For years, the United States government has preached the importance of family farming in the agriculture business. The Food and Agriculture Act of 1977 stated clearly:
Congress firmly believes that the maintenance of the family farm system is essential to the social well-being of the Nation and the competitive production of adequate supplies of food and fiber. Congress further believes that any significant expansion of non-family owned, large scale corporate enterprises will be detrimental to the national welfare (Vogeler, 1981, p.5).
In President Clinton's State of the Union address in January he addressed the growing problems of family farmers. "We must bring prosperity back to the family farm," he said (Fitzgerald, 1999, p.1J).
Although these two points were made over twenty years apart from one another, the idea remains the same -- save the family farm. The problem is that the actions that the government has been taking seem to hurt the family farm more than they help. The government is using their power in the wrong way. (To read about another government mishap, click here.
Current government programs allow big businesses to take advantage of them much more easily than a small-scale farmer can. This causes the agribusiness giant to have an edge on the competition. If one farmer or business owns many acres of land they can use that to their advantage. These farmers can use many of the government's programs to their benefit.
The Conservation Reserve Program, or CRP, for example, gives farmers money for setting aside the land and not growing crops. This program helps soil conservation, water quality, air quality, and the general welfare of the environment (Schneider, 1998). Farmers can sign up for this program and the government uses taxpayer money to rent the land from the farmers for a ten year period. Farmers get rent money to make up for the lost income from not planting a crop. Unfortunately, large-scale farmers can take advantage of this program in a way that a small-scale farmers can not. By owning more land, corporate farmers have the obvious advantage of having the ability to enroll more land in the program (Vogeler 1981).
This program seems relatively harmless. The government is trying to help everyone right? Why would it hurt the family farmer, you ask? The answer is that there is an unequal distribution of the subsidies. Most subsidies go to a few people who own or run large corporate farms (How do farm subsidy..., 1999). With more land in the program, the corporate farmer can cut back on labor and make the same profit, saving even more money. The family farmer, with little or no extra labor, saves only time.
With this money, the big farms can buy more resources and grow even larger. They can buy out small competitors and put more land into CRP. It is a never-ending cycle where the big business gets bigger and the small business eventually goes out of business. The subsidies do help family farmers' incomes, but they hurt their abilities to compete with the larger farms because the payments differ so much in size.
Large farms can take advantage of other subsidies as well. For example, when there is a natural disaster, the government gives away money to compensate farmers. This one seems fair. Counties have farms documented by a system where all farms are given a number. All farms owned or farmed by an individual or corporation in a county are given the same number. Any certain number has a subsidy ceiling of $150,000. Farmers can avoid getting near the ceiling by having more than one farm number. They do this by saying that they are splitting the crop earnings in different ways, usually with family members and spouses (Doolittle, 1999). They still get all the money and more subsidies than they are allowed. This is something that a family farmer can not do. They usually do not have enough land to reach the subsidy ceiling. Large-scale farmers, on the other hand, do have enough land to reach the ceiling, so they have more of a reason to cheat -- that reason being thousands of extra dollars. A small-scale farmer could, in fact, manipulate the county and have many farm numbers, but with little chance of reaching the subsidy ceiling, the cheating would have minimal effect anyway. The large-scale farmers are more able to get the big bucks because they own and farm more land. Their advantage makes it harder for the family farmers to compete.
Another thing giving the family farmer a headache is the way the United States handles its trading policy. This year, U.S. corn exports are down thirty percent. This is because the nations that we generally trade with do not have a large demand of American crops right now. There are other countries that do have that demand, such as Cuba, that we aren't trading with (Swobada, 1998). The government needs to open their trade sanctions with many other countries around the world. It would boost farm prices and help farmers, large and small. It would open markets more so that small farmers would have more availability to the markets.
Right now, many politicians are interested in passing "fast track" legislation to open up these markets. Al Gore and Secretary of Agriculture Dan Glickman are leading the charge. (Hillgren, 1999). I think that this opening of new markets is necessary for the survival of the family farmer.
The government also regulates price supports. It guarantees that the market prices for crops will not go too low, so that farmers can always make a living. This is somewhat detrimental the markets. It makes the crop prices higher than the demand, so that there are fewer buyers for a high priced item. There is limited access to the markets and only the large corporate farmers can reap the benefits.
