National Family Farm Coalition | By George Naylor | September 19, 2003
When I met fellow farmers from around the world at the WTO trade talks in Cancun, Mexico, last week, I found that low commodity prices were destroying their rural communities, just like mine.
In recent years, prices for the corn and soybeans I raise on my Iowa family farm have been lower than what I received in 1978. Mexican farmers' corn, a staple food there, is about half the price they received before passage of the North American Free Trade agreement. The importation of cheap U.S. corn has forced the uprooting of rural residents to move to large cities and the U.S. looking for work. Is this what we want from "globalization?"
The low price problem for third world farmers is often explained by the billions of dollars of subsidies to U.S. farmers. The cheap U.S. grain unfairly floods other countries' markets and destroys their rural economies. Therefore, the argument goes, getting rid of U.S. subsidies would make the price of grain rise, lifting all boats. Sounds reasonable, but even with subsidies, the economic collapse of many U.S. farm communities resembles those in Mexico and other countries.
The farmers I talked to in Cancun were surprised to learn that the infamous subsidy system of U.S. farm policy is a disaster for American farmers, too. Let me try to explain why that is.
Farmers respond to low prices by trying to produce more, not less, possibly damaging the land and only making the price problem worse. In 1933, my father hauled grain to the elevator in Adaza, Iowa, and asked the manager what he was paying for corn. The manager said, "Well, yesterday we were paying ten cents a bushel, but today we're not buying!" In other words, the price was zero! Shortly thereafter, the first U.S. farm program placed a floor under prices to get the farm economy moving again and bring some economic justice to family farmers.
A recent study from the Agriculture Policy Analysis Center (APAC), at the University of Tennessee, "Rethinking U.S. Agricultural Policy: Changing Course to Secure Farmer Livelihoods Worldwide" (www.agpolicy.org) brings the story up to date and explains why subsidies have become an integral and destructive feature of U.S. farm policy.
Ever since the 1996 Freedom to Farm Bill eliminated all price floors under basic commodities (feed grains, food grains, oilseeds and cotton), prices have been solely determined by traders at the Chicago Board of Trade and other global futures exchanges. This Farm Bill also eliminated a food security reserve and conservation set-asides so every bushel produced must be dumped on the market and farmers have no choice but to plant "fencerow-to-fencerow." Even with subsidies, farmers go broke, but other desperate farmers using new corporate technologies will farm the land. When farmers are under economic stress, they do exactly what food corporations want-maintain or even increase production.
So why the subsidies? Without a price floor under basic commodities and not knowing how low prices can go, how many bankers do you think would loan farmers the money they need to plant the next crop? How could a modern farm system operate under such uncertainty? It couldn't. That's the little secret corporate agribusiness won't tell you. U.S. taxpayers have to underwrite this system with billions of dollars of direct farm payments-subsidies-just to keep the U.S. farm economy functioning. In other words, cutting U.S. subsidies will hasten the demise of U.S. farmers but won't change overall production to improve prices. In fact, the APAC study cites a 2003 study by the International Food Policy Research Institute indicating that total elimination of U.S. subsidies would result in world price increases by 2020 of only 1.6% for rice, 2.9% for corn, and 0.8% for wheat!
The resulting cheap grain also spurs feeding of livestock owned by these corporations in giant confinements where animals are inhumanely crowded together without fresh air or sunshine and millions of gallons of manure can pollute air and water. Most farm animals are no longer farm animals on family farms; thanks to cheap feed grains and oilseed meal, livestock are raised in corporate confinements all over the world! Corporations benefit from the subsidy system, not farmers. It's corporate welfare in disguise.
It should be clear that eliminating the price floors simply allowed the giant food corporations to pay a very low price for farm commodities. The U.S. taxpayer, in effect, pays subsidies so big corporations can industrialize the food system.
The U.S. Trade Representative in Cancun wanted developing nations to lower trade barriers even more, allowing multinational grain exporters to further globalize the curse of low farm prices.
It's time for a civilized farm policy that values family farm production, local fresh food, a countryside with fresh air and water, and finally, the right of farmers in other countries to survive and contribute to their nation's food sovereignty. Progressive farm groups like the National Family Farm Coalition are calling for ending the subsidy system and restoring a price floor and food security reserve. Otherwise, abundance will be a curse to the world's farmers; the U.S. economy will suffer from exporting its bounty at less than the cost of production; and U.S. farm policy will remain corporate farm policy feeding livestock in giant confinements and inflicting damage on farm communities around the world. Let's all work together for that change.
George Naylor raises 470 acres of corn and soybeans with his wife and two sons near Churdan, Iowa. He started farming the family farm in 1976, and has been president of the National Family Farm Coalition since February, 2003. He can be reached at 288 M Avenue, Churdan, Iowa 50050. 515-544-3464National Family Farm Coalition:
