The baleful effects of federal ag subsidies
An essay arguing against farm subsidies as being ruinous of the U.S. Treasury and the Illinois countryside. By 2001 Illinois Issues had been transformed under editor Peggy Boyer Long from a magazine of record for state government to one offering arts coverage and provocative essays on public matters of the sort I was happy to supply.
This version has been slightly revised from the original to make it more readable.
Farming is as fickle a calling as politics, and every farmer expects a bad year now and then. But 2001 was the fifth in a string of bad years. In April, a bushel of corn fetched $1.87 on the open market and soybeans were bringing $4.23, in both cases much less than it cost to grow them.
Yet few Illinois farmers were loading the PC onto the roof of the SUV and heading west. True, there is much worry and some distress, and plenty of farmers are waiting yet another year to replace the tractor, but no wave of farm bankruptcies has swept the Illinois countryside. The levee against such destructive tides is the federal policy that for nearly 80 years has protected many farmers from failure.
Without federal aid, Illinois agriculture would be a disaster. Data from more than a thousand grain farms collected by the University of Illinois Extension Service projected the average net farm income in 2000 to be $32,414, of which $15,816 was federal support of one kind or another. Over five years ending in 2001, federal farm programs under the 1996 "Freedom to Farm" law funneled $5.6 billion of taxpayers' money into Illinois—more than any other state except Iowa and Texas. Farmers, in fact, were to Illinois of the 1990s what defense contractors were to California of the '80s.
Good arguments can be made—and have been made for years—that farm aid makes little sense economically or ecologically. Many of the critics are farmers who are genuinely uneasy about "growing for the government." Their combines may have satellite locators and two-way radios, yet they are being paid for in part by a farm subsidy system that was invented during the Depression and has been much changed but little improved in the years since. Planted with the best of intentions, the system has yielded a harvest of perverse effects. It encourages farmers to grow more of what the world already has too much of while wasting soil and energy in the process, helps big farms get bigger, inflates the cost of land and (through higher supermarket prices or higher taxes) the cost of food, and unfairly treats farmers as a privileged class.
Farmers like to call subsidies a necessary evil. But if evil is required to keep the system going, perhaps the system ought to be changed. Even its champions—major farmer organizations, big agribusiness corporations, farm-state congresspeople—concede that, at a minimum, the system has to be made more equitable and less expensive. However, to date, there has been little eagerness to rethink basic premises. The U.S. House spent early autumn debating the future of the latest farm bill when it ought to have been talking about the future of farming.
The mechanisms have varied, but the federal farm program has always tried to help farmers by stretching a safety net under growers of such staples as corn, through supporting prices or paying them not to grow price-reducing surpluses. The system hasn't worked, in part because the agricultural economy for which it designed no longer exists. While far have made themselves more competitive, the rest of the ag economy has never been less so. In an analysis that is increasingly popular among economists and farm activists, farmers are squeezed by agribusiness giants at the input end of the business—the seed companies, the sellers of fertilizer and fuel, the machine makers—while at the output end they are squeezed by giant grain dealers and food processors. In such a system the remedy for farmers' high costs and low prices is not subsidy but regulation. Some ag economists suggest the Cargills and the ADMs should be regulated as public utilities just as railroads were regulated in 19th century after similar complaints were made against them.
Simply abandoning federal payments was the ultimate aim of the 1996 farm bill, but that plan led to the present calamity. A further purge of Illinois grain farmers is plainly considered unthinkable by farm leaders and most of the state's congressional delegation, if not by farmers themselves. (Farmers are not troubled by farmers going out business, as long as they are not among them.) But not all that many farmers would be thrown into the streets were subsidies to end. The U.S. Treasury is not the only source of income support for Illinois farms. Farms also are massively subsidized by farmers themselves, through income earned at jobs off the farm or from non-farm businesses they run on the side.
