15, 2007: One of the main discussion items amongst farm
organizations is how to help the majority of farmers in their quest
to obtain adequate income. In this regard, much of the debate lately
has centered on things like expanding farm operations, cutting costs,
adding value to products, improving marketing skills or increasing
exports. In and of themselves, all of these things are good, but
they miss the main point.
Underlying many discussions about farm income are some conflicting
values and assumptions about how markets should function.
Consider the following: Today’s market rhetoric makes the
assumption that a willing seller and buyer are really all it takes
to make markets work. However, this assumption totally ignores the
fact that market exchanges between buyers and sellers are always
accompanied by institutional arrangements set up by the larger society.
Even the most ardent supporters of free enterprise generally admit
that their view of markets would not work without courts to enforce
contracts, a stable supply of currency and a host of regulations
and laws. These arrangements are all institutional in nature and
embedded in a view of how society and markets should function.
Author Linda McQuaig, in a book entitled “All You Can Eat,”
spends some time chronicling how economies of the past structured
their markets. In one example, she shows how English regulations
from the sixteenth and seventeenth centuries severely restricted
the role of middlemen in the economy.
For example, farmers were required to bring their grain to the
local market as soon as it was harvested, were not allowed to sell
to a middleman prior to harvest and couldn’t store the grain
in hopes of obtaining a higher price. Once at the market, common
people could purchase grain or flour in any quantities they wanted,
under careful supervision of weights and measures. After the common
people had made their purchases, middlemen were allowed to buy strictly
limited quantities of grain but weren’t allowed to store it
in hopes of obtaining a higher price in a later market.
McQuaig points out that the overriding concern of those older British
markets was to ensure that people didn’t use leverage to advance
their own interests over the interests of other people. And they
established regulations and market arrangements accordingly.
In essence, markets are never free of institutional arrangements.
We make rules and establish arrangements according to which values
we think are important. Getting back to the question of helping
farmers to obtain adequate income, the larger question may simply
be: Do we have the right rules and regulations in place to help
the majority of farmers obtain adequate income from farming?