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Wednesday, October 10

Getting around the fact that free-market farming isn't so free, after all

If, as I've contended, there's a global farming crisis that extends even to the United States, why isn't this making headlines in the U.S.? Partly because America's urban-based media giants aren't focused on the crisis. The U.S. Congress then feels free to ignore it in lieu of appealing to the 'urban vote' and suburban vote.

That is why U.S. House of Representatives Speaker Paul Ryan didn't even mention agriculture or food in a press conference ahead of the House passage of its version of the 2018 Farm Bill. He opted instead to promote the bill's role in closing the workskills gap and getting more Americans into the workforce so they could climb the ladder of opportunity.   

Yet political hullabaloo around the Farm Bill hasn't been enough to convey to urbanites that there's a crisis in America's farming industry. From an article at Civil Eats, a food and policy website that this year undertook to inform the public about under-reported issues related to farming:
In the divergent House and Senate versions of the 2018 Farm Bill, SNAP (formerly known as food stamps) cuts in the House version have made endless headlines, but debate over the farm-focused sections of the bill has been relatively quiet—even as the farm crisis has escalated through the summer.
Both versions of the bill contain small provisions to help grain and dairy farmers and the Senate has increased funding for Black farmers and beginning farmers.  But none of these will rein in consolidation or provide real assistance to farmers who are out of options. While there was discussion of alternatives early in the farm bill process, no senators are proposing to overhaul the farm system and a broad grassroots coalition is not forcing such a move.
For a sample of the "endless headlines" see Food stamp fight stalls critical farm bill, published in the Washington, DC based-Washington Examiner, on October 9. 

Although the problems for minority and beginning farmers -- and SNAP recipients -- are serious, the biggest problem is that small-scale farming in America is on its last legs. This is at a time when American proponents of 'Go Big or Get Out' farm consolidation have learned the hard way that Going Big is something every government-backed group of farmers on the planet can do. 

So what we're looking at now is a perfect storm. How bad is it? I've pulled a few passages from the Civil Eats report, although the entire report is valuable:

ITEM 

“I think people would be shocked the extent to which the farmers at their farmers’ market … are in or near poverty.”

ITEM

As early as February 2018, the U.S. Department of Agriculture (USDA) predicted a decline in net farm income to its lowest level since 2002 (adjusted for inflation), with median farm income projected at negative $1,316. For well over a year, worries about a new farm crisis have rippled across rural America. The very term is synonymous with the 1980s, when the bottom dropped out of the agricultural economy, sending thousands of farms into foreclosure and shuttering businesses.


ITEM 

Even as the number of dairy farms shrinks, the milk supply continues to grow as the remaining farms get ever larger. In 1987, half of American dairy farms had 80 cows or fewer; by 2012, that number was 900 cows. In March, Walmart announced plans to open its own bottling plant in Indiana, leading Dean Foods, a major Walmart supplier, to terminate its contracts with over 100 dairy farmers in eight states. 

Processors in Wisconsin and New York have also recently ended farmer contracts. In an interview with Food Business News at the time, Dean Foods CEO Ralph Scozzafava said the company expected to “consolidate our supply chain by a meaningful amount over the next 18 to 24 months.”

That’s just what many farmers fear. Some regions only have one processor; if it terminates a farmer’s contract, the farmers are left with nowhere to sell their milk and few options other than selling off their cows.


ITEM 

With the focus on production and no safety net, smaller farms have sold out and relatively few big farms have expanded. In 2015, about 65,300 farms making over $1 million in gross income accounted for 51 percent of the value of all U.S. agricultural production. At the other end, the nearly 1 million farms making under $10,000 accounted for just 1 percent of production. 

As farms have consolidated and turned to technology to replace human labor, jobs have dried up, rural communities have shrunk, and isolation has grown.

While the big farms have been able to absorb losses and weather ups and downs—at least until recently—the many farmers who have not gotten big or gotten out have struggled day-to-day for decades. Seventy percent of farmers make less than a quarter of their income from farming and only 46 percent have positive net income from their operations.


ITEM

In a much-publicized move earlier this year, dairy cooperative Agri-Mark included suicide hotline information along with farmer milk checks. A Guardian report on U.S. farmer suicides in the U.S. brought the issue further into the spotlight. The report referenced a Centers for Disease Control study whose finding on the rate of farmer suicide has since been retracted, but the picture of rural hardship and depression remains accurate.

****
Fog

There are debates related to the 2018 Farm Bill that are actually about farming. There is the issue of Cotton Growers vs. Urban Farmers: Bitter partisan fight threatens farm bill (Politico). The debate is even more complicated than Politico reports. But the biggie, and the most complex, is the land use debate: Commodity program dispute stalls farm bill. This one even has a WTO angle:
One of the concerns expressed by opponents of tying payments to planted acres was that it could have made it easier for competing countries to claim that the U.S. farm bill was unfairly distorting trade under World Trade Organization rules.
The land use issue is also directly connected to the hideously complicated crisis of chemical fertilizer runoffs on farms, which are poisoning America's water supply.

