|
|
Get Four
|  | JANUARY 21, 2004
By Thane Peterson Saving the Family Farm, Organically U.S. agricultural subsidies are hobbling international trade talks while doing little to protect family farms. One solution: Go green Here's an issue that's worth pondering: Do we really want American farming to go the way of manufacturing? The U.S. is now losing nearly 1 million manufacturing jobs annually, and there's a real possibility that domestic manufacturing will be largely wiped out in 10 or 15 years if the trend doesn't reverse soon. Should we risk the same thing happening to the farmers who produce most of the nation's food? It's hardly a frivolous question. World trade talks stalled in 2003 mainly because the U.S. and Europe refused to commit to dismantling the expensive trade tariffs and subsidies that prop up their farm economies. Yet in the U.S., word is that liberals and conservatives are developing a consensus to finally do away with farm subsidies, which almost certainly would bankrupt hundreds of thousands of small farms. Wouldn't it be wise to consider the consequences of such a radical move and develop an intelligent government policy before moving forward? Call me naïve, but it seems America has an opportunity here to refocus at least some government money on supporting smaller farms that use sustainable growing techniques. GROWING TOGETHER. It's clear the farm economy is threatened by many of the same forces that are destroying American manufacturing. The number of U.S. farms has plunged from 3.7 million in 1959 to just 1.9 million today. And further consolidation seems inevitable under current policies: The U.S. Agriculture Dept. estimates an incredible 94% of the $64,600 earned by the average farm in 2003 came from nonfarming activities (usually a second job or a spouse's job in town). Most of the nation's food was produced by about 175,000 larger family farms (usually run by several members of the same family). Trends in the food industry favor further consolidation. In just a few years, Wal-Mart (WMT ) has built the biggest supermarket operation in the country. And a handful of companies -- including Tyson (TSN ), Cargill, Smithfield (SFD ), and Farmland National Beef Packing -- control most of the nation's beef, pork, and poultry production. Farmers increasingly grow meat and grain under contract to a specific producer -- raising chickens, say, according to Tyson's exacting requirements, or corn tailored to have the right taste and consistency for Frito-Lay chips. That favors big, efficient farms that can keep prices low and make the capital investments necessary to meet the producers' standards. Little wonder that the number of U.S. pork producers has fallen by 90% since 1970. Can anything be done to slow these seemingly inexorable market forces? DEPOPULATION EXPLOSION. Some economists -- notably Steven Blank, a professor at the University of California at Davis -- argue that the U.S. would be better off if it simply got out of farming entirely. The average return on equity of American agriculture had fallen from an already skimpy 2.5% in 1960 to just 1.5% in 2000, Blank figures. Lower-cost producers in South American and Asia can grow food cheaper, he argues, so it makes sense for the nation to invest its resources in other industries in which it has a competitive advantage. The government didn't intervene to preserve family pharmacies and grocery stores, the argument goes, so why should it spend billions to preserve family farms? That philosophical argument aside, doing away with farm subsidies cold-turkey could economically devastate many rural areas and likely would strip much of the population from parts of the Great Plains, the rural South, and the West's Corn Belt. "We would see a collapse of the agricultural economy with very serious consequences for the general economy" predicts Karl Stauber, president of the St. Paul (Minn.)-based Northwest Area Foundation, which works to reduce rural poverty. Over the long haul, though, phasing out government subsidies would probably help. That's because after 60 years, they've badly inflated the price of farmland. For instance, big soybean farmers in Illinois and Iowa are among the most efficient and technologically advanced in the world -- but the $3,000-per-acre price of their land makes them uncompetitive with rivals in Brazil, where land costs a fraction of that.
BW MALL
SPONSORED LINKS
Buy a link now! | | |
 Copyright 2004, by The McGraw-Hill Companies Inc. All rights reserved.Terms of Use | Privacy Notice |
Printer-Friendly Version
