Letter From Langdon: Farm Bill Headaches

Lots of things on the farm cause headaches. Right up near the top of the list is headache caused by too much stress from Biblical things like drought, flood, pestilence, and disease. But nothing is more Biblical than money.

Luke manages to sum it up pretty well in verse 12:16-21 [2]. (This is the story of the rich farmer who hoarded his surplus grain, only to lose his life. God said, "This is how it will be with those who store up things for themselves but are not rich toward God.")

Of course, modern farmers have more reasons for monetary migraines than ancient tillers of the soil, because not only do we have modern futures markets, we also have the farm bill.

I have survived more farm bills than Noah survived floods, because while Noah only had to make it through THE BIG ONE, I've had to wade through at least three Freedom-to-Farm farm bills. Each one seemed bigger than the one before.

It's sort of like Biblical triple jeopardy.

Don't get me wrong, I appreciate all the hard work Congress does on these things. It's not easy building a coalition of cooperation among all the special interests. Livestock growers want abundant grain supplies. Grain growers want abundant prices. Grain dealers want abundant markets. And Taxpayers want abundant food at low cost.

Hence we have a farm bill and abundant headaches.

Farm Bill Headache #1: The Big Were Paid To Get Bigger

Most farm bills have dealt with the same problem found in Luke Chapter 12, by tearing down big barns to build bigger ones so that we could store the surplus. But the most recent law finally dealt with the surplus by selling it off. That's why we have commodity payments. Growing a lot and selling it all no matter what does not always net a good price. The farm bill tries to make up for losses when prices are below costs of production.

Most farmers didn't want to lose money, so the bigger farms got, the bigger farm payments had to be. Government-subsidized competition makes it hard for small farmers to compete for land they need to earn a living.

For all its cost, most of the money spent in the farm bill goes to food aid and nutrition. Only 15% of the total $95 billion for 2009 is dedicated to commodity programs. That's a very small percentage of the total. When you consider that large payouts to large farms come from this small pool of funds (15% of the total farm bill), it makes it even more imperative that small farms be treated equitably. What the farm bill should do for America is to strike a bargain between cheap production and plentiful production by encouraging farmers to invest and produce.

But that's not how it works. A recent study done by the Center for Rural Affairs points out what Luke was talking about, proving that payment limit reforms touted by Congress actually INCREASE payments for many large farms. [4] These are the large farms that, as Luke observed, will "tear down barns and build bigger ones." Congress could do a better job by treating small and midsized farms more fairly.

Farm Bill Headache #2: Ag Pollution and Contract Growers

Of course when a flood of grain hits the market, some livestock producers get bigger too. They figure that the cheaper grain gets, the cheaper they can produce chickens, hogs, and cattle. And as livestock farms got bigger, so did the pollution problems from industrial manure.

One of the ways big livestock overcame the problem was through contract-grower arrangements. They built bigger barns via contract growers, who lease to own through a corporation that owns the livestock and supplies the feed. When legal trouble looms with contracts, most contract growers have to adhere to contracts requiring binding arbitration, and growers are hamstrung by the debt they assumed to build the facilities. None of this is good for small farms that grow livestock for big corporations. It's not much better for those small producers who may want to compete with big corporations by growing their own. There are provisions in the farm bill to deal with this, IF they are approved by both House and Senate.

Farm Bill Headache #3: Captive Supplies and Secret Markets

When big meat packers get really big, they tend to gain a certain power in the marketplace. For one thing they have something called captive supplies.

Captive supplies could mean livestock raised under a contract, or livestock that the packer feeds out. Sometimes captive supplies can be traded and moved across the national border, which makes them even more secretive. The problem for small livestock producers is that when the market is secretive it's really hard to know when you're getting a good price. In fact, it's really hard even to arrive at a price.

Markets need to be free so that buyers have to bid against each other for available supplies. When big processors face little in the way of enforcement, as is the case now with the Packers and Stockyards Act, then small producers are not paid fair prices, consumers are not charged fair prices, and processors pile up the money. Luke warned us about that, too.

Farm Bill Headache #4: Country of Origin Labeling

Country of Origin Labeling (COOL) would require producers to tell U.S. consumers if the food they are eating is homegrown or imported. We have COOL for Chevrolets. We have COOL for fish. We have COOL for just about everything except most of the food grown in the United States. One really good reason for COOL is that food grown in some parts of the world may contain pesticides or other chemicals that are illegal in America. With food borne illness and bio-terror growing concerns, telling the consumer that the coast is clear on that 5 pound roast seems like a good thing.

All these things have come close to being fixed in previous farm bills. But just as Headache #1 points out, the devil is always in the details. While Congress may have good intentions, many times the stated goal and the final regulations are at opposite ends of the field. In Luke 12, Jesus is quoted as saying "There is nothing concealed that will not be disclosed, or hidden that will not be made known."

Let's hope he was right about the farm bill.