SYNOPSIS: THREE MAJOR FARM SUBSIDY MYTHS DEBUNKED
Because I’m criticizing great people acting in good faith on critical issues, I like to try to include qualifications and clear explanations to be sufficiently fair. This then makes for long answers. This synopsis skips that, to save time.
This blog explains three major parts of the farm subsidy myth, rebutting each one. It is meant to serve as a relatively comprehensive online source of rebuttal for anyone fighting to expose and eradicate these myths. (It’s about 14 pages long.) So far, few people (in the Sustainable Food Movement, in academia, etc.,) have demonstrated sufficient confidence to be willing to write anything themselves, or to link information that draws valid conclusions against the subsidy myth. I’m working to change that, for example, by exposing the scientifically invalid assumptions that are made by “science” organizations like CSPI and UCS on these matters.
These myths and rebuttals are:
 Farmers who produce corn, cotton, wheat, sugarbeets, and other commodity crops, (plus milk,) are thought to be big beneficiaries of the farm bill, according to this myth since they receive subsidies. In fact, these farmers are the biggest farm bill losers when the additional information that is needed to draw scientifically valid conclusions is added to the equation.
 Most subsidies are thought to go to a small numer of giant farms, while the vast majority of farms receive only tiny fractions of those amounts according to this myth. Here again, additional information must be reviewed in order to draw valid conclusions. We then find that most subsidies go to full-time family-sized farms, or similar farms that are somewhat smaller or bigger, while the many small recipients are much smaller than even a fourth the size of a very small family-sized farm.
 The giving of subsidies to farmers is thought to cause cheap farm prices according to a third major subsidy myth. Here too the analysis behind the myth lacks validity. Subsidies are correlated with cheap farm prices, but only some of the time. Cheap prices are caused economically by price inelasticity, and politically by the absence of adequate minimum Price Floor programs to fix the economic problem.
These major farm subsidy myths support agribusiness commodity buyers against farmers, even as they thwart major Food Day goals. They lead people to believe that good can come from reducing or eliminating subsidies, especially for large farms. While increased payment limits on the very largest farms might not be a bad idea, it doesn’t really do any good. In general, reducing subsidies without fixing the deeper injustices that subsidies were designed tin respnse to only creats bigger injustices. Instead, Sustainable Food advocates should support the policies that eliminate the need for subsidies. Unfortunately, these policies, the ones representing true reforms, are missing from the Food Day materials, and from almost all other Sustainable Food Movement resource lists. (See sources at the bottom.)
Farm subsidies represent a major absurdity in the history of U.S. farm policy. Unfortunately, the biggest absurdities, (8 times bigger, according to the analysis below!) are hidden behind a thick layer of myth. We hear less about some of the key aspects of these myths, as they’re taken for granted. They first went viral across mainstream media more than five years ago.
The myths lead those taken in by them to advocate directly against their own values and goals, to side with cheap food and feed and against the goals of health, sustainability, and even profitability. The myths blind us to a large body of missing evidence that is needed to place farm subsidies into a valid context. They reverse our understanding of justice, causing us to blame the victims (farmers) instead of the hidden beneficiaries who use government policy to exploit them (farm commodity buyers).
Today we can find these myths subverting the fine goals of Food Day. Food Day is a great idea. That should be obvious. It’s founded upon great values and goals, and addresses some serious problems in our farm and food system, pointing toward positive alternatives.
Unfortunately, as a project of the new “Sustainable Food Movement, Food Day reflects the false paradigm that dominate the movement.
Each of the informational flaws reflects scientific invalidity. Invalid methods and assumptions undergird these falsehoods. They represent pseudo-science, and are easily refuted.
This issue is one that I raised with CSPI in 2011, in detail. Here and elsewhere, the issue seems to be quite resistant to change. Simply telling someone not to support agribusiness against core food movement goals, through these flaws in the Sustainable Food paradigm, falls on deaf ears. For that reason, I’ve described the matter in detail.
FARM JUSTICE: MISSING FROM FOOD DAY
(SUPPORT FOR JUNK FOOD ON FOOD DAY)
The basic issue of justice for farmers, of “farm justice,” is fairly easy to understand. When it comes to selling their crops and livestock, farmers want and need distributive economic justice. In simple terms, they want and need fair farm prices, “living wage” farm prices, “fair trade” farm prices. This is the deepest issue.
