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Farm Bill & Food crisis Myths: Commodity Title Issues


In my view, the Commodity Title of the U.S. Farm Bill was not well understood by the left and others with similar concerns in the debate leading up to the passage of the 2007-8 Farm Bill. Commodity Title issues, as discussed among farmers, were not, it seems, given much attention, or if they were, significant false information was included. The same holds for farm bill issues related to the "food crisis."

My favorite introductory and corrective piece on the farm bill is "Ensure that farmers receive a fair living wage," from the Federation of Southern Land Cooperatives, Land Assistance Fund.

Perhaps the major problematic issue in recent farm bill debates was the belief that U.S. subsidies cause low prices on world markets. Actually farm commodities lack "price responsiveness," so they are usually, but not always low. We've seen this for more than 100 years, and most of what I've heard is that it will likely continue, with low prices following the recent price spike. Subsidies compensate U.S. farmers for losses. Subsidies are unfair to farmers in other countries, (and to farmers in the U.S.) Subsidies did not cause the low prices, however.

Various econometric studies on the impact of removing subsidies have found that the impact on prices is usually very small, 3% or less, and offers no significant relief to the massive dumping of 1981-2006, which ranged from 20-65% for the major "program crops."

U.S. farm policies coming out of the New Deal provided price floors backed up with supply management. These policies worked when managed properly. Price floors were lowered starting in 1953. It wasn't until 1961 that commodity subsidies were added. From then on subsidies were periodically increased as price floors were lowered, until price floors were removed in 1996. Here too, the historical record shows, subsidies were not the cause of low prices.

Another misunderstanding I see frequently is the belief that high farm prices are a root cause of the food crisis. Actually, the hunger crisis was caused by decades of dumping (exporting at massive losses). Farm prices have not risen much relative to other areas of the economy, especially since farm "program crops" ie. corn, wheat, cotton, rice, soybeans, (and others,) were priced below cost for a quarter of a century. September 2005 parity ratios for Program Crops were in the 26% to 32% range, where 100% is the traditional standard for fair prices. The farm share of the food dollar has dramatically fallen (even more if the input share is removed from the "farm share").  The input and market share have risen dramatically.

"A bushel of wheat for a barrel of oil is a distant memory (1970s). Recently wheat has been under $10/bu., while oil has risen to $140/barrel. Corn prices are commonly said to have spiked this year. Two recent single day price spikes for corn, (ie. above $7 per bushel,) have been only about half of record high yearly average prices.  We've got a yearly average price just over $4, which is about double of 2005, but that was the lowest price on record.  The new higher yearly average is about a fourth of the record high from 1947.

I've posted come comments at ZNet on these topics, but without links. I found I was seen as spam at Common Dreams when using a lot of links in my comments. My comments didn't get posted or there was a long delay.

I'm featuring links to key articles and pdf booklets that I use to introduce these issues on my ZSpace page.

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