by Jayson Lusk
None of this is to say there aren’t some negative environmental consequences that come from agricultural production, organic and conventional alike.12 But we seem to forget that gasoline is already taxed, as is almost all food eaten away from home; ethanol, biodiesel, and “green energy” are subsidized. Truly earnest advocates of externality-fixing taxes would have to take into account these preexisting food and energy subsidies and taxes, international trade distortions, constantly changing market prices, and all the complex interactions among poverty, health, environment, and food quality to derive an optimal tax/subsidy policy that would likely be obsolete the moment it was computed. Even still, an honest appraisal would have to keep open the possibility that new government action is apt to cause an externality rather than solve one.
We are also told that greedy agribusinesses manipulate and capture all the benefits of farm programs. Here’s Pollan again: “More even than the farmers who receive the checks (and the political blame for cashing them), these companies [Cargill and ADM] are the true beneficiaries of the ‘farm’ subsidies that keep the river of cheap corn flowing.”13 It might have done some good actually to look at the economic research studying the true beneficiaries of farm policy. One of the first things students of Intro to Ag Econ are taught is that commodity payments largely flow to the owners of fixed assets, such as landowners, not necessarily to producers. One study estimated, for example, that government payments are responsible for about 45 percent of the total value of Iowa farmland.14
So, current landowners definitely benefit. Who else? One prominent agricultural economist estimates that “for every dollar of government spending on farm subsidies, farmers receive about 50 cents, landlords receive about 25 cents, domestic and foreign consumers receive about 20 cents, and 5 cents is wasted.”15 Funny—those evil agribusinesses, the supposed “true beneficiaries,” aren’t even mentioned. In fact, another study found that farm subsidies have “a negligible influence … on the prices of other inputs, such as fertilizers, chemicals, and machinery.”16
Here we can plainly see the food elite’s schizophrenia about farmers. In one breath they speak of the Jeffersonian ideal and the importance of family farms, and romanticize production agriculture. In the next they lament how farmers get massive subsidies from the federal government—in truth only about 40 percent of farms receive government payments—and claim they are either incapable of considering, or unwilling to consider, the health of their land and our children. Indeed, one of Pollan’s heroes in The Omnivore’s Dilemma thinks most farmers are just plain dumb. As he puts it, “Part of the problem is, you’ve got a lot of D students left on the farm today.”17 The truth is, according to USDA data, “[t]he education level of farm operators is very similar to the educational profile for U.S. householders.”18 Yet we are somehow supposed to believe that the food police residing in residential Berkeley or New York City are more concerned and knowledgeable about the quality of the land in Farwell, Texas, than the flesh-and-blood people who own that land. We must believe that despite large and influential farmer-led commodity groups, farmers are merely subject to the whims of the greedy agribusinesses and don’t realize that the policies for which they fight are only handouts for agribusinesses.
The food elite’s trick is to divide farms into the good and righteous and the bad and villainous. The food police can maintain their hypocrisy by demonizing “factory” or “corporate” farms. But the reality is that 97 percent of all farms in the United States are family farms.19 For all practical purposes, there is only one kind of farm in America: the family-owned farm. The food police must be awfully paranoid to worry so much about the few corporate farms—or is it rather a useful scare tactic to throw around the word corporate without any context? As if the people who own corporations don’t have families, too.
It is true that some family farms are quite big. These large-scale family farms represent only about 7.5 percent of all farms in the United States, but they produce most of the food, accounting for more than 60 percent of agricultural output.20 But why are they presumed less righteous or wholesome than small farms? If you’re concerned about food security, you should be concerned about those who produce the food. A lot of large farmers do well financially, but so do many small farmers. Even small family farmers have average incomes that outpace that of nonfarm households, and they are much more likely to have extra off-farm incomes than their larger family farm counterparts.21
The statistic we’re frequently shown as demonstrating the injustice of farm programs is that large family farmers receive more subsidies than their smaller brethren. This is of course true in total dollar payouts. What you’re almost never told is that as a proportion of their agricultural output, small family farms receive more government handouts as compared with large family farms. Small farms get five times more government subsidies relative to the value of their output than large farms.22 One study concluded, “Careful examination reveals that … agricultural subsidies appear to be … subsidizing small farmers relatively more than large farmers.”23 So, at least in terms of agricultural output, small farmers are doing less and the government is giving more. Still, many people think large farms get too much, which is exactly why there have been various forms of farm payment limits since the 1970s.24
Again, it must be emphasized that, as a group, farmers large and small do relatively well financially.25 If equity and fairness are the concerns, we should redistribute money away from farmers of all types, large and small, and toward nonfarmers. Or just get out of the business of trying to pick winners and losers altogether and let the market reward those who produce what consumers want.
Another spurious claim of the food police is that farm policy is to blame for the rise in obesity. To take just one example, the Public Interest Research Group, which was founded by Ralph Nader and once employed Barack Obama, recently released a report concluding that “by fueling the crisis of childhood obesity, the [farm] subsidies damage our country’s health and increase the medical costs that will ultimately need to be paid to treat the effects of the obesity epidemic.”26 The media widely interpreted the report as providing a “link” between farm subsidies and obesity—something the food police have claimed for years.
