TCS Daily


Beast of Burden

By Ryan H. Sager - February 20, 2002 12:00 AM

If we don't subsidize wheat and corn production, the terrorists will have already won.

At least that's the line President Bush pushed at the National Cattlemen's Beef Association in Denver earlier this month. Doing his best imitation of a politician tying a spurious policy position to the tragedy of September 11th, he told the crowd that "It's in our national security interests that we be able to feed ourselves." The president also declared, "This nation has got to eat." (A trip to any given Denny's might persuade him to append the word "less" to that declaration.)

The problem with Bush's statements - crowd pleasing though they might have been - is that the agricultural subsidies he was pushing have absolutely nothing to do with making sure America eats. Instead, they have everything to do with feeding the beast that is our country's farm policy. It's a beast that eats bales of tax money every year, and one that Congress tried to euthanize in 1996; but now Congress and the president, cowed by whining about low farm prices, are preparing to shovel almost $200 billion dollars into its trough over the next 10 years.

Relatively similar farm bills having passed recently in the House and Senate, no one in Washington is likely to be able to stop this enormous waste of money as the two houses get ready to reconcile the legislation and send it to the president. But taxpayers should be more than a little ticked off that they are paying through the nose to keep a bloated and inefficient industry bloated and inefficient.

America doesn't have a farm policy because it produces too little food, of course, but because it produces too much. Chronic oversupply of basic staples has lead to chronically low farm prices, which in turn has lead to chronic begging on the part of farmers to be bailed out. It's a vicious cycle that started during the Great Depression and was supposedly ended in 1996. In that year Congress passed the Freedom to Farm Bill, which released farmers from a number of regulations in return for which the farmers were supposed to give up guaranteed government payments over a period of about six years.

The payments, however, never really went away. Farm prices dipped in the years after the bill was passed (due in part to the American farmer's tragically abundant crop yields) and Congress rushed to the rescue with barrels full of "emergency" payments. The somewhat surprising result of this farm "crisis": four years of record net farm income.

There's a problem in any industry where a good year means a bad year. Luckily, in this case, the problem is easy to identify. There are too many farms and too many farmers. In any industry, when oversupply regularly leads to low prices that make some firms lose money, those firms are supposed to go out of business. It's a simple, if not always popular, system known as capitalism.

Unfortunately, when it comes to farming, all economic logic flies out the window. The yeoman farmer holds a certain hallowed ground in the American psyche, dating back at least as far as Thomas Jefferson. It is this special status that has allowed farmers to trudge to the federal trough year after year while maintaining a very unreasonable amount of public support. This, despite the fact that the "yeoman" dropped out of the picture long ago.

When farm subsidies started during the Great Depression, one-quarter of the nation's population still lived on farms, plenty of them small, family farms with chickens running around and possibly even people wearing comical straw hats and chewing on long pieces of hay. Today, however, the agricultural sector has been transformed into a largely corporate enterprise, full of guys in suits and terms like GPS, employing a scant 2 percent of the population - and producing far more food than ever before while turning a tidy profit.

Still, the subsidies continue to flow. And since they are based on the amount of acres planted with government favored crops (wheat, corn, rice, cotton, soybeans), the subsidies primarily go to large farms as opposed to the few family farms that remain in existence.

Clearly, ending farm subsidies will not mean starvation for America. If anyone should doubt that prospect, they need only look to the unsubsidized sector of American agriculture. Though you wouldn't know it to hear the politicians and lobbyists talk, only about 30 percent of farms in the United States receive payments from the government. The rest, producing things such as beef, pork, chicken, vegetables and fruits, get no direct subsidies - and it goes without saying that there have been no shortages of these commodities for lack of government support. Furthermore, the unsubsidized sector of American agriculture is by far the more profitable and efficient one.

One argument, of course, is that these subsidies protect farmers and America's food supply from being wiped out during particularly bad years. But is this the case? People usually think of weather-related problems when they think of farmers having a "bad year." But subsidies certainly won't make crops grow in parched soil; and high-tech farming has made the entire industry less risky. Why should farmers get any more protection than people in other industries?

What the subsidies actually do is perpetuate drops in crop prices by promoting overproduction; raise the price of farm land by about 20 percent according to the Agriculture Department, increasing prices for farmers buying or renting land; and increase the price of farm equipment.

Nonetheless, the subsidies will stay. In an election year with control of the Senate hanging precariously in the balance (never forget just how many farm states there are), and with a president who won in a narrow victory that leaned heavily on farm states, no one will be tipping the sacred cow. Still, President Bush, even when he's at a cattlemen's convention, would do well to cut the bull.

Ryan H. Sager is a freelance writer based in Washington, D.C.

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