The farm justice of fair prices then affects many other issues, including the other side of justice, fairness on the input side of agriculture, (in what farmers buy in order to farm,) the sustainability of their farms, the quality of food, global poverty and much more.
As a general value, farm justice is supported by Food Day, in its rhetoric. Practically speaking, however, the reverse is true. Food Day subverts justice on the farmer side of major issues.
FARM JUSTICE IN THE FARM BILL
(FIGHTING AGRIBUSINESS EXPLOITATION IN THE FARM BILL)
Justice for farmers is fairly easy to understand, both economically and in relation to policy. ‘Free’ Markets have usually failed to bring fair prices to farmers. To address that, the farm bill was created in 1933. What the farm bill did was to establish a minimum price for basic farm crops, milk, and other items. Historically and ideally, this has been the main purpose of the farm bill. In other words, what the farm bill did was similar to a minimum wage. It set a floor under prices, and then supported that by roughly balancing the supply and demand of farm products from year to year, so that overproduction would not drive down prices. Starting in 1942, the standard for minimum farm “price floors” were set at “living wage” levels. Cheap food was not a problem.
At the same time, to insure justice for consumers, livestock farmers and other buyers of farm products, the farm bill featured top-side “price ceilings,” which triggered the release onto the markets of reserve supplies, to prevent prices from rising too high, such as on a year of shortages caused by crop failures.
MISSING: BASIC JUSTICE ON THE FARMER SIDE
(PRESENT: SUPPORT FOR JUNK FOOD, CAFOS, EXPORT DUMPING)
Under pressure from the giant corporate buyers of farm products, Congress changed the farm bill to reduce (1952-1995) and eliminate (1996-2018) minimum farm price floors. In response, the Farm Justice (Family Farm) Movement, which had fought for a fair farm bill before and during the Great Depression, re-emerged and went into action, confronting Congress and calling for support from urban consumers in the fight against “cheap food.” For more than 60 years, “farm justice’ farmers have fought this fight. While they’ve won some “battles” over the years, they’ve largely lost “the war.” Significantly, urban consumers did not show up to help in the fight for farm justice, at least not in significant numbers, until the 21st century.
Meanwhile, Congress lowered farm prices. This provided what was essentially a hidden subsidy to the corporate buyers of farm products. The subsidies went to farmers, not to the real beneficiaries, the buyers of farm products. Basically, over the years Congress increasingly turned the farm bill into an ineffective and misguided welfare program. “Farm commodity subsidies” were invented and funded. Over the years, subsidies provided some justice to farmers. They compensated farmers for a small fraction of the reductions that Congress took from farmers and gave to agribusiness buyers. That this justice was ineffective is seen in the fact that subsidies did nothing about the problem of indirectly and massively subsidizing animal factories with cheap feed ingredients, enabling them to take most of the value-added livestock business away from diversified farmers. Today we find that just 4 corporations, one Chinese, own most of the hogs in the United States (66%).
By the 21st century, as the largely rural Farm Justice Movement fell into a slump, and the urban Sustainable Food Movement emerged, accurate knowledge about the farm bill and its history fell by the way side, and the false paradigm that had long been fostered by the subsidy paradigm went viral. Though urban food leaders placed a high priority on fighting against cheap food, at least in rhetoric, technically, in actual practice, they misunderstood the solution and advocated strongly in favor of cheap food for agribusiness.
That’s what we see with Food Day. Accurate knowledge of the technicalities of farm justice is lacking. Instead, farmer victims themselves get the blame, as injustice solutions are taught.
EXAMPLES OF INJUSTICE AGAINST FARMERS IN FOOD DAY MATERIALS
(FOOD DAY EXAMPLES OF SUPPORT FOR JUNK FOOD, CAFOS, EXPORT DUMPING)
Inaccurate information leading to unjust positions against farmers can be found in a number of places on the Food Day web site. It’s seen in the general framing of some important Food Day issues. The best examples are found in the major “Organizing Guides” for Food Day, which are listed under “Resources.” (http://www.foodday.org/guides)
The basic framing language, which is found, (more or less,) in several of the guides, includes the following, which is taken from the “Guide for Organizers 2012”
and the “Guide for Faith Communities 2012,”
Other examples include the “Media Guide 2013,”
and the “Guide for Campus Organizers 2014,”
The basic information is essentially, (if not exactly,) the same across these materials. It is false information that is widely present all across the Sustainable Food Movement and beyond.
