Last week’s Victual Reality column startled a lot of sustainable-food advocates, particularly folks not immersed in the details of U.S. farm policy.
Subsidies, I argued, do not cause the ravages of industrial agriculture; rather, subsidies are a symptom of a food policy gone wrong.
Moreover, I continued, gutting subsidies won’t end the ubiquity of cheap and empty calories in the U.S. diet; or stop the devastation of waterways from fertilizer runoff; or make CAFOs unprofitable; or treat any of the other ills of industrial agriculture.
I concluded that reckless attempts to end subsidies should not be seen as a panacea, or even as sound policy.
The column inspired angry and even anguished reader comments and emails, as well as a retort from Environmental Defense, a major critic of subsidies.
I understand the outrage. I myself despise the policy of using federal cash to underwrite environmentally and socially destructive agriculture.
No doubt, plenty of cynical people and organizations support ag subsidies. On Monday, the genetically modified seed and pesticide giant Monsanto disclosed it had hired Combest Sell & Associates to lobby Congress on the farm bill. Before waltzing through Washington’s revolving door to lobbying nirvana, Larry Combest (R-Texas) chaired the House ag committee and essentially wrote the subsidy-happy 2002 farm bill. He’s the toast of industrial cotton farmers (major users of Monsanto’s seeds).
Presumably, Monsanto wants Combest to defend subsidies on the Hill. It makes me squirm to be aligned with Monsanto, a corporation I find repugnant, on this point.
Yet there’s no easy alternative.
If subsidies have dubious supporters, they also have unsavory opponents. The WTO’s Doha round of trade talks are currently stalled until the U.S. and Europe agree to reduce their ag payments. And the big grain-trading firms like Archer Daniels Midland and Cargill want Doha to succeed. Why? As The New York Times reported recently, a successful Doha would hardly result in a boon for nations in the global south, despite what high-profile subsidy critics like Oxfam say.
Here is the Times:
An analysis by the Carnegie Endowment for International Peace concluded that under the best circumstances, rich countries could gain more than $30 billion a year from a successful conclusion of the Doha round, about $30 a head. Middle-income countries, places like Brazil and South Africa, could gain up to $20 billion, or about $6 per capita. Poor countries would gain at most $5 billion — which amounts to $2 a head.
ADM and Cargill would likely grab a big chunk of that windfall by gaining access to food markets in "developing countries," much as they made billions from NAFTA’s liberalization of the Mexican corn market — and pushed untold thousands of domestic farmers off the land.
Understanding that profit potential, and also realizing that doing away with subsidies will not likely end the overproduction of soy and corn on which they rely, the big grain-trading firms support an end to subsidies. (So long, that is, as the payments aren’t replaced with mechanisms that help farmers manage supply.)
For someone like me — who wants to see an end to ruinous overproduction and reinvestment in local food systems — the policy options that dominate the farm bill debate offer little to get excited about.
I wish I could, like Ken Cook of the Environmental Working Group, thunder from the rooftops, "End the subsidies!" That would be a simple message that people could embrace — and indeed have. But it’s more complicated than that.
My rooftop message would go something like: "End the subsidies, which partially compensate farmers for selling commodities at less than the cost of production to big grain-trading firms, but figure out some way to help those farmers avoid overproduction, so that they can get a fair price in the marketplace and go easier on the land. And if we can’t get these mechanisms in place, it isn’t really fair to end subsidies, because most farmers who get them — a few spectacular exceptions aside — aren’t getting rich, but just getting by."
Of course, by the time I got done, I’d be hoarse and staring at an empty street — which is often how I feel after writing about the bloody farm bill.
And that’s precisely the beauty of the farm bill debate, if you have an interest in maintaining the status quo. Whether the subsidies stay or go under the current terms of debate, ADM gets its cheap, overproduced corn and soy — and robust profits.
In last week’s column, I explained why farmers, particularly large-scale commodity farmers, tend to overproduce without organized mechanisms to coordinate planting decisions. Below, I’ll respond to a few critics of my admittedly tortured position on subsidies.
In a guest post on Gristmill, Environmental Defense’s Britt Lundgren penned a cogent critique of the subsidy system. But she barely addressed my central point: that subsidies don’t cause overproduction, and the act of ending them won’t by itself end overproduction.
In fact, she almost goes so far as to concede my point. Lundgren writes: "Tom Philpott’s recent column on the ongoing debate over Farm Bill reform raises some interesting points, including the idea that commodity subsidies may not be the root cause of overproduction."
And that’s the last we hear about overproduction; she never claims that the proposals she promotes will address it. But overproduction is key. It can be directly inked to the following ills (among others, no doubt):
- The ubiquity of cheap and empty calories in the U.S. diet;
- The explosive growth of CAFOs and their environmental and social ills;
- The stunning consolidation of the food industry;
- The "dead zones" in the Gulf of Mexico and Chesapeake Bay and other damage to waterways;
- The rise of corn-based ethanol as the federal government’s major response to climate change;
- The despair of farmers in the global south as they lose their markets to cheap imports from the United States; and
- The ecologically devastating erosion of soil’s ability to store carbon.
