Long the bane of environmentalists and sustainable-agriculture proponents, the U.S. agriculture-subsidy system has drawn some unlikely new critics: top Bush administration officials.
Speaking before a food-industry trade group last week, USDA chief Mike Johanns, the reliably pro-Big Ag former governer of subsidy-rich Nebraska, complained that in fiscal year 2005:
92 percent of commodity program spending was paid on five crops -- corn, wheat, soybeans, cotton and rice. The farmers who raise other crops -- two thirds of all farmers -- received little support from current farm programs.
Later, he deplored what he called "trade-distorting subsidies. "
And Monday, U.S. Trade Representative Rob Portman published an op-ed in the Financial Times offering to slash farm support, so long as Europe and Japan follow suit.
The U.S. subsidy system, rooted in the Great Depression and most recently ratified by the 2002 Farm Bill, rewards gross output. The farms that churn out the most product -- so long as the product in question is one of the Big Five commodities mentioned above by Johanns -- grab the most cash. And from 1995 to 2003, reports the stalwart Environmental Working Group, that cash averaged a cool $14.5 billion per year.
Now, the subsidy system is beloved of politically powerful grain-processing giants like Archer-Daniels Midland, because it pushes down the price of the stuff they buy and then resell at a profit (or "add value" to, as in the case of high-fructose corn syrup). Environmentalists tend to hate the system because (among other evils) it encourages farmers to maximize production through the use of fossil fuel-derived fertilizers, which in turn foul up groundwater. (In his 2004 Harper's essay "The Oil We Eat," Richard Manning elegantly teases out the environmental impact of government-funded industrial agriculture.)
Why, then, is the Bush Administration, generally friend of industry and foe of environmentalists, breaking ranks?
The Bush Administration finds itself caught between its own lofty rhetoric on free trade and an important political lifeline in the so-called Red States.
Here is Environmental Working Group's report outlining which states grab the highest level of support, based on the percentage of farms receiving subsidies. It doesn't take a political scientist to figure out that the states with the highest production of Big Five commodity crops tended to support Bush in the 2000 and 2004 elections.
Arguably, that's why Bush countenanced the generous commodity subsidies built into the 2002 Farm Bill, which remains in effect today. (Next year, Congress will begin hammering out the 2007 Farm Bill. Not unlike the old Soviet Union, we tend to make ag policy in Five-Year Plans.)
Meanwhile, the very policy that helped Bush win support in the so-called Heartland has been getting him flayed over at the World Trade Organization, global enforcer of his beloved free-trade ideology.
Last year, Brazil, along with other cotton-producing nations like Benin and Chad, filed a complaint with the WTO charging that the United States' cotton subsidies gave U.S. producers an unfair advantage over competitors in poorer nations. In March, the WTO ruled in Brazil's favor.
Washington has yet to formally respond, and the subsidy system lurches on. Now Brazil is threatening trade retaliation, further pressuring the U.S. to change its ways.
The USDA's Johanns appears to be assuring farmers and agribusiness alike that a post-subsidy world could be palatable -- so long as the U.S. is able to ram its agriculture surplus down the throats of other nations. At his speech last week, Johanns declared:
95 percent of the world's population lives outside of the U.S. With agricultural productivity far outpacing consumption in our country, we cannot afford to turn our backs on world trade standards. If we do indeed want to firmly control the shape of future U.S. farm policy, which I certainly believe we do, then we must be bold.
Loosely translated, "agricultural productivity far outpacing consumption in our country" means: we're producing way too much corn and soy. Rather than stop overproducing stuff that no one really wants, the way forward is to "be bold" -- i.e., dump our unwanted stuff on foreign markets, farmers operating in those markets be damned.
Just after the above-quoted paragraph, the USDA chief rolled out his money quote: "We must use the WTO to force open markets for U.S. products."
As debate over the 2007 Farm Bill draws nearer, the tight spot Bush finds himself in presents an opportunity for environmentalists and small-farm advocates. But as satisfying as it would be to see an absurd subsidy system dismantled, surely we can't afford to see our fragile farm economy defunded.
Over the next couple of days, I'll report on efforts to create an agenda for the 2007 Farm Bill that attempts to use our resources to create a sustainable, local-oriented food system, not a machine for producing excess grain in search of a market.
