Basic Skills: Examining Work and Life Task #9 by Bill Berning

Develop 2 articles from your alternative journal or book. Post to the Web under your discipline.

Book read: "Is there a Moral Obligation to Save the Family Farm"

1) Theme: "Is a strong economy good for the average farm."

2) Narration: The small to average sized farms of all farming enterprises are quickly disappearing. The prices they receive for their commodities are at record low prices across all enterprises.

I have discovered that the strong economy and the government programs that have subsidized these farms have really hurt them financially.

The strong overall economy and low interest rates have really stressed the average farm. Mainly the ag businesses like feed companies, processors, equipment companies and chemical companies have made very high profits the past five years. They have used these profits to buy similar smaller operations to make them more efficient and reduce the number of high paying jobs.

They also have used the profits to quickly and vertically integrate in production agriculture. They now supply the inputs, produce the product and market the product. They have done this very rapidly at the expense of the average farm. Production of product is greatly higher than demand. This has reduced the commodity prices. The larger companies may lose money or just breakeven in producing the product but they use the profits from the other divisions of their operation to supplement the production side until prices turn around.

The reason I piked this topic was because I always was under the impression bigger was always better. After reading this book I have changed some of my thinking towards large operations. A small farm usually buys local and supports the community businesses. A large company typically buys direct and bypasses the local companies. The jobs that they provide are usually low paying. The majority of the people that work on large farms work full time but still qualify for welfare payments. They pay very little local property tax but the community still needs schools, police and fire departments that they contribute very little to.

3. How can I apply this to life or work. I am not really sure except that maybe it has opened my mind to the way I think. I must look past the size of the operation and how efficient it is and look at how it helps the community and the people it employs. The larger ag production farms need a tighter work force to force them to raise their wages beyond just survival wages.

4. The government has tried to help all farms with farm subsidy programs. The majority of the program dollars go to the large farms because they are always driven by paying for product. The larger operations produce more so they get more subsidy. The government needs to help the farms that need help the most with the subsidy payments. What is a $1000 payment going to do for a small farm? A large farm may get $500 and it could actually be a capital item.

5. I would like to help make known my findings by talking with people on an informal basis to help them decide if expansion is really good for their area. If I were to do more along these lines it probably would hurt me career wise. I also would like to take a look at new farm subsidy programs and passibly write local government officials on how these hurt or help the average farm they are trying to save.

Article One of Two from "Is There a Moral Obligation to Save the Family Farm" by Jim Hightower and Luther Tweeter

Since World War II corporate power and government programs have combined to eliminate 3 million small farms. New and ever changing government regulations have forced farms to quit if the cost to comply was too expensive. Government programs lik CRP and the dairy buyout have actually helped the large operations by creating more demand for their product and crating higher sort term prices to help large corporate farms increase the size of their operation. As supply increases to oversupply, government steps in with a buyout program or subsidy that only once again will benefit the large farm because the programs are always based on size or volume and not based on need.

Traditionally, farm policy has been left to Midwestern senators and states that produce cotton and tobacco. With the high cost of agricultural subsidy programs more senators from industrial states are getting involved and with the farm programs they have created a better environment for corporate farms.

The government has encouraged and allowed agribusiness corporations to vertically integrate. This they believed would help lower the price of food if the process from field to stove was streamlined. The prolem is that the numerous markets farmers have had has been greatly reduced to only a handful. Agribusiness, too, takes a big percentage of market share. Markets with continued low prices force farmers into signing contracts that lock them out of making higher profits if the markets go up. They have been forced to sign contracts because of low margins, to ensure market for the product, they are unable to secure credit, or because of the market power of existing corporations.

As large agribusiness grow, their influence on government policy strengthens at the cost of the small family farms. The tax law that allows farms to be taxed on a cash basis has helped attract investors looking for a tax shelter.

For example: irrigation policies. Water from federal reclamation projects are suppose to go only to farms of less than 160 acres, but this restriction has never been enforced. This has allowed large landowners to prosper from subsidized water. Knowledge of exporting contracts are not always known to the small farmer without government conditions. Larger corporations with knowledge of large exporting contracts or subsidy programs help keep this quiet as they buy grain from the farmer at low prices. The large agribusiness then raises the price, therefore increasing their profits.

As more and more farms disappear people not associated with farms increase. Also the image of the family farm changes from a small business and a good way to raise a family to one that depicts the small farm as an inefficient operation that requires government support to survive. The large corporate farms' image is one of efficiency and a profitable business.

Arcticle Two of Two "Federal Commodity and Credit Programs May indirectly Hurt the Family Farm"

Federal commodity programs are designed to help the American farmer. whay they have done is influence farm size, type and numbers.

1. Payments and price supports help keep marginal farmers in business. Large farmers receive larger subsidy payments than small farms. Government payments as a percent of gross farm income for farms of sales over $500,000 is 2.2% and for farms with sales between $249,999 and $100,000 is 7.6%. Now let's look at government payments as a percent of net farm income: farms with sales greater tatn $500,00 is 7.9% and for farms with sales between $100,000 and $249,999 is 40.8%. This is because direct income benefits of programs are given to large farms for total farm receipts, and net farm income for small to medium sized farms, this effect makes for more farms.

2. Features such as payment limitations, special grazing and minimum allotments have tended to favor small and medium farms thus increasing them.

3. Special subsidies for crops like sugar beets have helped reduce opportunities to consolidate production. This has helped the smaller farms that produce sugar, beets, tobacco, and cotton.

4. Commodity programs help stabilize farm income and reduce risk. This helps farms expand and makes for fewer large farms.

5. Conservation Reserve Program leaves operations with excess machinery and labor. It forces smaller operations to quit and larger operations to buy or rent their land that is not in the CRP program.

6. Government programs create inflaated proces by reducing risk associated with expanding. This inflates land values and reduces the number of farms because the farms that have not expanded consistantly over time lack capital, or start up farming and forced out.

The expansion of farm size would not be slower if credit would not be as eacy to access. In the 1980's, credit was available to larger, established farms with large equity positions and high income.

Has the Farm Service Agency helped serve the small limited-resource farmers? Small farms of less than $100,000 in sales make up 60% of all farms they lend to but only 22% of FSA lending and 12% of farm receipts. Farms with sales of over $200,000 account for 7% of all farms but for 23% of all lending and 50% of farm receipts. The agency appears to be serving larger farms and not the smaller farms it was intended to serve.

Government intervention has cost the family farm and indirectly helped the large farm operators. The government programs need to change by giving the subsidies to the farms that need it the most rather than to farms the larger farms. If this trend continues the number of farms will continue to be reduced and eventually all of farming iwll be done by only a small percentage of the current farming base. Entry by young people will be limited to those who have parents which own large farms because the capital need to start will be to great.

-- Anonymous, March 04, 1999