“GUIDE FOR ORGANIZERS 2012”
There is important information in the Food Day guides that addresses important food related crises related to public health and environmental sustainability. At the same time, we find the following. Among the points made under the heading “The Issues: Food Day Talking Points,” and then “Support sustainable and organic farms,” are the following facts and claims.
“The federal budget provides $16 billion annually in direct farm subsidies. 74% of these subsidies go to only 10 % of the largest farms.”
Under the heading “Farm Bill” we find (emphasis in bold added):
“• The USDA says fruits and vegetables should fill about half of our plates during meal times. However, the top five subsidized crops are corn, wheat, soybeans, cotton, and rice.
• The largest 10% of farms received an average of $30,751 per farm per year between 1995 and 2010.
• The bottom 80% of farms received an average of $587 per farm per year in the same period.
There is also a section called: “Reform factory farms to protect the environment and animals.”
WHAT’S FALSE, WHAT’S MISSING?
JUSTICE & SCIENTIFIC VALIDITY
(HOW INVALID REASONING SUPPORTS BIG FOOD)
Although not directly stated, the claims here are clear. Farmers who grow corn, wheat, soybeans, cotton and rice are the big bad farmers. As it states more clearly in the “Media Guide 2013,” they are said to be “large agri-businesses that contribute to poor health and severe environmental degradation.” The Farm Bill, we are then led to believe, bends over backwards to help these farmers, (those who grow “corn, wheat, soybeans, cotton and rice,”) instead of the other (good) farmers, who are organic or local, or who grow vegetables and fruits.
First, this makes it very clear why grain, cotton and soybean farmers, (i.e. most farmers in most farming regions of the country,) are excluded from the “Sustainable Food Movement,” and from helping to plan projects like Food Day, as they clearly seem to be.
Second, what’s the implied solution here? That too is clear. Take subsidies away from farmers who grow corn, wheat, soybeans, cotton and rice, especially from those who are in the top 10% of subsidy recipients, and spend the money on other goals, such as organic farming or fruit and vegetable farming.
Let’s take these claims one by one.
[1.] ARE CORN, WHEAT, COTTON, DAIRY,… FARMERS HELPED BY THE FARM BILL?
(IS AGRIBUSINESS OPPOSED IN FOOD DAY MATERIALS?)
First, what is the evidence that the farm bill hugely supports corn, wheat, soybeans, cotton and rice farmers. Well, it gives them subsidies, significant amounts of money. It is well known in the movement and in the mainstream media that these crops like corn, soybeans, cotton and wheat receive subsidies, and that there is public data showing this at the Environmental Working Group, (one of the Food Day resource groups linked in this and other locations). That’s ok for the Food Day materials so far. Yes, subsidies are given in large amounts.
But there is an anomaly to this paradigm. It is ALSO well known, (and stated in the guides,) that hungry people receive even bigger amounts of subsidies, food subsidies! As the Organizers Guide states, in the Farm Bill section:
“Each year, Farm Bill programs spend roughly $100 billion. Over ? of that goes to food and nutrition programs, including SNAP.” (p. 7)
Are we to believe that giving food subsidies to poor people is unjust. Should we call them privileged, farm bill winners? Clearly, the PRESENCE of subsidies in association with a category, (a mere scientific correlation) is not sufficient to prove that there is no just need for the subsidies. We find, then, that the materials do not try to prove that food subsidies are just, (isn’t that a no-brainer,) OR that farm subsidies are unjust. That too is assumed.
And why not. It’s widely assumed, without proof, all across the Sustainable Food Movement and all across mainstream media, that farm subsidies are unjust. As it turns out, however, no evidence is presented to establish that farmers growing grains, oilseeds and cotton do NOT need subsidies. If we go to the Environmental Working Group, the major group that is behind these issues today, we don’t find any evidence there, either. The question of farmer need is not a topic that is discussed. It’s as if the question of validity is so obvious that it need not be proved.
In contrast, remember my opening explanation of farm justice? The farm bill had minimum price floors, then Congress reduced and eliminated them. That’s like eliminating the minimum wage. That’s like a living wage that’s lowered down and eliminated. Then subsidies were added. We see, then, that no subsidies were initially needed, (1942-1952) as price floors were set at “living wage” levels, (called parity, or rather price floors were set at 90% of parity to achieve 100% of parity as an average market price).
