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June 24, 2007

The New Deal: Those guys weren't dumb

(Posted by John.)

Tom Philpott has an interesting post at Gristmill today about what a sane Agricultural Policy would look like.  No shocker:  it turns out that the policies that beat back the Dust Bowl of the 1930s are still relevant:

To keep prices at a reasonable level, the government tried to manage farm output. The program worked like this: When farmers began to produce too much and prices began to fall, the government would pay farmers to leave some land fallow, with the goal of pushing prices up the following season. There was an additional mechanism that sought to stabilize prices. In bumper-crop years, rather than allowing the market to be flooded with grain, the government would buy excess grain from farmers and store it. In lean years -- say, when drought struck -- the government would release some of that stored grain, mitigating sudden price hikes.

It struck me that, in many ways, the Strategic Petroleum Reserve is serving some of the function -- depending on political control, of course -- that the Roosevelt-era farm policies did.

What's also interesting to note is that, on one issue at least, global capital and global NGO activism are on the same side -- trying to dismantle trade barriers and subsidies in American food production would be good for ADM's bottom line, it's what groups like Oxfam want to see anyway, and it's the major stumbling block to the Doha round of WTO negotiations.  Too bad ADM, Oxfam, or the global poor don't get a vote in the US Congress.

June 24, 2007 | Permalink

Comments

ADM doesn't get a vote? Who financed Bob and Liddy Dole?

Posted by: squeech | Jun 24, 2007 12:24:03 PM

Let's not forget the pernicious health effects of corn subsidies, if any.

Wait... ADM doesn't get a vote?

Posted by: Anthony Damiani | Jun 24, 2007 12:24:40 PM

It is surprising that you don't see a Red-Blue coalition to fight farm subsidies. It is a waste of taxpayer's money AND it punishes the third world poor, and all to help a few megafarms.

Posted by: Jason | Jun 24, 2007 12:36:10 PM

I don't like his government-managed supply proposal. From a market standpoint, this sort of Keynesian demand-side "boost" distorts important signals that tell farmers what consumers want to buy, and will allow farmers to stay in certain markets when they shouldn't.

From a political standpoint, look how hard it is to even reform the Farm Bill. Agriculture is a powerful lobby, and politicizing market prices for food will almost guarantee political abuse.

The best strategy is to have a free market with some kind of system that helps farmers transition to different crops or exit the market entirely.

Posted by: Jason | Jun 24, 2007 12:48:04 PM


First, you have to realize that in the '30s almost two-thirds of the population worked in the agricultural sector. Today that number is about 1%.

And like many leftie ideas concerning economic management, it only sounds "sane" when it is presumed that the information required by central planners to produce desirable outcomes is readily available. It is not available. It is widely distributed amongst millions of consumers and producers and distributors and exists nowhere as some kind of accessible whole, which is why in practice what we really wind up with is a system where consumers are taxed by the $billion in order to keep their grocery bills high. ADM might dig the free money, but for the rest of us the deal pretty much sucks.

yours/
peter.

Posted by: peter jackson | Jun 24, 2007 1:12:43 PM

"The best strategy is to have a free market with some kind of system that helps farmers transition to different crops or exit the market entirely."

And why, pray tell, do you hate farmers?

Kidding, of course, but anyone seriously proposing that America's farmers be given a hand out of the market is opening themselves up for the full Monty of disingenuous attacks by those who stand to gain.

Posted by: John | Jun 24, 2007 5:15:10 PM

I don't like his government-managed supply proposal.

SCOTUS didn't either -- see U.S. v Butler

Large parts of FDR's AAA were struck down as unconstitutional in a number of cases brought before the supreme court, Butler being one of the notable ones.

Posted by: Purple Avenger | Jun 24, 2007 5:22:23 PM

And why, pray tell, do you hate farmers?

Kidding, of course, but anyone seriously proposing that America's farmers be given a hand out of the market is opening themselves up for the full Monty of disingenuous attacks by those who stand to gain.

I would simply respond that I care about other farmers, consumers, and taxpayers too. :)

Posted by: Jason | Jun 24, 2007 5:45:45 PM

Of course they were relevant. We are talking, afterall, about FDR. His Brain Trust were brilliant people. and FDR was the best president we had.

Posted by: dlake | Jun 24, 2007 6:36:33 PM

My *first* problem is that the New Deal era farm subsidies had the interesting effects of A) destroying surplus food and B) artificially raising food prices during the Great Depression - not the best time for either.The real problem is that the farm subsidies are what caused the erosion of not just the distribution systems for non-corn/soy products, it also erased the local distribution networks (leaving Big Ag to take their place) for almost everything, the shift to massive monoculture, and the continued collapse of the rural coops in the '70's and '80's.

The supply-focused efforts of the New Deal had serious problems that led to the subsidies. Let's stop the cycle and eliminate both as we organize Grange-style organizations with Distributist methods of beating Big Ag

Posted by: Deep Thought | Jun 25, 2007 8:46:58 AM

The rightwingers posting above think the magic of the market will solve everything. In reality, trusting to the market would soon reduce our food supply to the same condition as our health care, an industry in which a few large insurers starve the providers of adequate payment, while about 50 million of us can't afford the high prices charged to the consumer.

In the case of our agriculture, large brokers would squeeze the farmer and the consumer unmercifully. There is always a glut when the farmer sells, and, if you let the grain brokers control what happens, there is always a shortage when the consumer buys. There is hardly a clearer lesson from all of human history than that simple fact.

