The agricultural resources of the United States, while the most productive of any in the world, have been severely harmed by government policies. A commodity-based industrial system has encouraged overproduction, lowering prices and making it difficult for farmers to survive without government assistance. Meanwhile, erosion and water pollution have exacerbated the man-made problems facing the farming industry. It is clear that something needs to be done at the national level, if turning the U.S. agricultural base into a sustainable industry is still possible.

Current U.S. agricultural policy has evolved over the time from the colonial era, to the Revolutionary War, to the Industrial Revolution and beyond. Resource overproduction and land exploitation were always at the top of the list, and as technology progressed in the 20^th century, new and more efficient ways of doing so were devised. The trade policies of other countries around the world, often modeled around our own, and the nature of worldwide trade all have led to low prices in an already unsustainable agriculture.

The questions are what is to be done about the situation and what path does U.S. agricultural policy go from this point? The corporate nature of agriculture and farming feeds the practice of overproduction with the aim to increase profits, while the earnings farmers receive for their product continues on a decline. A 1996 farm bill which aimed to control production and set prices based on market conditions failed, while a 2000 bill ensured government money to farmers. Subsidy payments were set to new highs by a 2002 farm bill, without any policies to manage production.

A program to encourage conservation by farmers was included in the 2002 bill. This Conservation Security Program was designed to help improve the environment, and offer financial rewards to farmers who make conservational efforts. Congress placed a ten year cap on the funding for this program. Little would be accomplished if additional funding wasn’t put in place, and the program was accompanied by policies that contradict its intent. Continuation of the program would keep subsidies going to farmers, but at least the general public could benefit from the cleaner environment resulting from more sustainable practices.

Trade policies need to also follow the regulations of the World Trade Organization, which require that subsidies do not influence how commodities are traded. Since environmental concerns are expressed worldwide, the Conservation Security Program is looked upon favorably. In instances where watersheds are polluted, the problem can be addressed by seeking out the source and helping farmers to fund pollution control measures. The initiative was further boosted by the Conservation Stewardship Program in 2008, meaning that this could prove to be a viable path for U.S. agricultural policy in the coming years.

Perhaps the most efficient direction to follow, and where U.S. agricultural policy may be heading towards, is to directly address practices that aid in environmental conservation. The best incentives may be financial, but support of organic farming and ways to reduce the flow of pollution and prevent erosion will address the major environmental impacts. Methods such as longer crop rotations and mixing of crops that do not deplete resources as quickly should be encouraged as well. The best way to enforce sustainable practices is to create incentives for farmers to follow them, and financial rewards at a time when cash resources are short hold promise. This could only be accomplished at the national policy level. It may already be that the future structure of U.S. agricultural policy is in its formative stages as programs initiated over the past decade build momentum.

Source:

The Minnesota Project (http://www.mnproject.org/pdf/A%20New%20Agriculture%20Policy%20for%20the%20U.S.%20by%20Dennis%20Keeney%20%20Lo..pdf)

The Minnesota Project – Agriculture & Water: Conservation Stewardship Program (http://www.mnproject.org/csp/)

Building a U.S. agricultural policy that satisfies everyone is a daunting task. Farmers have both suffered from and relied on subsidies to finance their operations. These subsidies encourage overproduction and have driven crop prices so low that there is little profit from selling them. On the other hand, companies that run livestock feed operations benefit from the low prices of grain, corn, and soybeans, for example. Both farmers and livestock operators rely on one another to exist, but does one take precedence over the other? A report by the Global Development and Environment Institute in 2005 sought to determine whether the government should refocus its policy toward the livestock sector.

The more industrialized nature of livestock operations also keeps the prices of livestock very low, so farmers have no choice but to abandon similar operations because there is no profit from it. Left to overproducing crops, the farmers continue to be overrun by declining prices. Experts have speculated that raising the costs of feed grain could help family farmers, and family farm groups have rallied for reforms in the livestock industry that would improve their economic situation. The World Trade Organization, although it sees subsidies in general as distorting for trade, does not consider the subsidies for feed grains to be the input subsidies that it looks down upon. This is despite the fact that half of corn and soybean production goes to livestock. Experts say litigation-based arguments could be used to associate these grains with such subsidies. The economic scale is still tilted towards the livestock, however, while the working farmers struggle to survive financially with low crop prices.

Any operation that purchases products such as feed benefits if the prices are low. The fact that grains are often sold below the production prices makes the relationship between farmers and livestock companies non-symbiotic. In an economy that thrives on balance, no wonder there are such discrepancies when it comes to agricultural policy and farmer income. Researchers have concluded often that higher feed prices would tip the scale a little more toward family farmers, or at least make them formidable competitors to industrial operations tending to livestock.

Livestock such as cattle stand in the middle, and are of even greater product in terms of an end market product. Large companies and farmers alike can raise livestock. It’s just the policy that makes it more beneficial for one business or another to economically invest in producing this end product to make a profit. Once again agricultural policy stands in the way. Government subsidy payments go to farmers, while multi-national agricultural food businesses with livestock feeding operations thrive on the low prices of grain. Criticism of policies by the World Trade Organization has led to reduced support for domestic farming. U.S. agricultural policies have not addressed the interests of the so-called agribusinesses except to encourage overproduction that keep costs low. A policy that encourages a balance of support for both farmers and large agribusinesses has yet to be implemented, yet alone planned out.