Along the way, minimum price floors were lowered and subsidies were added. As I stated above, however, subsidies compensated farmers for only a small fraction of the reductions in market prices. Therefore, essentially, Congress created a need for subsidies, and then, yes, subsidies were given. By the standard of “living wage” farm prices, however, the result was injustice AGAINST farmers, not FOR farmers. Only a small fraction of the need that Congress created for subsidies was addressed in the farm subsidy programs enacted by Congress.
It’s easy to measure this in terms of market prices. When people remark about the amount of farm subsidies that farmers get, you can simply point to the low farm prices, such as $2 corn. The more difficult challenge is to measure the reductions in direct comparison to farm commodity subsidies, as in the Food Day materials, where subsidies are measured in billions of dollars. Answering that the price of corn was only about $2, for example, is insufficient.
I’ve developed ways* to conduct the necessary measurements, based upon previous standards and operational definitions.*
(*My beginning standard is parity, or market prices during the 1942-1952 (parity) period, which is essentially the same. I then assume that reduced production (operationally defined supply management) would have been needed to achieve the higher prices. So I multiply price x production to get a figure for comparison with the billions in subsidies that have been paid to farmers. While there are limits to this method, it at least shows the general idea.)
Using these methods, and adjusted for inflation, I find that farmers growing the crops at issue (“corn, wheat, soybeans, cotton, and rice;” plus grain sorghum, barley, oats, peanuts and sugar beets,) plus milk, have been reduced below previous standards by about $4 trillion. On many of the same years, then, farmers received subsidies of about $500 billion. (Note: Figures are all adjusted for inflation in 2013 dollars using a GDP deflator. Subsidies started for the first crops in 1961).
By combining these figures we get an overall result for Congressional action of about $1 in subsidies given TO farmers to compensate for each $8 in market reductions taken FROM farmers. With this additional data, then, we see that the conclusions about farmers growing these crops (plus dairy) that are drawn from looking at subsidy data alone do not lead to valid conclusions about farm bill justice. Such conclusions go directly against justice. That’s what the Food Day materials do.
In the example above, other standards of fair prices and reductions could be used, of course. Using very different operational definitions we might find, for example, only $3 trillion in reductions compared to the subsidies, or $6 in reductions compared to $1 in subsidies. Alternately, we might find $2 trillion in reductions, ($4 in reductions for each $1 in subsidies). These too would show serious distributive economic injustice. The evidence for injustice AGAINST, (not privilege FOR,) farmers is very strong.
We see, then, that there is a large margin of error in drawing conclusions from subsidies alone. That conclusion might miss the mark by 800%!
From these figures we can then understand the question of “means testing,” which is sometimes raised when comparing food subsidies to farm subsidies. Subsidies are given in general relation to the amount of reductions that farmers have faced. The bigger the reduction, the bigger the subsidy. This applies to the bigger farms,(I’ll post data on this at SlideShare and link it here) the bigger crops, (i.e. corn,) and the bigger states (i.e. Iowa). They have bigger reductions, so they get bigger subsidies. We now see that Iowa (http://zcomm.org/zblogs/first-ever-map-of-farm-bill-net-impacts-by-brad-wilson/) and corn (http://www.lavidalocavore.org/diary/5209/corn-is-the-biggest-farm-bill-loser-and-other-surprises), for example, are not farm bill winners. They’re the biggest farm bill losers. (See related links under “Further Reading,” below.)
With this data we can then examine other, related questions. For example, the Food Day materials point out that “fruits and vegetables are not subsidized,” (i.e. in anything close to comparable ways). The clear assumption is that these crops are at a disadvantage compared to the “program crops” that receive subsidies. Here again, at Food Day and at places like the Environmental Working Group and the Union of Concerned Scientists, no evidence is presented to establish the validity of the conclusion that grains, for example, are (net) beneficiaries of the farm bill, (& see discussion above). It is simply assumed, on the basis of partial evidence, that one set of farmers is getting a great deal, while the other is not.
Here again, I’ve compiled a large mass of data that rebuts the claim (I’ll post it on SlideShare, as the slides have been taken down at ZSpace). I’ve compared a variety of major fruit and vegetable prices with the prices, (plus the subsidies,) of major commodity crops (i.e. corn, wheat, soybeans, cotton, rice) over a long period of history, starting in 1953, when farm price floors were first lowered by Congress. I’ve done this using the statistic “percent of parity,” (percent of the traditional standard for “living wage” farm prices). The findings are clear, while all of these crops have declined severely, commodity crop prices, even with added subsidies, have been consistently lower than almost all of the major fruits and vegetables. (http://zcomm.org/zblogs/commodity-crops-vs-vegetables-data-slides-fix-the-myth-by-brad-wilson/).
