Farm subsidies: beyond simplistic outrage

Gourmet magazine points the way toward a green and smart farm policy

Posted by Tom Philpott at 2:10 PM on 28 Mar 2008

In Thursday's Wall Street Journal, there's a detailed article about the farm-subsidy mess. It can be summarized as follows: 1) the government-engineered ethanol boom has driven up farm-commodity prices; 2) farm incomes are sharply up; yet 3) the government still makes subsidy payments in the billions per year; and thus 4) it's time to cut the subsidies.

The logic is impeccable. And surely, payment caps should be much lower and blocked from going to high-income farmers and Rockefeller heirs, as the article implies.

The Journal piece comes at a key juncture: the president and Congress are locked in contentious negotiations over the 2007 Farm Bill.

I despise farm payments -- and ethanol subsidies -- because they encourage farmers to produce as much as possible, without regard to ecological impact or quality (and food quality has demonstrably deteriorated in the era of industrial ag).

But there's something missing in the Journal's analysis: Societies -- particularly ones in which less than 1 percent of the population farms -- need to support farming in one way or another, or they risk disaster. I teased out that point in a Victual Reality column more than a year ago, and I can't think of a pithier way of explaining it now.

While I was struggling yet again with a way to articulate my admittedly tortured position on the Farm Bill -- which has generated controversy in green circles -- I came upon a lucid piece in Gourmet, of all places, that treats the issue with the complexity it deserves.

The article, by North Dakota buffalo rancher Sam Hurst, is no knee-jerk screed against subsidies. The author understands how farming works, and he focuses on something often left out in simplistic pieces on subsidies: the tortured history of U.S. farming over the past century.

He does so through the story of one farm family that abandoned the commodity market in the 1980s and now runs a diversified organic operation.

Everyone who cares about food should read the piece in its entirety; for now, I want to point to the alternative vision for farm policy Hurt points to at the end. He finds it in an interview with Thomas Dobbs, an agricultural economist at South Dakota State University and a sometime Gristmill blogger.

Here's Hurst:

For Dobbs, the current Congressional debate that focuses on limiting commodity payments to rich farmers is a distraction. "Of course, close the loopholes. But people will always find new ones. Caps may work for a short time, but people will always find a way to get around them." What is lost in the caps debate, says Dobbs, is the opportunity to shift the entire paradigm of federal farm policy from subsidies and price supports to conservation, stewardship, and support for [innovative farmers].

He and others call the new approach "multi functionality." It is an idea that has been hidden and underfunded in different titles and sections of federal farm policy for more than a decade but has never been promoted as a unifying principle ...

Under current federal policy, farmers receive "direct payments" each year, no matter what crops they grow or how they grow them. A multifunctional approach would build on and rechannel those payments, along with other crop-support subsidies, toward sustainable social and conservation goals. "Instead of tying payments to crops and yields, we should tie them to the services that farmers provide for the public." In the past, "public services" has meant cheap food at the supermarket, but Dobbs believes it is time to rethink the whole idea. "Pay farmers to reduce synthetic fertilizers and pesticides. Pay them to enhance wildlife, diversify their crops, build soil, and restore wetlands. Pay them to develop local markets for their products, especially fresh food."

I'm with Dobbs on the multifunctionality approach -- which is essentially already being done in Europe.

That, plus an end to biofuel subsidies and mandates -- which Dobbs also finds hideous -- and a renewed strategic grain reserve, and you've got a farm policy I can support.

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2 Comments | Post a Comment

Yikes, multifunctionality!!

Tom, MF -- rechristened "motherfunctionality" by one ag economist I know -- has been hashed and rehashed on this side of the Atlantic for years, and is now much less invoked than it was a decade ago.

The idea that any economic activity generates multiple external benefits (but let's not forget about costs) is nothing new. What was clever -- for awhile -- was to come up with a new "feel-good" term that provided Europeans who were afraid of farm-policy reforms a new justification for continued agricultural support. But unifying slogans rarely provide a sound basis for policy.

First, MF is hardly unique to farming. Look at almost any profession and you will find that they perform services that are often not recompensed -- taxi drivers who dispense helpful advice to tourists, fishers who rescue stranded boaters, land owners of all types who plant flowers. Encouraging civic behaviour is generally better done through social norms than through subsidies. (For more on that, I recommend highly Swiss professor Bruno Frey's book, Not Just for the Money [PDF file].)

At the end of the day, we cannot avoid the need to justify supporting each public good on its own merits, and without prejudice. If there is public value in leaving land in its natural state for the sake of wildlife, or in maintaining the rural landscape, ALL land-owners should be able to compete for that service. Simply paying farmers, and only farmers, is inefficient and arbitrary.

I am also skeptical about the need to pay farmers to diversify their crops. Let's first see what happens when we stop subsidizing farmers to produce a narrow range of monoculture commodities, like the "program crops" (now called "contract commodities": wheat, feed grains, oilseeds, cotton, rice, sugar cane and sugar beets) currently favoured by support policies. In many countries where commodity-linked programs have been withdrawn, more-diversified horticulture has thrived.

Finally, the idea of subsidizing any producer -- farmer, chemical plant or coal mine operator -- to clean up their act (in the case of farmers, to reduce fertilizer use or pesticides) should be approached with extreme caution. Besides violating the "polluter pays principle", it can ultimately be self-defeating, unless the money is mainly used for research, extension and demonstration projects.

These are only my personal opinions.

by Ron Steenblik at 1:57 AM on 29 Mar 2008

Why not soil organic matter?

All of the benefits of the multifunctional approach could be captured using soil carbon rents, essentially payments for ecosystem services involving atmospheric stabilization, water enhancement and conservation, wildlife, etc. etc. Soil organic matter characterizes all of these benefits.

http://soilcarboncoalition.org/future_of_farm_bill

soilcarboncoalition.org

by Peter Donovan at 10:25 AM on 29 Mar 2008

ADVERTISING POLICY

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