To claim that farm subsidies cause obesity, one would have to wonder how it is that Australian obesity rates have risen at roughly the same rate as those in the United States when Australia has no farm subsidies.27 Indeed, careful statistical studies of changes in farm subsidies over time and across countries show that changes in rates of obesity are unrelated to changes in spending on farm programs.28 The research is clear: farm subsidies are not the culprit for the rise in obesity.
How can this be when the food police have been telling us the opposite for so long? For starters, as we’ve already seen, the link between farm policy and food prices isn’t as clear as propaganda asserts. It never ceases to amaze me that in the diatribes arguing that farm policy leads to more high-fructose corn syrup (and, voilà, more obesity), the food police never stop to point out, for example, that another government policy, the sugar tariff-rate quota, drives up the price of cane sugar. One estimate suggests that the government sugar programs keep the price of beet and cane sugar 15 percent higher than they would be otherwise.29 A case could be made that current government policies make calories from all types of sugar (corn, cane, and beet) more expensive, not less.30
You also have to keep in mind that the prices of raw farm products such as corn and wheat make up only a small fraction of the costs in the grocery store. For cereal and bakery products, the farm costs represent only about 7 percent of the total retail price. The other 93 percent of the price of Wheaties is made up of the costs of turning the wheat into flakes, the salary of the truck driver delivering the box, the celebrity-athlete endorsement on the cardboard cover, and on and on.31 If wheat prices fall 10 percent, the price of Wheaties falls only 0.7 percent. So, even if farm policies drive down the price of corn, wheat, and soybeans, this often
isn’t going to have a big effect on what we pay.
The truth is that in the grand scheme of government largesse, farm policy is just a fruit fly on the massive heap of spending. The USDA spent, in total, about $130 billion in 2010.32 Over 70 percent of that went to programs such as food stamps and school lunches. Only about 13 percent of the total, or around $16.5 billion, was spent by the agency administering the farm subsidy programs. To put these figures in perspective, note that farm subsidies account for less than 4 percent of the value of all farm output.33 Also recall that Obama’s 2010 federal budget proposal was $3.55 trillion. Farm subsidies account for less than half a percent of total federal spending. You can’t even make the slice show up on a pie chart. Yes, wasteful and inefficient programs should be cut, but let’s not make a Mount Everest out of a molehill.
The fact that the food police can’t quite figure out the real effects of farm subsidies hasn’t in the least hindered their desire to remake farm policy. The food elite, not understanding the present, believe they have a crystal ball into the future.
At the forefront of the policy agenda of the food elite is a desire not to cut farm subsidies but to expand and reallocate them toward their favored foods. Writing in the New York Times, Mark Bittman proposes “support designed to encourage a resurgence of small- and medium-size farms producing not corn syrup and animal-feed but food we can touch, see, buy and eat—like apples and carrots—while diminishing handouts to agribusiness and its political cronies.”34 It is a mystery as to why Bittman supposes the agribusinesses and political cronies supposedly benefiting from subsidies to corn and rice wouldn’t also figure out how to profit from federal subsidies to apple and carrot growers. So goes the apparent belief that the favored veggies are morally good and incorruptible while their sleazy wheat and soybean cousins have gone over to the dark side.
If we started subsidizing spinach, artichokes, and arugula, sure, we’d get more of them. But then what? Which agricultural crops do you suppose are the biggest users of water, fertilizers, insecticides, and herbicides? It’s not necessarily those evil crops the government currently subsidizes.
If we began subsidizing the crops favored by the food elite, we’d likely see massive increases in chemical use. On average, wheat and soybean farmers use about 0.02 pounds of active insecticide per acre planted; corn farmers use more, at 0.13 pounds per acre. A farmer who plants the same acreage with okra, cabbage, cauliflower, tomatoes, or melons uses about 62 times the pesticide as a wheat or soybean farmer and about 10 times the pesticides as a corn farmer. Lettuce and strawberry farmers use more than 100 times the pesticides as wheat and soybean farmers on a per-acre basis, and don’t even mention the citrus growers, who use more than 2,500 times the pesticides!
It isn’t just pesticides; it’s other chemicals, too. Topping the list of herbicide use on a per-acre basis are crops such as sugarcane, beets, rice, citrus, onions, cranberries, parsley, and asparagus. Cherries, apples, strawberries, tomatoes, and grapes use more than 750 times the amount of fungicides per acre planted as wheat, soybeans, and corn!35
Chemicals are just one input used to produce food. How about other resources? Although some vegetables, such as beans, cabbage, and peas, are relatively efficient users of water, it takes more water to produce some types of fruits and vegetables than crops such as soybeans and corn. For example, compared with soybeans, it takes about 4 percent more water to grow tomatoes, 30 percent more water to grow peppers, 39 percent more water to grow sunflowers, 83 percent more water to grow citrus fruits, and 195 percent more water to grow bananas.36 In their myopic attempt to use government policy to try to get healthy food, the food police seem to forget all the other things that will come with it.