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Comments View as Flat
Corey McKrill Posted 3:38 am
11 Oct 2005
How does organic farming fit into this?
My grasp on the economics behind this is rather shaky, so perhaps Tom or someone can elaborate, but to draw a connection between this post and this Grist article, wouldn't eliminating these subsidies level the playing field at least somewhat for organic farmers?
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Tom Philpott Posted 5:12 am
11 Oct 2005
Good point
Corey,
The subsidy system as is certainly works to the advantage of the big industrial processors. It gives them a steady supply of dirt-cheap inputs (ie, corn, soy, etc.) which allows them to undercut organics on the supermarket shelf and still make a nice profit. So your point is well-taken.
My response is this: The system is so skewed to the advantage of the multinational food giants, local food networks are in such a state of collapse, and farms of almost all sizes are struggling so mightily, that I'd hate to see the $14.5 billion or so per year now devoted to commodity subsidies disappear into the ether (or go up in smoke in Iraq).
Rather, I'd like to see Congress cobble together a support system that rewards other things besides gross output of a few commodities. Why not, say, reward farmers who sell at least half of their product for consumption within a 30 mile radius? Or pay farmers not to use chemicals?
Or, to take a different approach, devote some of that money to helping school, hospital, and nursing-home cafeterias buy local food. Or improve infrastructure in existing farmers markets. Or dole it out in low-interest loans (or grants?) to help new farmers buy land, which in most areas that have established markets for local veggies (think NY or SF) has gotten prohibitively expensive.
The reality is that, given current fiscal realities, any money that's slashed from the 2007 Farm Bill will be gone forever. If we've spent the last 70 or so years subsidizing industrial ag, isn't it time to level the playing field by subsidizing locally directed, sustainable ag for a while?
Thanks for the response,
Tom
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David Roberts Posted 5:44 am
11 Oct 2005
the hidden "ag subsidies"
On a slightly tangential point:
As I noted a couple of times, Bushian calls for cuts in ag subsidies -- inevitably touted as brave fiscal prudence -- generally translate into cuts in nutrition (e.g., food stamps) and land-conservation programs, which also fall under the purview of the Ag. Dept.
More broadly, hoping for anything that might damage Big Ag or advance social welfare under this administration is a recipe for disappointment.
www.grist.org
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Tom Philpott Posted 6:20 am
11 Oct 2005
Another good point
David,
That's very true, and an important point missing from my piece. But it's also precisely why recent comments from Johanns and Portman seem so significant. Both guys are talking explicitly about cutting the commodity program. Of course, the ideas I lay out above--restructuring the Farm Bill to support local, sustainable ag--is a pipe dream at this point. However, pressure from the WTO does provide a small opening for real reform, and sustainable-ag activists have to try to bust it wide open.
The other thing is that the Bushies can slash conservation and food stamps all they want, but it won't appease the WTO. That group is demanding cuts in "trade-distorting subsidies," and it's looking increasingly like it will get its wish.
Tom
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Forrest Posted 6:21 am
11 Oct 2005
Good Point
If I could respond to Tom's perspective with a slightly different view:
If you look at the history of any federal subsidy program, I think you will find that it is eventually diverted to benefit the wealthy and powerful. The original New Deal era farm subsidy program was aimed at least in part, at helping small farmers (although it also aimed to decrease their number based on the assumption that trouble on the farm was due to an excess of farmers). Well... now it all goes to large commodity operations - most of which would probably go out of business without government support, or have to change dramatically (perhaps by adopting organic certification?).
Increasing subsidies for local organic agriculture sounds tempting - but I fear it would eventually all get channeled to a few big farming operations - i.e. the eventual ConAgras or Monsantos of the organic world. Whole Foods maybe? Is this a good thing? I hardly think so. Eliminating 14.7 billion in subsidies will drive up prices - helping all the farmers who don't get the subsidies. That would be a big help to most of my farmer friends. The people who would be hurt, I think, would be the poor food consumer. I'd rather see the money coming out of big ag subsidies go to support increases in foodstamps.
ps. I am glad to see that Grist has started offering thoughtful, quality coverage of agricultural issues. It is hard to find (and I admit even to being disappointed with some of Grist's historical coverage of these issues). I look forward to Tom's next post.
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