In conclusion, farmers growing “corn, wheat, soybeans, cotton, and rice” are not helped by the farm bill, as a net result, even considering the large amount of subsidies that are paid to them. They are hurt. They’re even worse off than fruits and vegetables, which have also declined.
[2.] DO MOST SUBSIDIES GO TO “LARGE AGRI-BUSINESSES?”
(JUNK FOOD BUYERS ARE NOT IN THE FARM SUBSIDY DATABASE)
A related point is that the lion’s share of farm subsidies goes to just 10% of the “farms,” to farms that are really “large agri-businesses?” What about that?
First, here again, for comparison, no evidence is presented regarding what percent of food subsidies go to the biggest families, such as those with ten kids. They surely get much more. If the case is made regarding farm subsidies, logic would suggest something similar for food subsidies. The answer on the food side is obvious. Food subsidies go to those in need, and big families have greater needs. That’s understood. What’s more, it’s widely known that there is means testing for food subsidy recipients.
What about the top 10% of farm subsidy recipients. What are their needs like? Why do they get more subsidies? Just how big are they? Do they have means testing? I’ll provide answers to these questions.
Ok, here, more specifically are the claims. As the 2014 Guide for Campus Organizers states, “Shockingly, only 10 percent of farms—the biggest ones—receive 74 percent of those government subsidies” (i.e. 1995-2009). These are the ones labeled “large agri-businesses.” Likewise, as shown in my earlier quotes, while the “top 10% of farms received an average of $30,751 per farm per year,” the “bottom 80% received an average of” only “$587 per farm per year” (i.e. 1995-2010).
Here again, I don’t question the raw data. I question it’s valid interpretation. What I find is that this interpretation of the data is invalid. And here again, I’ve seen nowhere, (including Food Day, The Environmental Working Group, the Center for Science in the Public Interest, and the Union of Concerned Scientists, which makes similar claims,) that any of the evidence needed to establish a valid context for interpreting this data has even been considered.
$30,751 per farm per year adds up to a lot of money, but how big is the farm that received that amount of money? Remember, I argued above that farmers have had huge reductions below earlier standards of what prices should be and what they really were. The huge reductions then establish a “need” for very large subsidies.
$587 is much much smaller. In fact, $587 is only 2% of $30,751. That would make the $30,751 farm 50 times bigger than the $587 farm. All of these figures are relative, however. They’re relative to each other. They’re all scientifically related to other, correlated to each other. As such, these figures provide no evidence that can validly establish farm sizes. None. To do that you need a fixed standard, not a relative one. It’s a simple case where we must go with the evidence, (the facts,) and not with our impressions, (our opinions). And indeed, as I show below, “truth” can be “stranger than fiction.”
Here too, I’ve developed ways of providing the missing answer, using operational definitions. I use, for example, a simple corn and soybean crop farm, (i.e 50% each, or the national average acreages for each year, which are close to 50/50 for the years 1995-2012, the years of the Farm Subsidy Database). I take the amount of subsidies that have been given to corn farmers and the amount given to soybean farmers, year by year and overall, and then use the amount of acres of these crops that were harvested, to calculate the amount of subsidies per acre, on average. From there I calculate a rough estimate of farm size. I’ve shown my work, here (http://zcomm.org/zblogs/most-ewg-subsidy-recipients-are-too-tiny-to-be-farmers-by-brad-wilson/). (Note: A similar method to my corn/soybean approach is to use a hypothetical farm that grows corn, cotton, barley, and the various other crops, for example, in proportion to overall national averages. Each 100 acres of such a farm would then have a certain large amount of corn, a much smaller amount of cotton, a tiny amount of sugar beets, etc., which would then feed into the calculations.)
What I find, then, is that a small, 200 acre corn and soybean farm got about $138,259 in subsidies (1994-2010) or about $8,641 per year. This amount placed it in the Farm Subsidy Database at the top 10.1% mark, almost in the top 10%. The top 10% mark, then, is about 203 acres. (There are, of course, significant variations in actual subsidy amounts per farm, for a variety of reasons including growing conditions, farm history, etc.)