Right now, the large corporate farms have more access to the markets than small- scale farmers. Because the price of farm products is so low, buyers want to make it as easy as possible. Small-scale farms can only supply a buyer with a fraction of what the buyer wants. Large-scale farmers, on the other hand, can often supply the buyers with all they want. This gives a buyer little reason to look for family farm grown products to buy. They would rather save time and effort by contracting with large-scale farms to get the desired product. This creates a crowding-out effect in which a small-scale farmer has less availability to a market. So even though they ensure high prices, government price supports do not guarantee that a family farmer will make a living. If they have no place to sell their product, how can any money be made? The government, by trying to help farmers, is actually taking away free enterprise and hurting family farmers.
With these added advantages the corporate farmer has more power in agriculture. Large scale farmers have more money, and they can use it to monopolize the industry even more. They have easier access to markets and in a way, control prices. This really hurts family farmers' chances of survival, for they can no longer compete.
With the loss of competition, the large-scale farmers have a couple of choices to what to do with family farms. They can either buy the farms out and add the acres to their empire, or they can make the family farmers their employees by contracting them to do their work. Neither option is a good choice for the family farmer.
The family farmer faces another challenge in the fact that the agribusiness giants are too big. They continuously merge with and purchase one another and seem to monopolize agriculture. Currently, one of the largest businesses in agriculture, Cargill Inc., has a proposition to buy out Continental Grain, its biggest competitor. At over a billion dollars, this acquisition is one of the largest in agriculture history. Together, these two companies, soon to be one, will handle over thirty-five percent of the U.S. grain exports (Cargill defends..., 1999).
This acquisition is too large to be any benefit to agriculture. If these two companies do, in fact, become one, then they will have too much control over the grain market, making it hard for the family farmer. The government should prevent this monopolization of the farming industry.
"Wouldn't it be better for large corporations to be running the agriculture business anyway?" you ask. "Wouldnít a bigger business be more efficient?" Not necessarily. It is a myth that bigger is better when it comes to business. A small firm can achieve a high level of efficiency and performance (Pratten, 1991). This efficiency can rival even the largest company. So the acquisition that Cargill wants to close will not necessarily bring more efficiency to the agriculture business.
Currently, the agriculture industry is running by a new system passed by legislation in 1996. It is known as Freedom to Farm, and it is a market-oriented system. The government has stepped down somewhat after much pressure. Farmers are given more freedom and they are getting weaned away from government help. It is, in my opinion, a better system, but no one seems to give it a chance. When it was enacted the prices were high, and it was good to be a farmer (Sesker, 1998). But since, prices have fallen and family farmers are in a bind. The problem is that most family farmers are not farming under the new bill the way they should. Family farmers, if they are to survive, need to realize that they can not possibly compete with the large producers. They need to find alternative methods in their practice. They need to find the hidden potential in the farming industry. They need to find new markets to sell their product and new products to sell. Corn and beans might not necessarily be the best crops to grow, and Chicago may not be the best place for family farmers to sell their crop. We already know that a small-scale farm can not compete in the same markets as agribusiness giants. If family farmers can change their ways, maybe they can survive.
In my own personal experience as a "farm boy," I have realized that farmers are not the biggest fans of change. I don't mean to be stereotypical, but most of the farmers I know are pretty hard-headed. The problem is that farmers almost have to change if they want to pass their jobs on to their sons and daughters. The farming industry is in for a massive overhaul, and it starts with the farmer.
Freedom to Farm does reduce subsidies and price supports, making the farmer do things on his or her own. In my opinion, the government does not have that far to go in helping the family farmers. They need to somehow open trade relations with other countries to open up markets for the family farmers.
The government also needs to control concentration in agriculture as well. If they can keep the large businesses from merging and acquiring one another, it would at least slow down the monopolization of the agriculture business.
These major problems that are hurting the family farming business need to be stopped. The government plays a large role in the shaping of the farming business. They have the power to start the corporate farming shrink-down, and I believe that our elected officials have a job to do. But they are not the only one's that have to work.
The power also lies in the farmers to get things changed. If the family farmer, an American icon comparable to the Rocky Mountain trailblazers or Eastern industrialists, is going to be saved, it is not all the government's responsibility. The farmer has to make things happen. If the farmers all accross America figure out what needs to be done, and the same is true in Washington, then this problem plaguing small scale farmers can be fixed.
It's too late for me to become a farmer, but there are many other kids living out on farms all over Iowa and the rest of the United States that dream of working the land and being their own boss. Unless things change, though, they won't have a chance to carry on their families' traditions either.
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