If you buy into Pollan’s argument that food is underpriced because of environmental externalities, you ought to think long and hard about Bittman’s proposal to subsidize fruits and favored veggies, which are relatively big users of chemicals. Charitably, maybe we should interpret Bittman’s suggestion to mean that we should subsidize only organic growers. (But remember, organics use pesticides and fertilizers, too.) The truth is that it is a lot harder to grow and ship crops such as tomatoes and apples than it is to ship corn and soybeans, and even harder to grow them organically. That’s why they’re more expensive.
I don’t know exactly how big the externalities are that concern Pollan, but what is plain for anyone to see is that organic production systems are much more expensive than conventional. These are real price differences that reflect real disparities in the resources used in organic food production, not hypothetical claims about the “dishonest” pricing of nonorganic. Given the fact that organics often sell at twice the price of conventional, an organic veggie subsidy policy that were to have any substantive impact on what people ate would take a massive increase in spending on farm programs to bring the prices down to a level where regular consumers would shift consumption—and all this at a time of ballooning federal government deficits.
The food police claim they are interested in policies that support small farmers but only if those farmers produce the kinds of virtuous food accepted by the food elite. They claim they want cheaper veggies, but only if they are produced by the kinds of virtuous farmers accepted by the food elite. So we can see that it isn’t really about small farmers or health, but about a desire to use farm subsidies to engineer an idyllic food system desired by the food elite.
Here’s one other thing you won’t hear from Bittman and others who favor subsidies for fruit and veggie farmers. According to a Michigan State University economist, “[i]n 1990, specialty crops growers convinced Congress that they didn’t want subsidy payments.”37 That’s right, no matter what the food police would have us believe, the large fruit and vegetable producers don’t want handouts. Part of the reason is that taking subsidies would invite the government onto the farm to enact restrictive rules of the kind facing corn and soybean growers. But it is not as though these veggie producers are earnest defenders of free markets. Although the matter is currently under negotiation, corn, soybean, and wheat farmers who receive subsidies are restricted from planting fruits and vegetables on the land enrolled for payments. The fruit and veggie growers apparently consider themselves better off allowing government policies to limit competition than explicitly accepting payments themselves. Advocates of the new farm policy would do well to step back and see what happens when we entrust the federal government with the power to tell producers what to grow and what prices to charge. It’s a recipe for strategically farming the government programs, not for healthy eating.
One of Pollan’s proposals is to establish a strategic grain reserve, whereby the government would “buy and store grain when it is cheap and sell when it is dear, thereby moderating price swings in both directions and discouraging speculation.” As if the government’s strategic oil reserves have discouraged speculation in the oil market. Rather, as recent history shows with Obama’s decision to tap in to the strategic oil reserve, the decision turns from one about market fundamentals to a calculus of politics and reelection strategy. In reality, all that evil speculation is exactly why we don’t need a strategic grain reserve.
Don’t those big, bad, money-hungry Cargills and ADMs of the world buy up grain now to release later if they expect the price to rise? Or release their current stores of grain now if they think prices will later fall? The natural profit incentives of all the individual actors in the grain market—the farmers, the grain elevators, the traders at the Chicago Board of Trade, and the food processors—cause them already to do exactly what Pollan wants to take out of their hands and concede to the all-knowing federal government. Virtually any agricultural economist will tell you that the old government grain storage system never really worked very well, and is even less likely to work well today given the global trade of agricultural commodities.
The optimistic-sounding “strategic grain reserve” is a guise for what many food police actually want: government-planned supply control.
The food elite pine for the old days of the New Deal food policies, when the government bought grain and told farmers what and how much to plant. I don’t doubt that with a government security blanket and ample cradling, more small farmers could be kept in business. But at what cost? If the elite’s prowess at engineering the agricultural economy had successfully kept the same number of people on the farm today as we had back in the 1930s, what might we have given up? Would Steve Jobs or any number of innovators have been compelled to work with apple trees rather than Apple phones? I’m not saying farming is a bad occupation, but when we distort market incentives, we keep people from knowing where to employ their skills in the places where they can most valuably be put to use.
Farm policy, of course, concerns more than what happens on the farm. Because the bulk of Farm Bill spending happens on food stamps and school lunches, it shouldn’t be surprising to see the food police licking their chops to get at these programs. Michelle Obama’s signature policy initiative has been the 2010 Healthy, Hunger-Free Kids Act, which, at a cost of $4.5 billion to the federal government, takes more control over children’s food at school. From what can be offered in school lunches, to the hallway vending machine, to that old-fashioned bake sale, Uncle Sam now has a major say-so in what our kids eat. Or does he?
Kids don’t have to eat what the school offers. As one San Diego school official put it, “Nothing is achieved when money is spent on food that children won’t even be able to consume and nothing is more disheartening … than to see perfectly good and perfectly untouched food thrown into the trash.”38 As the researchers who have studied the issue could have told Michelle Obama, kids will bring bagged lunches, go offcampus, or just wait till they get home to eat when the lunch lady won’t serve them what they want.