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Global Food Corporations Are the Real Beneficiaries of Current Farm Bill
By R. Dennis Olson, Institute for Agriculture & Trade Policy
Critics have a point in arguing that the recently passed version of the
Farm Bill in the House would continue some of the failed policies of
the past. Unfortunately, they miss the mark in charging that
family farmers are the primary beneficiaries of continuing the current
farm policy.
The real beneficiaries of the current agricultural deregulation policy
are global food corporations like Tyson, Cargill and ConAgra, whose
profits have steadily climbed since passage of the 1996 farm
bill.
(Hit "Read More" for more). *************
Recent research from Tufts University has documented that the current
policy of deregulation has allowed overproduction to force the price of
feed crops like corn and subsidies far below the cost of production.
This cheap feed policy has provided nearly $20 billion in indirect
subsidies to industrial animal factories owned or controlled by
vertically integrated meat processing conglomerates.1 The current farm
bill also indirectly subsidizes the processed food industry by
providing it with below-cost high fructose corn syrup and below-cost
soybeans.
Meanwhile, a 2003 University of Tennessee study documented that,
despite a tripling of subsidies from 1996 -2001, net income for US
farmers declined by 16.5 percent.2
Critics often claim that the richest farmers unfairly receive the bulk
of farm subsidies in the current farm bill, leaving out 60% of all
farmers. Yet, as Tim Wise of Tufts University points out in his
insightful article, Understanding the Farm Problem: Six Common Errors
in Presenting Farm Statistics3, this oft-cited but misleading 60%
figure is based on, “rural residence farms, which represent the
largest group of farms in the United States today.” These are
“…part-time operations with ample outside sources of income, from
retirement or from full-time non-farm careers.” In other words, a
minority of part-time farmers gets payments, but a significant majority
of full-time commercial and family farmers receives farm payments. Do
these critics really think that the biggest problem with our farm
policy is that well-off, part-time hobby farmers need more subsidies?
"Payments are highly concentrated,” Wise continues, “but the average
full-time family farmer, with income around the national average, finds
herself in the top 13 percent of payment recipients with modest
payments of under $18,000. The most widely used data on individual
recipients is misleading: Nearly half of the top 20 subsidy recipients
in 2003 went to cooperatives, Indian tribes, and conservation trusts,
and the rest went to corporations, not family-owned farms."
The current US policy of agricultural market deregulation--epitomized
in the 1996 and 2002 farm bills--has failed to live up to the promises
made by its advocates; just like energy market deregulation--epitomized
by the Enron scandal--failed to live up to its promise of cheaper
electrical rates. Deregulation advocates prevailed in passing both
NAFTA and the 1996 Farm bill by promising to get the government out of
agriculture, eliminate subsidies and expand US exports. Yet the
current policy has instead made US farmers more dependent than ever on
taxpayer subsidies for their income.4 And instead of expanding
exports, the current policy has eroded our U.S. agricultural trade
surplus to the point where our country is now poised to become a net
importer of food for the first time in a half a century.5
Congress needs to show some courage and leadership by replacing the
current failed policy of agricultural market deregulation with policies
that can correct the inevitable market failures in agriculture--from
droughts and floods, to unfair market manipulation by powerful
multinational agribusinesses.
Such policies should include the creation of strategic food, bioenergy
and conservation reserves that would curtail costly and unsustainable
overproduction and stabilize volatile crop prices. This would reduce
the controversial dumping of agricultural commodities at below the cost
of production on the markets of developing countries, which forces
small farmers off their land and causes them to migrate to the United
States. Congress should pass the antitrust package being offered by
Senator Harkin with bipartisan support in the Senate Agriculture
Committee to rein in the dangerous concentrated market power now
wielded by multinational agribusinesses. And, Congress should
reestablish a price floor to allow farmers to receive a fair price from
the marketplace rather than taxpayers, which would simultaneously
curtail the multibillion dollar indirect subsidy of below-cost feed
crops to corporately owned and controlled industrial animal factories
that exploit people, animals, the environment and rural communities.
Such policies would provide safer and healthier food, greater energy
independence and a cleaner environment. They would provide
farmers—both at home and abroad—with fairer prices and new markets,
which in turn would allow them to invest more in sustainable
agricultural practices on their farms and more in their communities.
They would replace the current fear and despair now prevalent in rural
communities everywhere with prosperity, hope and an alternative vision
for a sustainable future for farmers globally.
--R. Dennis Olson is a Senior Policy Analyst in the Trade & Global
Governance Program at Institute for Agriculture & Trade Policy in
Minneapolis. He can be reached at:
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For more farm
bill analyses, please go to www.agobservatory.org.
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Citations:
1 — Industrial Livestock Companies' Gains from Low Feed Prices,
1997-2005; Wise & Starmer; Global Development and Environment
Institute Policy Brief, Tufts University; February 26, 2007; accessed
August 7, 2007 at:
http://www.ase.tufts.edu/gdae/Pubs/rp/CompanyFeedSvgsFeb07.pdf
2 – Rethinking US Agricultural Policy: Changing Course to Secure
Farmer Livelihoods Worldwide; September 2003; Ray, Ugarte, Tiller;
University of Tennessee Agricultural Policy Analysis Center; Figure 3,
p. 9; accessed August 7, 2007at: www.agpolicy.org
3 – Understanding the Farm Problem: Six Common Errors in Presenting
Farm Statistics; Wise; Global Development and Environment Institute
Working Paper No. 05-02; Tufts University; March 2005; accessed August
7, 2007 at:
http://www.ase.tufts.edu/gdae/Pubs/wp/05-02TWiseFarmStatistics.pdf
4 – Rethinking US Agricultural Policy, Ibid.
5 – The U.S. Ag Trade Balance. . . More Than Just A Number; Online
Article in Amber Waves, U.S. Department of Agriculture Economic
Research Service; February 2004; accessed on August 7, 2007 at:
http://www.ers.usda.gov/amberwaves/February04/Features/USTradeBalance.htm
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