“How does a farmer double his income?”
“Get a second mailbox.”
I was first told this joke 17 years ago by a friend who was both
a farmer and a director of a state agricultural agency. It still
resonates with me, today, as we witness another harvest season, not
in the fertile fields across America but here in Washington,
D.C.
Yes, it is the season for another Farm Bill complete with its
subsidies, supports, and Rube
Goldberg programs which will be layered on top of other
tariffs, preferences, and perks to assist the agricultural sector
in the face of what some health officials call an obesity
epidemic.
This periodic spectacle of rent-seeking and the fleecing of
taxpayers represent the triumph of the Jeffersonian myth of the
yeoman family farmer over principles of limited government, a very
ironic development. Most farmers express nothing but disdain for
the federal government’s taxes and regulations of all kinds. Their
self-image is that of an independent, self-sufficient citizen who
feeds the nation and the world. Indeed, most of the farmers and
ranchers I have had the pleasure of working with are hard-working,
family-oriented Republicans.
This is a monumental case of collective cognitive dissonance given that the American farming
“way of life” is dependent on federal taxpayers who are not
fortunate enough to have picked farming as their chosen
profession.
All this federal money creates obvious incentives for
over-exploitation of natural resources. The ethanol boom is
entirely a creation of the federal government. It will aggravate
the environmental impacts of existing farm subsidy programs. Acres
and acres of additional corn will be planted, accompanied by tons
and tons of chemical application and inputs, including nutrients,
which will aggravate the already ballooning hypoxic or “Dead Zone”
in the Gulf of Mexico, not to mention local rivers, lakes, and
streams. The hypoxic zone is the result of oxygen depletion caused
by over-enrichment of nutrients, primarily nitrogen, 90 percent of
which comes from row-crop agriculture in the Mississippi River
basin with an assist from the Ohio and Missouri Rivers.
In the west subsidized water for subsidized crops as well as
subsidized, below-cost grazing and timbering on federal lands
degrade watersheds throughout the region.
Most economists and ecologists who have looked at the plight of
Florida’s Everglades place a great deal of the blame on U.S.
tariffs imposed on imported sugar which, if lifted, would help the
environment and the consumer by removing this incentive for
unsustainable sugarcane farming in that part of the country.
There are millions of “conservation” dollars available in farm
programs, many of which I support, such as the Wetlands Reserve and
soil conservation programs. But it would be hard to argue that
their environmental benefits come close to offsetting the harm that
massive farm subsidies generate.
The Office of Management and Budget (OMB) has struggled to
mandate “targeting” of these precious conservation dollars on
high-risk or high-value waters and landscapes, but this effort is
resisted by the farm interests because they want to spread the
money around to insure political support for the overall program in
Congress. The Department of Agriculture’s state conservationist can
encourage such targeting of resources if he or she wants to, but
there is not much top-down pressure to do so.
There are, of course, equity issues regarding subsidies since
they are not means-tested. In other words, rich and middle-class
farmers get these federal payments. So a wealthy farmer is entitled
to a federal subsidy, but a working-class auto mechanic is not.
Does that sound fair to you?
It is pretty clear that unnecessary, protectionist farm
subsidies and tariffs in the U.S., France, Switzerland, and other
developed countries are a real blow to destitute, developing
countries which are in dire need of access to markets, such as
ours, in which their low-cost goods would benefit consumers.
APOLOGISTS FOR THE STATUS QUO make three arguments. First,
everybody does it. Second, we have the votes in Congress. Third,
all this federal largesse is necessary to protect the safest,
healthiest food supply in the world. The reader can judge the first
and second claims, possibly recalling the fundamental moral lessons
your mother told you when you were young.
As to the third, the answer is quite simple. If you withdrew
federal subsidies you would have fewer, more efficient, more
productive farmers — not less food. The truth of this observation
was brought home to me by recent news accounts of dairy and sheep
farming in New Zealand and tobacco farming in the U.S.
According to Wayne Arnold reporting in the New York Times
(“Surviving Without Subsidies”), the government of New Zealand
changed hands in the mid-1980s “and essentially canceled handouts
to farmers…agriculture here has never been the same.” Arnold
claims that the farming community was “devastated — but not for
long.”
“Today, agriculture remains the lifeblood of New Zealand’s
economy,” says Arnold. “There are still more sheep and cows here
than people, their meat, milk and wool providing the country with
its biggest source of export earnings.”
Arnold quotes the president of the Federated Farmers in the
Waikato region in the heart of the country’s dairy region, who
served at the time of the policy shift: “Farming in New Zealand is
now a cold, hard business…I think we have benefited hugely.”
Arnold documents the sound business and scientific approaches
which New Zealand farmers now use to achieve financial success in a
global market. The changes were obviously difficult, but the result
was an agricultural sector more entrepreneurial and legitimately
proud of its accomplishments.
Tobacco is not everyone’s favorite crop, but it does provide a
useful case study supporting the proposition that the end of
federal subsidies does not mean the end of farming, just the end of
the federal gravy train.
Lauren Etter, writing
in the Wall Street Journal (“U.S. Farmers Rediscover The
Allure of Tobacco”), describes the boom in tobacco farming that has
occurred three years after the federal government stopped
subsidizing it. Driven by increased demand in China, Russia, and
Mexico, U.S. tobacco acreage has risen 20 percent. Etter focuses on
tobacco in southern Illinois which hasn’t grown any significant
amounts of the crop since the First World War.
Even factoring higher labor costs for immigrant workers, Etter
describes farmers netting up to $1,800 per acre compared to $250
per acre for corn a crop blessed by both commodity subsidies and
ethanol support by Uncle Sugar. One farmer has boosted his income
by 35 percent in the last three years.
Simply put, there is no justification for continuing a
Depression-era subsidy program for tobacco, corn, soybeans, or
sugar, to name just a few of the usual suspects.
This writer would like to report that congressional Republicans
have stood on their free-market principles and resisted this
ongoing raid on the Treasury. But I would be lying to you if I did.
Farm subsidies are bipartisan sins that reflect a deep corruption
in our body politic.