Grain farming is seasonal work, which is why most operators can—barely—farm and still hold down a full-time job. Of 6,456 Illinois farmers surveyed recently by the University of Illinois College of Agricultural, Consumer and Environmental Sciences, 46 percent had off-farm incomes—about half of those from full-time jobs—and nearly three of five farm spouses worked, too. Those percentages are even higher among younger farmers, farmers of smaller farms, and farmers of unsubsidized crops. If marginal farmers fail, it is the farms that would be out of work, not the farmers.
In any event, the problem is not that Illinois has too many farmers but too much farmland. Farmers may be put out of business, but good farmland seldom is. In 1949, there were more than 200,000 farms in Illinois, today only 75,000 or so, but the acreage in production has declined only modestly. The land of those who leave is absorbed by their more ambitious, better capitalized, more efficient neighbors. Allowing failing farms to continue to go out of business is likely to have only trifling effects on chronic grain surpluses because their land will be bought up by the survivors.
One alternative to the current system would be to grow new "crops" that make a better return on some of that land. Some farmers have turned to supplying their city cousins with experience rather than grain, by converting their ground to "living history farms," you-pick fruit and vegetable farms, and bucolic B&Bs. But there is hardly enough demand to sustain more than a handful of farms this way. Redirected subsidies might expand that sort of business slightly. In some parts of Europe, chiefly Britain and France, they've turned redundant countryside into theme parks for day-trippers, but the potential for that sort of tourism in Illinois is modest. Besides, most farmers rightly find pandering to bored urbanites demeaning, and, most telling, that puts the government right back into the business of supporting dubious enterprises.
The one indisputable demand for rural land now is for building sites. Yet, the problem with sprawl is not that it eats up farmland, which we have in surplus, but that it does so haphazardly. Targeted subsidies could ease the transition from a farmed countryside to a residential and commercial one. Instead of buying corn, Washington could buy the rights to develop land that is environmentally or scenically sensitive, helping keep farmers on the land and subdividers off it. It is an old idea, long used by local and state governments; the drawback is that it is too expensive for Congress, which is most comfortable spending lots of money on familiar bad ideas than on new good ones.
Admirable as they are in other ways, Illinois's farmers can no longer be considered the moral backbone of society. Their fabled independence is rather compromised by their reliance on government checks, and it is hard to think of them as providers when their main contribution to the national diet is the sweetener in soft drinks and the thickener in salad dressings. But they are clearly stewards of the land. Farm families may make up about two percent of the population, but farming remains the single biggest land use in the state, taking up about three-fourths of all acreage. Because farming affects so much land, even modest per-acre pollution has big cumulative impacts, especially on streams and lakes. The larger public gives farmers money and gets back dirty water—among the worst bargains in government programs.
That fact has left farm programs vulnerable to criticism from environmentalists as well as budget-balancers. It was largely in hope of blunting that criticism that the authors of the 1985 farm program set up the Conservation Reserve Program. That program pays farmers to take highly erodible land out of production; the government rents it (usually) under 10- or 15-year contracts that require farmers to protect it with soil-saving plantings of grass and trees. This was sold to environmentalists as a green program but farmers recognized that it was intended to reduce production—an old-style acreage set-aside in leafy costume.
The Conservation Reserve Program suggested a way to reorder the terms of the quid pro quo between farmers and taxpayers so that taxpayers get something for their money. Prior to 1990, soil erodibility mainly determined whether land was eligible for the reserve; today, eligibility is determined according to broader environmental standards that include water and air quality, wildlife habitat, and proximity to "priority areas" such as nature preserves. Even limited conservation reserve plantings in Illinois—this state has less than 925,895 acres enrolled, though that figure varies from year to year—have made a visible difference in the Illinois countryside. In east central and northern Illinois, for example, populations of grassland birds once common to the Prairie State, such as dickcissels and song sparrows, have bounced back.
Under this approach, farmers become, in effect, paid landscape contractors to the public. The new relationship is rich with potential. The standards could be expanded further to encompass land with special potential, offering scenic views, hiking, skiing, or cycling, places for repose and reflection or raucous fun—pleasures that are inappropriate to or impossible in cities.
