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)