Farming for Fun and Profit
Just don't grow anything
ONE thing is certain about our nation's farm policy - it's complicated. Or so the experts on the congressional agriculture committees would have us believe. There's the Acreage Reduction Program, the 0/92 program, deficiency payments, and an alphabet's worth of acronyms. Congressmen from nonfarm districts don't speak the lingo so they fear the debate. They've been esoterrorized.
They shouldn't be so intimidated. When you get past the jargon, the farm bill comes down to basic wheeling and dealing to prop up food prices to benefit farmers at the expense of taxpayers and consumers. The organized farm lobby likes to keep ``nonexperts'' out of the debate. Unfortunately for our nation, these ``expert'' politicians and lobbyists benefit much more from these programs than do consumers, taxpayers and, often, farmers.
Here's a straight-talk glossary of our nation's (often silly) agricultural policies.
Acreage Reduction Program (ARP): A ``supply management'' program which rewards farmers for not growing crops on a portion of their acreage in order to limit production. In 1988, 61 million acres lay fallow (er, reduced) under direction of the United States Department of Agriculture (USDA), an area equal to all of Indiana and Ohio, plus half of Illinois.
Agricultural Extension Service: An office of the USDA that teaches farmers how to produce a surplus on the land USDA does not pay them not to grow on.
Cartel: An alliance of independent producers in the same business who limit competition, fix supply, and set prices in their market. The Department of Justice is responsible for breaking up US cartels.
Marketing Orders: Federal regulations which establish an alliance of independent producers in the same business (i.e., citrus or milk) who limit competition, fix supply, and set prices in their market. The Department of Agriculture is responsible for enforcing marketing orders in the US. Participants in marketing orders are exempted from US antitrust laws. (Several businessmen are now in prison attempting to set up their own marketing order-type operations in other industries.)
Basic Commodities: Six agricultural crops (corn, cotton, peanuts, rice, tobacco, and wheat) for which the government guarantees a price. Only 30 percent of American crop production is subsidized. The majority of agricultural producers (not to mention private producers in every industry except agriculture) manage to survive without price guarantees.
Dairy Diversion Program: Cow killing. An interesting program in the 1985 farm bill designed to limit milk production by paying dairy farmers to kill 1.6 million dairy cattle and take five-year vacations from farming. Inexplicably, a milk surplus still existed, while the unsubsidized beef industry crashed when beef from ``diverted'' dairy cows flooded their market.
Target Price: A ``guaranteed price level,'' written into law by congressional fiat. If farmers can't get the target price for their goods in the marketplace, the US government makes up the difference through hefty federal checks.
Deficiency Payments: Hefty checks mailed from Washington to farmers whose crop prices are below the target price level. When market prices for basic commodities end up below the target prices, the federal government pays farmers the difference with tax dollars. When farmers have a good year and a bountiful harvest, these federal checks get even heftier.
Dumping: Selling commodities in a foreign market at a lower price than in the domestic market, which is usually done through government subsidization. Dumping is a nasty Japanese trade practice, a happy US farm policy.
Peanut Program: The reason foreigners can buy American peanuts at a cheaper price than Americans pay for American peanuts. (See also, dumping.)
Free Market: A system in which the market forces of supply and demand determine prices and allocate resources free of governmental central planning, price supports, or supply management. Sweeping the world, it is the root of America's economic system. Except in agriculture.
Central Planning: Economic system marked by government allocation of goods and resources, as seen in Moscow, North Korea, Cuba, and the USDA.
Payment Limitation: The maximum amount of direct benefits a farmer can receive. Thanks to the payment limitation, those needy farmers who annually earn only $1 million can receive just $50,000 per year from the taxpayers.
Mississippi Pyramid: The shape of a farm's organizational structure after a farmer subdivides his farm among children and grandchildren so each can receive $50,000 under the payment limitation.
Surplus: Excess crops the government buys from farmers when consumers refuse to pay the government guaranteed price. Surpluses are often dumped on foreign markets.
Welfare: A system of income subsidies often derided for rewarding people for doing no work.
Zero/92 Program: A system of income subsidies which rewards farmers for planting no crops. Under the 0/92 program, they still receive hefty deficiency payments as if 92 percent of their permitted acreage had been planted.
Family Farm: A farm where the operator and his family make most of the management decisions, supply the capital, and provide a significant part of the labor. The family farm, and the loss thereof, has been the focus of many movies in the '80s, and its salvation is the basis for the costly array of agricultural subsidies.
Ironically, these same programs benefit large corporate farms over small family farms, since they reward maximizing yields over minimizing costs and enable large wealthy farmers to buy out small farmers. In 1987, large farms accounted for 62 percent of sales, up from 23 percent in 1960.