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No Quick Subsidies Fix for Food System
Over the last decade, the sustainable food movement has brought much needed attention to U.S. agricultural policy and how it influences which foods Americans grow, buy, and consume. From chefs and policy wonks to teachers and bloggers, everyone interested in food has an opinion on subsidies and how to craft the 2012 Farm Bill. One of the most common focuses is moving subsidies away from commodities like corn and soy, which are used to make junk food and factory farmed meat, to fruit and vegetable production. This simple fix misses the bigger picture—the consolidation and the inability of diversified farms to compete in our industrialized food system.
Stop blaming farmers
For far too long criticism of agricultural subsidies has focused on large, “greedy” farmers who gobble up the majority of subsidies in the form of direct payments. This is an over-simplified analysis of both the data and the impacts of subsidies. According to the Environmental Working Group, just 10 percent of farms collect nearly 75 percent of federal farm subsidies. But what this statistic doesn’t reveal is that between 1995 and 2009, nearly half of the top 20 recipients of farm payments were cooperatives, Indian tribes, and conservation trusts—organizations that often divvy up payments amongst their members.
The database also uses the inaccurate USDA statistics on the number of farms—one that includes lifestyle farmers who do not rely on farming for their family’s income. While the bulk of the money goes to large farms and associations, over 80 percent of small and mid-sized family farms growing commodity crops receive and depend upon subsidies for survival. In 2007, a year of record high crop and input prices, mid-sized family farms earned an average of $26,000 from farming—more than a third of which was subsidy payments. Most of these farms would not survive without subsidy payments and off-farm income. We need to focus on making sure family farms survive, so that they can transition into a sustainable future.
Subsidies didn’t cause HFCS, cheap meat, or obesity
Contrary to popular belief, subsidies are not to blame for cheap junk food. First, subsidies don’t make commodities cheaper. Overproduction is an inherent problem of commodity markets—one that existed long before the current subsidy system was put in place. A University of Tennessee study found that if subsidies were eliminated, farm incomes would fall by 25-30 percent, but the supply and price of commodities would remain virtually the same. Second, the impact of commodity prices on the final retail prices of most junk foods is quite small. High fructose corn syrup (HFCS) represents just 3.5 pecent of the total cost of soft drink manufacturing and the corn content of HFCS represents only 1.6 percent of this value. Middlemen, not farmers, capture the vast majority of the retail price.
The real winners are factory farms and corporations
Factory farms, meatpackers, food processors, and grain companies like Cargill and Archer Daniels Midland are the real beneficiaries of farm payments because government payments to farmers allow these buyers to pay less for the crops that are their raw materials. Essentially, subsidies have become a way of laundering money through farmers to factory farms and agribusiness. A Tufts University study found that factory farms saved $34.8 billion between 1997 and 2005 because they were able to buy feed at below-production costs.
Supporting a healthy, sustainable food system means taking a more nuanced view of subsidies that acknowledges their role as a safety net for small and mid-scale farms and calls for policies that help create a robust, diverse farm economy. The next Farm Bill should:
- Restore common-sense practices that manage the supply of commodity crops, including establishing crop reserves.
- Level the playing field for farmers by re-invigorating antitrust enforcement and breaking up big food monopolies.
- Restore the safety net for farmers by ensuring farmers are paid more for their crops than it costs to produce them to stop the cycle of price volatility that agribusiness buyers use to their advantage.
- Restore the financial infrastructure needed to provide a safety net for family farmers in the form of loan and credit programs and access to loan restructuring services.
- Rebuild local infrastructure like grain processing, small slaughterhouses, and regional distribution systems that midsized farms need to survive.
Ultimately, we need a Farm Bill that is as good for farmers and the land as it is for eaters.
For more info on the Farm Bill, go here.