Ok, is a 203 acre farm “large agribusiness?” 300 acres? 400 acres? Actually, over the time period, this farm was not big enough to be a full-time family-sized farm, as financial calculations can easily show (i.e. “Commodity Costs and Returns”). We see, then, that all of the family-sized farms, (if they get all of their income from these crops, for example,) must be located in the top 10%.
If we then take the $8, 641 in subsidies per year for 200 acres and calculate farm size for $30,751 in subsidies per year, the result is 711 acres. That’s the average for the top 10% using this method. On the other hand, this average size is not near the median subsidy size for the top 10% (the top 5% mark). Instead, this farm size lies at about the top 2.75% mark. So nearly 3/4 of the top 10% farms are smaller than 711 acres, roughly speaking, (using this method to make the estimates).
Is a 711 acre corn and soybean farm a “large agri-business?” No. Farms like this might be somewhat bigger than “family-sized,” but they’d mostly look like family-sized farms. Certainly farm sizes have continued to increase. Keep in mind that, because of cheap farm prices, including the 8 of the 9 lowest corn prices in history, 1997-2005, (after minimum price floors were eliminated,) and the same for soybean prices, and similar for the other crops, farm incomes have often been low. Some (5) of these crops have been below full costs for 30 years (almost every year for a sum for the group). For three more crops, corn, soybeans and rice, prices this changed starting in 2007, at least through 2013. We see, then, that the the 711 is not so big after all, since prices have been so low.
To understand the economic size of 711 acres of crop farming today, consider the fact that most farms have lost livestock to giant animal factories. For example, two thirds of hogs are owned by just 4 corporations. Cheap corn and soybean prices, (not the government payments,) have been the primary economic benefits that have subsidized animal factories. It’s made for cheap feed ingredients. Crop farmers have paid the lions share of these subsidies, net result, as I showed above, while government payments back to farmers have reduced it by only a small fraction. (Again, that is compared to the traditional “living wage” standard of parity.
We see, then, that the diversified crop and livestock farms of the past lost most of their “value added” livestock. We can now apply this to the 711 acre corn and soybean farm which no longer got, say, 40% of it’s income from livestock. We find, then, that 711 acres would be economically equivalent to a much smaller diversified farm. 711 acres minus 40% equals a 427 acre farm that also has livestock. That’s pretty much a family-sized farm. We see, then, that the clear majority of farms in the top 10% of the Farm Subsidy Database are family-sized farms, or a bit smaller, or a bit larger. They’re clearly NOT “large agri-businesses.” Huge farms make up a much smaller percentage.
What is more, in stark contrast to myth gone viral, crop farming is much less concentrated than is livestock farming. For example, while 4 corporations own 66% of US hogs, the top 4 corn farms in the farm subsidy database (i.e. excluding cooperatives,) get less than a 4/100 of 1% share of the subsidies, (which is a rough estimate of farm size). To then compare the largest corn farms, even in the top 1% or 2% with the CAFO giants or with agribusinesses like Cargill and ADM, is a stretch.
None of this is to suggest that it’s good to have bigger farms. The Farm Justice Movement has been fighting against that for 6 decades. My point is rather that the underlying problem is not at all subsidies going to farms, but rather it’s the lack of minimum price programs, and the overall injustice against commodity crop farmers.
What about the 80% of “farms” (subsidy recipients) that received, on average, only $587 per year? And note here that the Food Day materials use the term “farms,” not “recipients.” Well, in my corn soybean example, the farm size for the entire bottom 80% averages less than 14 acres. In other words, these “farms” are not (full-time) farms at all. They’re tiny fractions (less than 7%) of the size of even the small 203 acre corn/soybean farm in my example for the beginning of the top 10% mark.
And that’s an average figure, weighted heavily by those in the 70% to 80% range, for example. The bottom 50% of recipients are, at most, something less than 4% of this size. The bottom one third of recipients, meanwhile, are at most only about 1% of the size of a small 200 acre corn and soybean farm.
We see, then, the invalidity of the claim that the most subsidies go to “large agri-businesses,” in comparison to the smaller recipients that are also assumed to be full-time farms. Here again there seems to be a large margin of error. At a minimum, (very conservatively assuming 200 acres for a “full-time” farm,) they seem to be off by more than 700%, and for the bottom 1/3 10,000% at best.
My approach is intended to provide a general answer to this issue. Whatever the limitations of my method, I’m confident that it’s validity towers above that of Food Day, the Center for Science in the Public Interest, the Environmental Working Group and the various others who make these claims.