Even more exotic goods could be purchased through set-aside programs. Jim Kinsella, who owns and runs an 840-acre family farm in Lexington, in McLean County, proposed to the U.S. Senate Committee on Agriculture, Nutrition and Forestry in March a federally subsidized carbon sequestration program. Farmland cover crops take carbon from the air and convert it to organic matter, he explained, capturing or sequestering in the soil an average of 0.4 tons of carbon per acre per year. Paying farmers to treat large acreage in this way would compensate for a lot of greenhouse gas emissions. "Why not give something back to the taxpayer for their generosity?" Kinsella asked.
The Conservation Reserve Program would seem to be that rare government program that pleases everyone. Farmers get rent for not planting crops on land that usually isn't much good for crops anyway, and the taxpayers get a countryside that is more comely and ecologically diverse. President George W. Bush's administration likes it too, or at least the principles on which it is based; the U.S. Department of Agriculture published a report earlier this year that provided the rationale for expanding conservation funding beyond set-aside land under the next farm bill.
Critics of the trend complain that federal farm programs are meant for farmers, not gardeners, and Illinois farmers hsould be growing corn and beans like God and Cargill intended. That raises one of the more telling criticisms of the federal farm program, which is not that it subsidizes crops but that it subsidizes the wrong crops. Might the remedy for chronically low farm incomes be for farmers not to find ways to make more money from corn and beans but to stop farming corn and beans?
Illinois soils and climate are perfectly suited to grow those crops, but those are not the only crops Illinois is suited to. These days, countries outside the U.S. not only eat corn and soybeans but grow them. Growing different things, things the world wants and can afford to buy and that are not available at a cheaper price from someone else, would reduce U.S. ag subsidies by making them unnecessary.
Illinois farmers have learned to grow new things before. In 1930, the farm program first kicked in, millions of acres of Illinois farm were planted in forage crops and grains, mostly used to feed livestock including the horses that then still powered many farms. Today, that acreage is planted in soybeans, which in 1930 were still an agricultural oddity, known mainly as "green manure." The land once used for grains sustains a multibillion-dollar industry, and an Illinois city can claim to being the soybean capital of the world—or could, until farmers in Europe and Brazil upped production and ate into a lucrative market that Illinois and the rest of the United States dominated for decades.
Illinois plainly needs another soybean. Research has been underway for years—in federal agriculture department labs in Peoria, in the state's university ag departments, and private company headquarters—to find new field crops that might oust Illinois' duopoly of corn and beans. The wizards have tested plants that could be used to make plastics, biomass, paper, pharmaceuticals, and dozens of raw industrial materials. Some of these ideas are quite promising, but none is much past the pilot stage of development.
New crops leave Illinois farmers the classic chicken vs. egg situation or, in the case of Illinois farmers, the chicken feed vs. egg situation. New crops require new investments in equipment and expertise, and committing to them is risky without a well-developed infrastructure in place to market, move, and process them. Subsidies might be better spent financing this infrastructure, and thus easing the transition to new crops with market potential, rather than underwriting the production of traditional crops, but the question is not being argued among politicians who write the farm bills.
Were the market left free by Congress to do its worst, Illinois between the interstates would teem with satellite-guided tractors trundling back and forth across massive corporate grain factories half a county in size, the countryside having been profitably converted into an outdoor assembly floor. This may not be the calamity everyone assumes. Shorn of its symbolic cap and overalls, Illinois grain farms and hog operations would be recognized for what they have been for a long time: factories. No longer vulnerable to charges that they are strangling family farming, lawmakers at every level might well feel free to regulate agriculture like any other industry. Pollution standards may be imposed, scenic buffers demanded, or wildlife habitat insisted upon as a condition of farming permits the way we demand new stoplights from subdivision developers.
The future for Illinois farming is as murky today as it was in the 1920s, which was the last time new production technologies led to price-wrecking gluts of grain worldwide. But family farmers will not disappear as long as the economy has a use for them. They will survive in the same way that mammals survived the dinosaurs, by being smarter and nimbler than their giant competitors, turning their unmatched entrepreneurial and technical skills to new crops as they have done more than once in the past. ●
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