But stumble around long enough in the fog of debates and it dawns that they boil down to government subsidies: who gets how much of the taxpayer-funded subsidy pie and how each portion of the pie is further divided according to arcane regulations that make winners out of some recipients and losers out of others, depending on how well-financed and energetic their political lobbies. 

Free Market Farming Isn't So Free After All

With the fog lifted one comes face to face with a debt crisis that undergirds the farming crisis -- debts that force farmers to turn to the government for help just to survive in farming. While the American small-scale farmer is theoretically free to pursue profits, he's doing so with government assistance and controls that are the real manager of the farm, and often to the detriment of the individual farmer and the entire farming industry.  

Is There a Way Out For Farmers?

Here I return to the late Thai King Bhumibol Adulyadej's 'New Theory of Agriculture,' which rests on a stepwise approach to free market capitalism that protects the farmer against putting his farm in hock to the bank or government just so he can farm for profit. At a certain step in his majesty's system, debt is spread among what is in essence a farming cooperative.    

Some American small-scale commercial farmers are feeling their way toward the same approach. From the Civil Eats article:
Meanwhile, Jerry Pennick, of the Federation of Southern Cooperatives, isn’t going to wait around for a government that has so long disenfranchised his community. “While holding the government accountable, we need to do things that will sustain us without the government,” he points out. Pooling resources and working together through farmer cooperatives is one of the few ways for farmers to gain power and raise their prices even in a heavily consolidated market.
30:30:30:10

However, a commercial cooperative is subject to the same market forces as the individual who's trying to build a business from farming. For that reason King Bhumibol's system makes the cooperative a secondary step. The first step reflects the old adage, "The only time to ask for a loan is when you don't need it."

In like manner, before making farming into a for-profit enterprise, the farmer should ensure that he and his family can live on what the farm produces. 

In other words, to move ahead safely in the high-risk occupation of farming, subsistence farming must precede commercial farming.  His majesty's 'New Theory' farm is a subsistence farm that can serve as a springboard to commercial farming -- and to a cooperative built around selling farm produce.

A genuine subsistence farm -- meaning one that can fully serve all the food needs of a farmer and his family -- is no small feat. But King Bhumibol did all the heavy lifting by working out, with mathematical precision, how six acres (average small farm size in Thailand) can provide a high-quality diet for an average family in Thailand. 

Every New Theory farm is laid out according to a formula known as 30:30:30:10:
The New Theory farming system advocates dividing a farmer’s total land area into four, well-defined plots in the ratio 30:30:30:10. 
The first plot (30%) is for water storage [the pond can also hold fish for family consumption and/or sale]
The second (30%) is for cultivating rice [Thailand's staple crop] to ensure that households have a year’s supply.
The third (30%) is used to grow vegetables, fruits, and herbal plants for household consumption, with surpluses sold to earn additional income.
The last and smallest plot (10%) contains the family dwellings and outbuildings for raising livestock.
Dividing the land into these proportions enables farmers to optimize agricultural activities in an efficient manner. In the New Theory, soil fertilization, weed control, and pest control use natural methods. The production system maximizes synergies between livestock and crops and makes the household self-reliant. 
His Majesty stressed that this is a basic model that could be easily modified to different regions where soil, water, and cropping conditions [and staple crop] vary.
There are special reasons, having to do with Thailand's climate and the planting season there for rice, why every NT farm has a pond, which is also worked out to mathematical specifications to take evaporation into account. But while the farm makes allowances for variables, the standardization means that if you've seen one NT farm you've pretty much seem 'em all.   

The standardized NT farm can easily be integrated with a network of other NT farms. The network forms the basis for a commercial cooperative that can qualify for loans to start small retail businesses related to farm products. In one sentence King Bhumibol's NT system is small-farm capitalism.

Has the system worked in Thailand? Sure it's worked, and for at least 23,000 farming villages. After King Bhumibol's death in 2016 the Thai government talked about setting up 70,000 NT farms within a year. I have yet to hear how that project worked out. But the NT system is voluntary and quite a number of Thai farmers have been very determined to get rich selling rice and hang fooling around with stepwise progress and subsistence farming. 

As to how that's worked out for them, a shockingly large number of Thais have lost their farms during the past few decades. And many are still waiting for their cut of (former) Thai Prime Minister Yingluck Shinawatra's 'Can't Fail' rice price- fixing scheme. I think it was probably the stupidest get-rich-quick scheme in modern history but to repeat, the NT system works.  

In closing, in my opinion American small-scale farmers should aim to get on firm footing before they try to stand their ground in today's highly globalized farming industry and fractious domestic political system. They have a choice: 

A version of the New Theory farm:


Or this:



Related Pundita posts:
Civilization is now based on market valuations of food products. What's next? (October 7)

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