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Farm Economics

The US Congress, defying a threatened veto by President Bush, just passed a $ 307 billion farm bill. A significant percentage of that farm bill consists of food stamps and other food assistance for the poor. But the farm bill has plenty of goodies for farmers. For instance, the bill allows producers with an adjusted gross income of $1.5 million annually to obtain subsidies. Furthermore, price supports kick in if commodity prices drop a mere 10% over two year averages.

These and other financial and other benefits are showered upon American farmers despite the fact that nation-wide full-time farmers are doing quite well. The average full-time commercial farmer will earn $229,000 this year according to the USDA—many times what the average American earns. In 2007 approximately 1 million farmers received more than $5 billion in direct crop subsidies, with 60% of that funding going to the top ten percent of producers. This figure does not include many other subsidies from the Conservation Reserve Program, drought insurance, and numerous other payments that help to booster farm incomes.

Despite the fact that we continue to borrow money at unprecedented rates, there are still limits to the federal treasury and every dollar going to farmers is one less dollar available for some other worthwhile project or sector of society—many in far more desperate need of federal assistance.

HOW DO THEY DO IT?

One has to wonder why an industry that really makes up a small proportion of the American public is able to assert such political power. One factor is that farmers are a cultural icon in America. Ever since Thomas Jefferson lionized the yeoman farmer as the ideal citizen, America has put those in Agriculture in an exalted position. Farmers and ranchers are perceived to be among the most worthy of Americans, and “family farmers” are always described as “hard working” and “independent (implying that the rest of us don’t work nor are independent). Most people at least believe they would like to live in the “country” and bucolic rural settings are among our most idealized landscapes. Farmers and ranchers are seen as inherently “good” people, grounded in the earth, and being a third or fourth generation rancher and/or farmer is considered a badge of honor.

Beyond the cultural reasons, others support Ag subsidies believing we will starve if we do not support farmers. This is another deception perpetuated by the Ag industry, based more on hype than truth. Most of the cropland in the country is used to grow forage crops for livestock, not food for direct human consumption. If we were really concerned about feeding ourselves and the rest of the world, we’d eliminate red meat from our diets. A small fraction of America’s farmland is used to grow crops for direct human consumption—most of our good soil produces cattle forage and other livestock feed.

For instance, last year we planted 90 million acres to corn—not the sweet corn you might eat on a summer picnic, but feeder corn to fatten cows, pigs, and chickens. Another 75 million acres went into soybeans—with only 2% used for human foods like tofu and soy milk. In fact, since Ag subsidies go mainly to producers of corn, soy and other livestock forage crops, most subsides are not really helping to feed the nation, rather they help feed cows.

Finally the last major reason Ag enjoys phenomenal support has to do with the public perception of Agriculture as the economic backbone of many state economies. Such assertions may be true for states like Iowa and Kansas in the heart of the Mid-West farm belt, but in most states Ag is a minor part of the economy. However, since the assertion is repeated ad nauseum by those in Agriculture, politicians, even conservation groups, few question this assertion.

Of course, Ag does everything it can to foster such a perception. It is not uncommon for any industry to try to inflate its economic value in hopes of gaining more power and taxpayer subsidies.

WHO IS A FARMER?

A good example of this exaggerated economic value of Agriculture can be seen in Vermont. In the Green Mountain State everyone from political progressives to fiscal conservatives flatly assert that farming is the backbone of the state’s economy. No one questions such claims. And this exaggerated importance of Agriculture is fostered by the US Dept of Agriculture Economic Research Service which lists more than 63,382 Vermonters (15.8%) out of 409,000 plus employed state residents as working in “farm or farm related employment.”

However, the largest sub category of Ag workers—some 44,331 people–are involved in what the USDA euphemistically categorizes as Ag retail trade and wholesaling. What is Ag retail and wholesaling? That’s the people working in grocery chain stores selling food, microbreweries, and even selling ride-on lawn mowers. In some Ag economic studies I’ve read, those working at coffee shops, and restaurants—even bottled water “manufacturing” are counted as Ag related workers. Indeed, any one who touches, handles or sells equipment, food, shoes, clothes or other product that can remotely be traced back to Ag production are frequently categorized as “farm related workers”. And when people talk about these “Ag related” workers, over time t he “related” is shortened to “ag workers.” By such deceptive accounting, AG grossly exaggerates its real economic significance.

