How Farm Policy Affects Us All
(Page 3 of 5)
June/July 2007, Issue 222
By Tom Philpott
In short, the government could pay farmers to take acres out of production, but it couldn’t stop farmers from milking every last drop from each remaining acre. In 1935, U.S. farmers devoted 100 million acres to corn, yielding 2 billion bushels. By 1975, farmers were squeezing about 6 billion bushels out of less than 80 million acres. Given such leaps in productivity — meaning quantity, not quality — it was inevitable that the New Deal paradigm would break down.
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And break down it did.
In the early 1970s, with grain prices low, farmers growing restive and a presidential election looming, the USDA took a new approach. Rather than focus on supply management to boost prices, the agency moved to jack up demand. This was a radical idea, because demand for food doesn’t tend to rise fast; people don’t normally eat more when prices drop.
EARL “RUSTY” BUTZ
Since farmers were producing more food than Americans could possibly eat, the USDA aggressively sought overseas markets. Seeking, in part, to coalesce Midwestern support for President Richard Nixon in the 1972 election, USDA Secretary Earl “Rusty” Butz engineered a 30 million-ton grain sale to the Soviet Union, financed with $700 million in “export credits.” Yep: U.S. taxpayers loaned the Soviet Union money to buy our grain.
As a price-boosting strategy, the Soviet grain sale was a success. Wheat and corn prices surged. But a Midwest drought the following year exerted further upward pressure on prices. Inflated grain prices rippled through the food system, driving the price of meat nearly beyond the reach of middle-class U.S. families. Along with the 1973 OPEC oil embargo, the Soviet grain sale helped spark the “stagflation” that gripped the U.S. economy into the next decade.
Butz responded to the crisis he had helped set in motion by urging farmers to plant “fence row to fence row” and flood the market with the whole harvest. And if such a strategy were to lead to overproduction and low prices, Butz offered two solutions. In the short term, the government would support farmers with direct payments (subsidies) when prices dipped below the cost of production. In the long term, if U.S. consumers didn’t eat their way through the surplus, new markets would be opened overseas.
In the decades since, these reforms have proved a failure. The United States has worked to open markets for our goods overseas, but export growth, too, has failed to keep up with ever-rising yields. Direct subsidies (introduced as a short-term solution, yet never replaced with a more economical alternative) continue to promote the interests of industrial farms.
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