[3.] DO SUBSIDIES CAUSE CHEAP FARM PRICES?
(DO FOOD STAMPS CAUSE CHEAP WAGES AT WALMART?)
According to the Food Day Media Guide,
“74 percent of” “the $16 billion a year allocated to federal farm subsidy programs,” “goes to large agri-businesses that contribute to poor health….”
What the “poor health” claim means, of course, is that the farms in the top 10% of the farm subsidy database, by getting subsidies, are fostering the cheap prices we’ve seen for sugar, transfats and other junk food ingredients thus fostering “poor health.” And in fact, this is a claim that has been widely made by the Food Movement and in mainstream media. We’ve seen similar claims made by the Union of Concerned Scientists, for example, in their report “The $11 Trillion Reward.”
We’ve already debunked the claim that subsidies represent net benefits to farmers. Subsidies make up only a small fraction of the amount that farm crop value has been lowered by Congress. Does giving subsidies to farmers cause cheap farm prices?
Here again, there’s a clear scientific correlation between farm subsidies and cheap farm prices, at least some of the time, but, of course, that’s not a causation. As it turns out, however, there’s an anomaly even to any claim of a correlation. As I’ve explained above, much of the time there has been a zero correlation between these two sets of numbers. For example, corn (feedgrain) and wheat subsidies started in 1961, but Price Floors for these crops were lowered starting in 1953. Over those eight years farm prices fell, but there were no subsidies. That’s a zero correlation for subsidies, but a strong correlation for the lowering of price floors. For cotton, the comparable subsidy time frame started in 1964, so the period of zero correlation is a few years longer, while here again, the lowering of Price Floors does correlate with the lowering of prices. For rice, subsidies started in 1977, so the period of zero correlation is even longer. Price floors were lowered even more by that time, and prices fell even more. For soybeans, the year is 1998, by which time price floors had been eliminated, and prices had already entering the period I mentioned above, of 8 of the 9 lowest soybean prices in history. The same is true for sugarbeets, which received no subsidies until 2000-2005. Sugar price floors were lowered, but not eliminated. Rye is another example. It’s a crop for which price floors were lowered, and prices went down, but no subsidies were given. Prices for barley and oats, crops very similar to rye, went down in ways that were almost identical to rye. They got subsidies on the same years as corn, and had their price floors lowered and eliminated.
There are 4 kinds of evidence that show that subsidies do not cause cheap prices. First there is historical evidence, as I’ve discussed above. Prices stayed up when Price Floors and supply management programs worked to keep them up, and they fell, as intended, when Price Floors and supply management programs were reduced and eliminated, eventually resulting in the lowest prices in history.
Second, data on price inelasticity for these farm crops shows that they lack “price responsiveness” “on both the supply and the demand sides” for these crops as a group, (i.e. as they are actually grown in the various farming regions). In other words, economically, under deregulated “free” market conditions, (i.e. without price floor programs,) farm commodity prices have usually been low.
Third, econometric studies on subsidy elimination find the same conclusion. Subsidy elimination would not raise farm prices in any practically significant way. Daryll E. Ray found, for example, that there would be some adjustment between the prices of various crops, corn and cotton, for example, but there would be no impacts that would be anywhere close to what we saw with price floor programs. Ray found, in fact, that corn prices would go down, not up, with subsidy elimination, as more corn was planted, and less cotton.
Fourth, Ray also shows that subsidy elimination in other countries did not fix the problem of oversupply that then contributes to cheap farm prices. The Canada, Australia and Mexico were the examples used, each being an important farming country.
This contrasts with the claims that have been made elsewhere, such as in Wikipedia (“agricultural subsidies,”) that New Zealand’s lack of subsidies can serve as a model for other countries. In fact, New Zealand’s participation in the growing of these crops is so tiny that it doesn’t even show up on the list of countries that grow and export them, as we it find in USDA’s annual publication, “Agricultural Statistics.” New Zealand isn’t a player. (And there are many more falsehoods in the Wikipedia material.)
“Oh, and One More Thing:” SUGARBEET POLICY
Sugar policy, for beet and cane sugar, represents fourth category of misinformation in the Food Day materials. I will explain this in a separate post.
