| 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
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 avoid.”
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
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
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; email@example.com;
Daryll Ray's column is written with the research and assistance
of Harwood D. Schaffer, Research Associate with APAC.