The Public Policy

Harvest Season in Washington

How does a farmer double his income?

By 9.24.07

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"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.

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About the Author

G. Tracy Mehan III served at the U.S. Environmental Protection Agency in the administrations of both Presidents Bush. He is a consultant in Arlington, Virginia, and an adjunct professor at George Mason University School of Law.