Time to rethink agricultural policy

Dean Acheson, President Truman’s secretary of state and co-architect of American foreign policy in post WWII with Truman and George C. Marshall, observed in 1962, “Great Britain has lost an empire and has not yet found a role.”

And so it is with agriculture.

In the early 20th century, there were about 29 million farmers in the United States. Today, there are about 1.8 million, probably fewer, if you argue about the definition of a farmer.

In 1910, it took about 90 minutes of labor to produce a bushel of corn. Today, it takes about 2 minutes.

“Farmers have been reduced to less than 2 percent of the population and they’re losing their identity,” said Don Paarlberg, who served in the USDA under presidents Eisenhower, Nixon and Ford. “They’re not as sure about their status. The whole rural culture has been eroded.”

Farmers are walking a tightrope above an abyss of low commodity prices and high input prices. What makes the perch particularly precarious is the ocean of overproduction lapping at their heels.

Nearly all crops produced in the United States are in oversupply and market prices are at rock bottom. Farmers are propped up by federal subsidies, not necessarily by choice, but if the program’s there, by George, I’m going to take advantage of it. It is, as Alan Guebert penned in his May 17 column, “the produce-all-you-can-so-you-can-grab-all-you-can unlimited farm program payment scheme.” It’s not very flattering.

“We’ve adopted a policy of producing full tilt, with government payments compensating for prices that are well below what it costs the farmer to produce these crops,” says Daryll E. Ray, economist and ag policy specialist at the University of Tennessee.

“Neither crop supply nor crop demand responds to sharp price drops today any better than they did in the 1930s. Farmers have no incentive not to produce on their land, even when prices are low.”

“Crop agriculture doesn’t have to receive multi-billion dollar subsides to be profitable,” Ray claims. “If, like General Motors, production met demand and prices covered the cost of production, farmers could earn about the same income they presently receive from government payments.”

Ah, but those are two big “ifs.” Who will cut production? How will we boost demand? And whose cost of production are you going to use?

“Farmers need to start marching to their own drummer, not a drummer bought and paid for by someone else whose interests are to achieve maximum possible production,” says Neil E. Harl, attorney and ag economist at the Iowa State University.

Production is important, but ignoring overproduction and stagnant demand led us into this corner of $1.70 corn and $4.50 beans and won’t get us out of it.

We have lost our empire and have not yet found our role.