Sources:

Global Development and Environment Institute (http://ase.tufts.edu/gdae/pubs/wp/05-07realwinnersusag.pdf)

Two facets of the well-being of the United States seem to be invariably linked – farming and the economy. From Kansas to Indiana, Oklahoma to Iowa, the way farming is conducted has changed drastically over the past few years as economic tensions have affected both production and the way a farming business is run. Investors who have lost out on stocks and bonds during the recession have turned to farming as an investment. Whether farmers are happy or not, outsiders looking to profit off the land are not going anywhere, at least for now. The fast rising prices of crops have led to increased production. Corn stands at $7 per bushel as of July 2011 and both farmers and their investor partners are rushing to have a stake in the profit.

Farmer Robert Huber bought a corn and soybean farm 10 years ago in Carmel, Indiana. Recently he sold the 500 acre farm for three times what he originally paid. Deals like this are taking place across the Midwest, and farmers are profiting, even if it means turning in the ownership of their land to someone who has never been on a farm before. However, this phenomenon, as lucrative as a deal it may seem for both parties, could have a limited lifespan. Crop prices are rising as the demand for food worldwide keeps rising, at the same time there is less and less land suitable for farming.

Based on the principles of supply and demand, as well as simple profit, farmers are planting the crops that are rising in price the fastest. If this trend continues, the prices will eventually fall, but at the same time the value of the farms planting the crops will drop too. Thus, the current momentum unravels. The double-edged sword here is that taking advantage of business and financial opportunities, on the part of both farmers and investors, could lead to more financial hardship than both have already faced in tough economic times.

Still, the pace continues to pick up. Low interest rates have persisted and investors have not earned nearly as much as they would like to from investments such as CDs and money market funds. Moving their money into corporate bonds and stocks, the more risky of financial assets, investors have found comfort in farms because they can collect income in three ways - by owning the farm, selling what is grown, and charging rent to farmers.

In Iowa, local farmers have expressed anger over the trends, but have nothing to do to change anything. Investors are hungry. A farmer in Iowa sought to buy his farm which he rented for two decades, and dozens of his local farming neighbors actually withheld their bids in support. An insurance executive eventually bid over $1 million for the property and purchased the farm nonetheless. In fact, it has been reported that one-quarter of farm buyers in Iowa are investors, but the farmers seem to be holding on to their loyalty of their land and each other.

The tide will turn again in a few years, according to Jeffrey Obrecht of brokerage firm Farmers National, and investors will soon sell back the land as new profit ventures are discovered. Even investors themselves are wondering if money managers will see farms as tradable as stocks or bonds. For now, both farmers and investors are at the mercy of a slowly recovering economy and what appear to be avenues for profit in the short term.

Source:

MSNBC, Down on the Farm, Investors See Big Potential (http://www.msnbc.msn.com/id/43802778)

The hardship that farmers face is sometimes blamed on government agricultural policy. However, the biggest problem in many areas has been from Mother Nature herself. The drought in 2011 in the plains has caused total losses for some crop farmers, particularly on the Texas and Oklahoma border. Experts at Texas A&M University say as much as $5.2 billion has been lost in agricultural revenue as the land has dried up, crops have perished, and the topsoil has dried into dust that blows in the wind. Even systems that efficiently keep crops watered have failed. Crops maintained by center pivot irrigation have died out because of the stress of the heat, despite being adequately watered; the same has occurred throughout Oklahoma and Texas as well as Kansas.

Despite taking precautions to reduce the stress on crops, farmer Jerod McDaniel has lost a great deal of crop yield. Land that would support up to 185 bushels an acre returned a total loss, even though McDaniel cut down the plantings and began irrigation in early spring to prepare the soil. The seeds were even planted early. Other fields fared better, although McDaniel could not work out a formula because one field that survived was planted early on, and the other one later in the season. The intense heat is thought to have played in a role in killing off the crops.

The Dust Bowl of the 1930s is still fresh in the minds of older generations. Hardships that grew out of that remain solid through oral tradition and folklore, and are thoroughly described in The Grapes of Wrath by John Steinbeck. Farmers today face uncertainty because of the rapid changes in farming conditions; Texhoma was able to pull out 6.2 million bushels of corn in 2010, but not even three million are expected in 2011. Corn producers for Texhoma Wheet Growers, Inc., for example, have fared so badly that the company has introduced options for canceling contracts, which include service fees per each bushel lost.

Financial experts say the effects of the current drought might last for years. On a financial level, farmers with just a percentage of their land covered may only recover input costs, according to Rowdy Slavin of First National Bank. A rippling effect could have an impact on indemnities as well. Farmers like McDaniel have fared better because he has a more diverse array crops and production areas. Some fields have received a little rain, but the 34 year old farmer hit a roadblock when some of the lost corn crop turned up potentially toxic, so plans for grazing the land are now up in the air.

The natural environment complicates things not only for farmers, but for policy makers in Washington as well. Jerod McDaniel’s stand is that crop insurance is more important than direct subsidy payments. Of course, this might not be the position of every farmer, so a complicated road ahead lies for both farmers and government policy. Brief changes in the weather have opened the door to planting wheat, but even good farmers like McDaniel face uncertainty as to how much is sufficient to bring the crop yield up enough to turn a significant profit.

Sources:

DTN Headline News (http://dtn.usfarmcredit.com/index.cfm?show=4&id=0702BF4D)

Environmental Science in the 21^st Century (http://oceanworld.tamu.edu/resources/environment-book/dustbowlandaftermath.html)