I have not addressed all of my concerns with the Food Day materials. There are other ways that they show misunderstandings of farming and farm justice. One of these other concerns is the role of livestock in the sustainability of farming and the ways that the major injustices against farmers, (described above but not in the Food Day materials,) have damaged the sustainability of our farm and food system. I have not answered the charge, for example, that “severe environmental degradation” is caused by giving farmers subsidies, but I have placed the subsidy system into the larger context of justice. )On the sustainability issue see http://zcomm.org/zblogs/farm-bill-economics-think-ecology-by-brad-wilson/).
What I have done is to show that a massive amount of evidence contradicts the claims that are found in the Food Day Guides and other materials. I’ve also shown that, behind the false information are a number of scientific invalidities. The claims that concern me, I’ve shown, are grounded in pseudo-science. The challenge for groups like the Center for Science in the Public Interest is one of paradigm change. When it comes to the major farm policies and programs that I’ve examined, the Food Day materials represent an overwhelmingly dominant paradigm in the Sustainable Food Movement, in politics, in mainstream media, and in the academic world. This paradigm is massively inside of people’s heads.
What I’ve argued (in response to those views of “normal science,”**) represents a “revolutionary”** response to that paradigm (**Thomas Kuhn, The Structure of Scientific Revolutions). It’s a response in which, here and elsewhere, I’ve presented a larage amount of evidence and exposed a large number of major “anomalies”** that this paradigm fails to account for. In turn, I’ve presented a major alternative paradigm that addresses these anomalies in powerful ways.
The subsidy paradigm is an agribusiness point of view. It diverts attention away from the major farm bill beneficiaries, the commodity crop buyers, and toward the victims of the low prices enacted by Congress on behalf of these buyers, crop farmers.
Paradign change is tough, even for scientists.** I made a video (https://www.youtube.com/watch?v=VQkeDza3bM0&index=1&list=PLA1E706EFA90D1767) showing charts of the data that rebuts similar themes in a major report and video from the Union of Concerned Scientists. No one from UCS has contacted me about that, even though we were asked to jointly respond to it on a telephone conference call. I explained my position while UCS had nothing to say in response, other than very general comments, unrelated to my video review.
Likewise, in 2011 I wrote a detailed response to CSPI’s work on Food Day, (http://zcomm.org/zblogs/the-case-against-cspis-food-days-farm-bill-analysisi-by-brad-wilson/) but it seems not to have made much of an impression.
Food Day is a great idea. The general values behind it are good, and the materials have surely been created in good faith. The problem is that they are heavily influenced by a false paradigm that has come to dominate mainstream media and the sustainable food movement. It is a paradigm that places the blame on farmers, and then, in that way, hides the exploitative role of mega agribusiness. While the stated goals stated in the Food Day materials favor justice and inclusion, the actual results are just the opposite. Instead of justice on the farmer side of the matter we get injustice. The exclusion that allowed that to happen is thereby reinforced in a vicious, self-fulfilling cycle. Farmers and urban food advocates are divided and, operating at half strength, conquered. These incredible and absurd flaws have continued through the 2008 and 2014 farm bills. They must be stopped, long before the 2018 farm bill.
FOR FURTHER READING
NOTE: I’LL BE EDITING THIS AS I’LL BE ADDING SOME KEY RESOURCES IN THE NEAR FUTURE.
Brad Wilson, “Farm Justice PRIMER: A Farm Bill Primer,” ZSpace, 8/3/14, http://zcomm.org/zblogs/farm-justice-primer-a-farm-bill-primer/. (A collection of major online resources from nonprofit organizations, academics and others that support “farm justice” in the farm bill.)
Brad Wilson, “Food Crisis PRIMER,” ZSpace, 8/9/14, http://zcomm.org/zblogs/food-crisis-primer/
Brad Wilson, “Primer: Farm Justice Proposals for the 2012 Farm Bill,” ASpace, 5/11/12, http://zcomm.org/zblogs/primer-farm-justice-proposals-for-the-2012-farm-bill-by-brad-wilson/.
Brad Wilson, “PRIMER: Revenue Insurance in the 2012 Farm Bill” ZSpace, 5/11/12, http://zcomm.org/zblogs/primer-revenue-insurance-in-the-2012-farm-bill-by-brad-wilson/.
Brad Wilson, (my blog and video index,) ZSpace, soon, I hope. This will be a categorized index that fills in some gaps in the work of others (in the primers above,) and that includes quite a few reviews of the work of various #FoodLeaders. I think it’s now more than 100 blogs.