As for the assertion by "peter jackson" that the information required to make good decisions about agricultural policy is not available, that is simply total hogwash. Not only are the numbers involved very large, which always improves statistical precision, but much of what happens is very predictable. There is no great uncertainty about the aggregate use of grains or feed crops in the coming year, because it is very easy to guess how much we must use to keep from starving. Reservoirs do not draw down as a result of a few weeks drought, they empty or fill over a period of years. The productivity of the land is largely dependent on the crop chosen, the fertilizer used, and the amount of water for irrigation.

It is sad, and in fact a devastating comment on modern liberalism, that liberals are so poorly educated on farm policy. As the rightwingers above illustrate, a healthy dose of demagoguery could push us into a full-fledged meltdown of sane farm policy, and when this resulted in a situation analogous to our health care, with about a sixth of our population starving, the stage would be set for a populist dictator.

It's obvious from the paucity of comment here that almost nobody today works on a farm- you'll have no trouble remembering that. What liberals have to learn is how grain is grown, how it is harvested and stored in elevators, and how it is marketed at home and abroad. The good news is that this is the most central element of human history and almost any good history book will provide valuable clues.

Posted by: serial catowner | Jun 25, 2007 9:09:28 AM

Not so Deep Thought there.

To begin with, the destruction of surplus products, most markedly the demonstrations in which farmers brought their milk to town and poured it in the town square to show how valueless it was to them when the markets failed, was hardly caused by New Deal agricultural policies. The policies, in fact, were the result of crops left to wither in the fields, milk poured on the ground, and livestock left to die by emigrating farmers.

Secondly, farms got big because tractors got big. This problem was exacerbated by allowing large companies to flout the irrigation laws that restricted the use of reclamation irrigation to farms of 600 acres or less. The tractors and the water for irrigation worked together to boost yields when the land-grant universities developed high-yield seed crops.

The destruction of the truck farms that, as late as the 50s, surrounded every major city, was the result of paving the farms over for suburban housing and commercial use. The paving of the farmlands may be attributed to some extent to the federal freeway system, which also made it possible to carry products by truck great distances from huge farms in California (and elsewhere) owned by large corporations, such as Safeway, which also control the end distribution.

These facts illustrate the very large nature of the forces affecting our agriculture. In spite of the tremendous progress made in understanding agriculture during my lifetime by what I will refer to as the Rodale Press wing of the population, the possibility of effecting significant change by vaguely wishing for consumer-producer co-ops is exactly zero.

The Rodale Press is perhaps the single most valuable resource for people wishing to study agriculture, but it also pays to look around you and notice the co-ops still extent, study the role of the Grange today in your state, and become aware of the basic facts of our agriculture, which can be found in a World Almanac. Or at least read the little stickum on your produce to find out where it came from.

Posted by: serial catowner | Jun 25, 2007 9:31:23 AM

1) The New Deal agricultural approach was originally tested in ancient Egypt. If the Bible is to be believed, it resembles Joseph's plan to stabilize grain prices in ancient Egypt with pharaoh being the buyer of last resort and setting a price floor during the flush times (seven fat sheep) and lowering prices by releasing stored grain onto the market during times of scarcity (seven thin sheep). Joseph was probably the first Jewish economist and economic advisor, and he established a long tradition of same.

2) I live in farm country, and the simple fact is that certain kinds of farming are subject to the efficiency of scale. If you pump in capital in the form of equipment and research you can create oceans of grain, mountains of butter and barrels of pork (the pig meat kind), all at prices below the level any small farmer could produce.

The farmers here who have managed to survive specialize in diversified truck farming, aiming at the local and nearby Seattle (~100 miles) markets. They benefit greatly from institutions like farmers' markets, small organic groceries and large organic grocery stores, but even selling to the latter can be a challenge. They can move a lot of product. Many local farmers just can produce product on that scale.

An interesting thing is that there have actually been a number of successful startups. For example, a local dairy is selling raw milk and is thinking of selling butter and cheese. Another farmer has reached the level of selling to a local, but not national, organic food supermarket chain. The number of eggs for sale signs on the road has perhaps tripled in the last five years, and our local organic egg producer sells his old layers as stewing hens.

The survival of this kind of agriculture is important. It has cultural importance, but that is not its primary value.

It provides avenues of exploration in developing national tastes. If you haven't noticed, modern supermarkets sell lots of things they didn't even ten years ago. Many of those products, including produce and meat, were originally developed and marketed by small scale farmers. They were pushed at specialty markets and high end restaurants. Then, they moved into the mainstream. It's a lot like the way fuel injectors replaced carburetors and bucket seats replaced bench seats in cars.

People in small scale agriculture may also be playing a larger role in our dealing with global warming. Fifty years ago, our area was much too cool and foggy for growing wine grapes. It is that simple. Now a local vintner is planting several varietals, and early results show promise. It is not worth a large company's while to do this sort of experimentation. It is best left to agricultural startups.

There is no way that these small farms are going to feed our teeming cities and sprawling suburbs. (If trends continue they'll be importing bread to the wheat belt from China in ten years. We already get a lot of Chinese garlic). Still, they play an important role, and a big part of that role is pointing our way to the future.

3) I was talking to our local egg farmer a while back, and he was concerned at being a bird flu first responder. As it turns out, our state has funds for testing, so he's spread the word. If a chicken, or sparrow for that matter, falls, there is a good chance it will be tested for influenza.

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Posted by: judy | Oct 8, 2007 8:52:48 AM

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