A more accurate accounting Ag’s true economic importance in Vermont is found at the US Bureau of Economic Analysis. By their estimates all agriculture, forestry, fishing and hunting COMBINED accounted for only 1.6% of Vermont’s gross state product and less than 1% of all state employment, far below other economic sectors like health care, manufacturing, finance, real estate—to name a few. Indeed, there are far more used car salesmen in Vermont than full time farmers—unfortunately for the car salesmen there is no romance about their occupation, nor an entire Cabinet level post promoting their employment. Yet that hasn’t kept Ag proponents from asserting, falsely, that Agriculture is the backbone of the Vermont economy.

Of course, given how few farms there are in Vermont, one could suggest that such statistics do not characterize real farming states. However, such deception is not limited to the Green Mountain State. For instance, Montana has the majority of its land area devoted to farming and/or ranching. And if you look up farm and farm-related employment for Montana, you would find that the USDA classifies 18 percent of the state’s workers as Agricultural. Thus approximately one in five people in the Big Sky State is considered to work in Ag. However, like in Vermont, more than half of those jobs are in Ag retail—in other words, the check out clerks employed in the Albertson’s grocery store or the bar tenders at the local micro brew, and only a small percentage, perhaps no more than 1% of the state’s citizens are genuinely earning a full-time living farming and/or ranching.

WHAT IS A FARM?

There are several other ways that Agricultural accounting methods are deceptive. First, is the low bar established to qualify as a farm operation. Any business that grosses more than $1000 dollar a year selling “agricultural” products is considered to be a farm.

For instance, I have a friend who is a professor at the University of Vermont. In the spring, he tends a sugar bush to produce maple syrup. If you asked my friend what he does for a living, he’d tell you he’s a professor. But if you were to consult the Dept. of Agriculture, you would find out that my friend is classified as one of Vermont’s 6000 farmers because he grosses more than a $1000 a year in sales—the minimum amount needed to qualify as a farm producer by USDA standards.

Most of the “farmers” in this country are like my friend the professor who depends on a non-farm job to provide for their primary income—in other words farming for most of these people is more of a hobby and/or a source of extra cash rather than a full time occupation. In reality people like my friend, the professor, usually do not benefit from Ag subsidies, but those who do, benefit from including them among the “farmer” category to inflate their purported economic value to local and regional economies.

A similar exaggerated view of Ag exists in Montana where the USDA lists 27,870 “farms” in the state. Surprisingly, despite all the talk about subdivisions wiping out Ag land, there are now more farms in Montana today than in 1987 (24,500 farms) suggesting that the bar for what constitutes a farm is pretty low. Of those 27,870 “farms”, more than 10,000 of them produced less than $2,500 in product. In fact, only 10,000 out of the nearly 28,000 farms produced more than $25,000 in gross sales. And even $25,000 is likely not an economically viable operation. In essence, less than a third of the farm operations in Montana are likely full-time viable economic entities—with the rest more or less hobby operations or supported primarily by off farm employment.

By aggregating the part-time hobby farmer with the much fewer full-time commercial enterprises, the USDA is able to inflate the perceived employment importance of farming/ranching in the local/regional economy.

Dispelling the myth that Ag is a major industry may help put Ag subsidies in perspective. Most of the money that goes directly to Ag industry is directed towards a few major crop commodities like corn, soybeans, rice, and cotton. Indeed, most fruit and vegetable growers get few, if any direct financial support from Ag subsidies.

Because Ag is believed to be an economically important sector of local and regional economies, it enjoys special exemption from many environmental laws and standards. For instance, in Vermont, the state’s endangered species act does not apply to farmers and though it is the most important source of water pollution in the state, it is exempt from water pollution laws. Similar exemptions exist in most states. It’s time to rein in Ag and look at it clearly. We need to feed ourselves, but we don’t need to line the pockets of Ag producers. We shouldn’t think that just because someone grows something they automatically deserve special treatment or support.

For many who are considered farmers/ranchers, lifestyle is the real reason they continue to work (and/or abuse) the land. But should we subsidizing a lifestyle choice and more often than not, an ecologically destructive “deathstyle”?

GEORGE WUERTHNER is an ecologist and writer. He is a descendant of a reformed farmer and proud to be a second generation non-farm worker.He is the author of 34 published books, including Wild Fire: A Century of Failed Forest Policy and Montana, Magnificent Wilderness and, most recently, Thrillcraft: the Environmental Consequences of Motorized Recreation.

 

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George Wuerthner has published 36 books including Wildfire: A Century of Failed Forest Policy. He serves on the board of the Western Watersheds Project.

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