The Environmental Defense/Environmental Working Group crowd is rallying around Sen. Lugar’s Fresh Act, a wholesale alternative to the farm bill version now under debate in the Senate. But if the Fresh Act wouldn’t address the above list of ills, how can it be promoted as "fundamental reform"?
Indeed, the pitch for the Fresh Act (judging from Lundgren’s piece) isn’t an end to overproduction and its associated ills, but rather fairness. The bill would replace subsidies with an insurance scheme — one eventually open to all farmers, not just ones that produce major commodities like corn, soy, and cotton.
The bill would certainly broaden federal support from areas like the Midwest (corn and soy), Southeast (cotton), and Texas (cotton), which now get the bulk of subsidies; and spread some love to places like California, which mass-produces vegetables.
But the bulk of support would still go to the largest farms, I reckon, because the Fresh Act would — like the subsidy system — pay out on a per-acre basis, meaning the more acres you have, the more support you get.
And since the insurance payouts are based on county-level ag revenues — the policies would kick in when a county’s ag revenues dipped below 85 percent of their five-year average — the biggest beneficiaries would be farmers in ag-heavy counties in places like Iowa and California.
Counties where people are trying to jumpstart agriculture to rebuild local food systems — say, on urban fringes — would get little or no more support than they get now.
More fundamentally, such an insurance scheme would not likely slow overproduction of key crops like corn, soy, and cotton. As the agricultural economist Darryl Ray wrote in a must-read recent analysis of insurance schemes like the Fresh Act:
Converting the current program to an insurance-based program really solves nothing. Market distortions would continue. Farmers in developing countries would continue to accuse the US of dumping crops on the international market at below the cost of production, however defined. And commodity demanders/users [e.g., ADM] and input suppliers [e.g., Monsanto] would continue to be the real beneficiaries of farm programs.
On New Zealand and its farm program
Another reader, the economist Jason D. Scorse, raised what he saw as a fundamental critique of my position: that New Zealand several years ago abandoned both subsidies and supply management, subjecting their farmers to the free market.
And rather than see farm incomes plummet, farm losses surge, and overproduction continue — as Darryl Ray and I say will happen if the U.S. follows the same course — New Zealand farmers are thriving.
To back his position, Scorse pointed to a 2003 article in New Farm by Laura Sayre that documents the New Zealand miracle. The piece opens promisingly for Scorse’s position:
What would the world look like without agricultural subsidies? What would the United States look like? If a crystal ball exists for those questions, its name is New Zealand, one of the first and still one of the few modern countries to have completely dismantled its system of agricultural price supports and other forms of economic protection for farmers.
Brace yourself: this is free-market faith to make Adam Smith proud. But the New Zealand experience is pretty persuasive. Well into its second decade of subsidy-free farming, New Zealand enjoys a worldwide reputation for its high-quality, efficient and innovative agricultural systems.
But the author never carefully compares and contrasts the situations faced by New Zealand and U.S. farmers. Buried at the bottom of the article, though, we do get this:
Around 90% of New Zealand’s total farm output is exported. These exports account for over 55% of [the nation's] total merchandise exports.
That means that the New Zealand case offers little insight into what the U.S. farm belt would look like without subsidies or supply management. New Zealand’s landscape is dominated by vast pastures ideally suited for the sort of grass-based meat and dairy production that people now demand; and the nation’s population density is low. Neither condition applies here.
In short, New Zealand doesn’t need supply management, because it produces mainly high-value products like meat and cheese that consumers in Europe and the U.S. will pay a premium for. (Indeed, imports of grass-fed New Zealand beef and lamb aren’t exactly helping efforts to boost pastured meat production in this country.)
When he began to dismantle the New Deal supply management programs in the early 1970s, then-USDA chief Earl Butz urged grain farmers to produce as much as possible, assuring them he would find robust foreign markets for their goods.
But exports — despite plenty of official energy spent over the decades ramming open foreign markets to U.S. ag produce — have never been the panacea promised by Butz. In 2005, for example, U.S. corn farmers produced a then-record crop, for sale at rock-bottom prices. Still, they only managed to export 17 percent of it — well below New Zealand levels.
Of course, those farmers responded to low prices and sluggish exports by planting yet more corn for the next season. (As it happened, they cashed in on that year’s government-mandated ethanol boom, but that’s a different story.)
In short, just as Brazil’s ethanol "success" story offers little encouragement for our ethanol program, New Zealand’s post-subsidy ag experience, while heartening, has little to teach us.
A word on Michael Pollan
In my column, I used as a starting-off point a quote from Michael Pollan’s recent New York Times op-ed that seemed to portray ending subsidies as a panacea: "As long as the commodity title remains untouched," Pollan wrote, "the way we eat will remain unchanged."
But I know from talking with Michael and reading his work that his view is more nuanced than that, and I should have given him credit for it. Like me, Michael feels the agony of modern farm policy.
In that very same op-ed piece, for example, he writes:
For starters, farm bill critics did a far better job demonizing subsidies, and depicting commodity farmers as welfare queens, than they did proposing alternative — and politically appealing — forms of farm support.
Like me, he’s groping for a viable policy agenda that fundamentally addresses overproduction while rebuilding local food systems. As this farm bill bumbles toward its finish, I’m afraid we don’t have one.
It will be one of the sustainable food movement’s major tasks to create one going into the next farm bill debate.