 1-2 percent per year, while corporations that process and distribute food usually net annual returns in the double-digit range. In addition, U.S. Department of Agriculture statistics over the past two decades show erosion in the farmers’ share of the food dollar, with the trend exacerbating since passage of the last federal farm bill in 1996. From 1997 to mid-2000, retail food prices increased a total of 7.5 percent, while farm prices fell 8.5 percent. The multi-national conglomerates that buy, process and sell food to consumers are paying less for raw commodities and charging more to consumers. So, while farmers are being scrutinized for the subsidies they are being paid, are not the corporations who buy commodities at discounted prices and sell processed food at full price the real benefactors of these subsidies?

Rocky Mountain Farmers Union is pushing policy that enables producers to get more of their income from the market and less from government coffers. Such a system would be gentler on the federal budget and more to the liking of farmers. The most effective way of raising market prices is through an increase in commodity loan rates.

Rocky Mountain Farmers Union also suggests capping payments to the size of a family farm. The current farm bill is structured so that 60 percent of the resources are paid to just 10 percent of the nation’s largest farms. There’s nothing wrong with operators who want to expand beyond the size of a family operation, but there is no reason for government programs to support them beyond that level.

Unfortunately, legislation passed by the U.S. House of Representatives in the fall of 2001 acerbates the shortcomings in the 1996 farm bill, making it likely that an even larger percentage of payments will come from the government and be made to even fewer recipients. The Senate Agriculture Committee has passed a bill that is more to the liking of Rocky Mountain Farmers Union, but the full Senate has yet to vote on it. America’s farmers and ranchers need a farm bill that will provide them with honest pay for their labors. There is no need to subsidize the corporations that buy and process commodities.

“American farmers are very efficient and productive, but there has to be a safety net,” Adler said. “I can assure you that the program payments I received over the last five years have not paid for any extravagances. It’s gone to repair equipment, buy seed and pay other bills.”