| Posted May 24, 2005:
Much of the response to USDA’s recently released revision
of the food pyramid is predictable. Whether it is viewed as
(1) a tool of the food industry, (2) too confusing, or (3) a
needed and helpful revision that reflects the diversity of needs
within the US population seems to depend on the prior agenda
of the speaker.
There was one response, however, that you might not expect.
It came in a May 2, 2005 “Chicago Tribune” article
by Andrew Martin titled “USDA’s subsidies ignore
its own dietary advice.” Martin’s thesis is what
the USDA “urges people to eat to remain healthy does
not match what it pays farmers to grow.”
He notes that “Corn and soybeans receive a good chunk
of the $15 billion in subsidies to farmers that the Agriculture
Department is doling out this year. And while that might seem
logical because the food pyramid advocates a plant-based diet,
most of the corn and soybeans grown in the United States are
used to fatten cows, pigs and chickens, while the pyramid
recommends that consumers eat more fish and beans. Corn and
soybeans also are used to make artificial sweeteners and partially
hydrogenated oils that the food pyramid urges Americans to
If the basic purpose of US direct farm payments were to subsidize
consumers, there could be good reason to hop on Martin’s
bandwagon. But, as regular readers of this column know, that
is not the basic purpose of US farm programs. There are agricultural
and food related expenditures that do benefit, directly and
indirectly, consumers including taxpayer funded research and
extension and a whole host of food safety and food subsidy
programs. But consumers are not the primary target beneficiaries
for commodity programs. Let us take a moment and see what
the article suggests as the purpose of farm programs.
The article paraphrases a comment by former Rep. Charles
Stenholm, D-Texas: “He said the only justification for
farm subsidies is to increase production of a crop or to level
the playing field in the international marketplace.”
The reality is that the large government payments for the
1998-2001 crop years came about not to stimulate production
but to compensate farmers for extremely low prices. Even though
the value of direct payments were in the $20 billion range
in those years, aggregate production for the eight major crops
remained relatively constant, with weather being the deciding
Another argument made begins with the idea that farm programs
are programs that were initiated during the depression “to
give temporary relief to farmers for low commodity prices”
and goes on to point out that “once you provide a taxpayer
benefit, you develop a constituency.” This argument
suggests that farm programs are continued simply because farmers
and their supporters have the political muscle to keep the
money flowing even though those who make this argument contend
it is no longer needed.
A third argument is that fresh fruit and vegetable producers
do not receive farm program benefits and if one were to follow
the food pyramid guidelines they are the ones who should receive
the funds. While it is true that fresh fruit and vegetable
producers do not receive direct payments like commodity producers
do, they do benefit from a number of government programs.
Many fresh fruit and vegetable crops have government coordinated
marketing orders that influence how much comes to market.
By controlling the amount of product that is fed into the
commercial food supply, the setting of standards does function
to manage supply and maintain prices. In addition, fresh fruit
and vegetable producers benefit indirectly from commodity
program provisions. Prior to the 1996 Farm Bill, farmers who
grew program crops needed to maintain base acres and as a
result they stayed away from fruit and vegetable production.
Under the 1996 and 2002 farm bills, farmers lose benefits
on any acres they convert to fresh fruit and vegetable production.
Scientific evidence suggests that increased consumption of
fruits and vegetables likely has numerous nutritional and
health benefits. But it might be well to look before leaping
to policy conclusions.
Suppose fruits and vegetables were made “program crops”
or in some other way were made fully eligible to be planted
anywhere anytime under an unrestricted planting flexibility
clause. More acreage would be planted to the expanded list
of crops. We could expect fruit and vegetable net returns
to be driven down to near the net returns of the next most-profitable
major-crop, say corn. Fruit and vegetable farmers would be
among the recipients of decoupled payments or payments to
help compensate for reduced prices.
While the crop mix would change until net returns were comparable
among the expanded list of crops, aggregate crop acreage and
total crop production would be virtually unaffected. Hence,
agriculture’s fundamental problem would remain unaddressed
since the aggregate quantity supplied by all farmers and the
aggregate quantity demanded by consumers would remain relatively
fixed regardless of price.
As we see it, the fundamental problem of simply reorienting
commodity policy to be consistent with the food pyramid is
that it does not address the lack of price responsiveness
in aggregate agriculture. And “it’s price responsiveness”
of aggregate crop agriculture that we believe should come
to the top in a commodity policy proposal’s motivation
and ameliorating provisions.
Daryll E. Ray holds the Blasingame Chair of Excellence
in Agricultural Policy, Institute of Agriculture, University
of Tennessee, and is the Director of UT's Agricultural Policy
Analysis Center (APAC). (865) 974-7407; Fax: (865) 974-7298;
Daryll Ray's column is written with the research and assistance
of Harwood D. Schaffer, Research Associate with APAC.