Who Says Money Can't Grow on Trees? (It Certainly Can Grow in Dirt)

When Jed Clampett & family came into the city from their ho-hum Arkansas (or was it Appelachian?) existence, they continued to derive seasons upon seasons of financial goodwill from their little plot far far and away. The story there is not so different from what happens in the case of subsidies in the Farm Bill. While not the largest title, the Commodity Payments (Title 1) , do represent some of the most contentious payments, and some of the most complicated.

Now when politicians, activists, and others say "subsidies", they actually can mean a lot of different programs.  Title 1 covers a number of different programs covered by the umbrella term of subsidies: Direct Payments (DP), Counter-Cyclical Payments (CCP), Average Crop Revenue Collection (ACRE -- an alternative to CCP, described below), Loan Deficiency Payments (LDP's), marketing assistance, and insurance assistance (covered in Title XII). (See how much policymakers love acronyms! It's like a magical zoo of topsy-turvy speak for things that, even when you spell them out, really don't make a whole lot of intuitive sense.)

Each of these programs are connected in a network of overlapping regulations and institutions that give out somewhere in the ballpark of $95 billion dollars in the 2002-2007 cycle, and only slightly less in the 2008-2012 cycle (1). These payments apply only to the 5 major commodity crops (rice, wheat, corn, soy, cotton), and are distributed in this way: Every 5-odd years the Farm Bill comes up for re-authorization (2), farms deliver their records for their 5 most recent harvest numbers and how much acreage of their land it occupies. From those numbers, two facts are gathered - one, their Olympic average of harvest (the mean, minus the highest and lowest producing years) and two, the number of acres planted under legitimate crops and cover. The first is important for determining the average production per acre, the latter for determining the amount of acreage eligible to receive subsidy assistance.

Here's where things get tricky, is in the government definitions. See that term "eligible acreage"? Besides inferring the lands can be included in subsidy assistance, it means they also ONLY grow crops that are entitled to subsidy support. You use a cover crop that isn't on the allowable list? Exempted from the subsidy program. Tried your hand at growing vegetables on a plot that formerly grew corn? No subsidy for you! Planted a legit cover crop then tried to sell it? Shit outta luck if you planted radishes and not soy, because one will get you kicked out, the other you might be able to get away with. So the subsidy program pretty directly incentivizes the growing of only 5 specific crops, and heaven help you if you want help growing apples. Or lettuce. Or anything people actually eat (3). So that's the first thing: if you're in the subsidy program, you're locked into it if you want to keep deriving funds from it.

And who wouldn't? As the Washington Post showed during a year-long investigation, there's a very keen chemistry to working the subsidy system. And its assisted by the way those various programs are interlinked. Say, for example, you have 100 acres of corn, and your Olympic average is 150 bushels per acre. The baseline price is slated for $1.00 per bushel, that being the average price over the last 5 years. Automatically, based on these averages, the Farm Bill will allocate Direct Payments to the farmer based upon those numbers projected into the future. (So every year, for 5 years, a farmer receives an automatic payment of $15,000.) This is seperate from the counter-cyclical payment (CCP), where the government promises, based upon that baseline price, a floor for the lowest-possible payment over the next several years. So if the actual sales price of corn goes up, the farmer can claim the added benefit. But say the price goes down, say to $.80 per bushel, the government will make up that remaining difference. (an additional $3,000 in this given year). So without doing anything more than filing papers, our farmer has earned $18,000 in taxpayer dollars. And since our example here is both 10-15 times smaller than the average commodity farm, and our price selected was half of the present price, our real life average is actually closer to $360,000 a year for your average commodity farmer.  (This number does not yet include insurance payments, which we will touch on later.)

The buck also doesn't stop there, either. In certain cases, the person farming the land may (or a person farming a smaller property) may not even be the person receiving that particular payment. As Ken Cook, head of The Environmental Working Group shows in this clip from a TedxManhattan talk earlier this year, thousands of people receiving subsidies live in Americas large cities, receiving payments as the landholders of rural second homes, property developments (earning conservation subsidies, a much smaller payout than the Title 1 commodity subsidies), or as agricultural firms who own the land but sell to renter-farmers (which is in and of itself a complicated matter). In most cases, it is posited that most small and medium sized farms are ineligible for the vast majority of Title 1 price supports, or they garner insignificant income from it due to acreage (or more likely, as posited, they are growing "specialty crops" -- fruits and vegetables -- which receive little to no direct subsidy supports). You don't even actively have to be growing crops on your land -- since the historical record shows your averages, you can claim you're leaving the ground fallow for cover crops and still receive a payment for corn produced from said acreage (part and parcel to some of the trickier Conservation title programs).

Without looking at the insurance supports, we can already tell that on its own, the Title 1 commodity payments tilt the agricultural setting unfairly towards a limited number of crops and give payouts to crops that are not only large, but perhaps not even going to the parties for whom they were intended. The points made by the Washington Post team are still relevant and are worth considering. And as the various committees (including the supercommittee) deal with cutting back at Farm Bill programs, it's worth seeing whether or not we end up with a fairer set of programs, or potentially more runs of Jed Clampetts.

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1)  For the 2008 Farm Bill, the overall allocation to Title 1 was cut in half to $42.5 billion, but a reserve fund was set aside to the tune of $50.2 billion, reserved for programs that, surprise, only fell under Title 1.

2) An important point, Farm Bills come up every 5 years or so as part of the process of re-authorization, i.e. saying "yes, we like these programs very much and wish them to continue". As part of the political drama, especially this year, the process of re-authorizing comes into conflict with those able to allocate the funding to ensure those programs are funded. Agriculture in this case concerns itself more with the reauthorization aspects, as does the full Congress; allocation concerns are usually promoted by Appropriations in conjunction with the Agriculture committee, and this year, the Supercommittee. We'll be setting up a post with a lexicon forthcoming.

3)  As referenced above, the 5 commodity crops are largely NOT consumable by human beings. The soy you hear about is not the edamame of your Japanese restaurant  or the soymilk in your Whole Foods. The corn you hear about is a lab-grown variety that you won't find on your 4th of July grill. Wheat is the lone exception, and with rice a much smaller percentage than corn or soy; most foods you find at the market are defined as "specialty crops" that are offered no or little subsidy support. And while meat and dairy are not explicitly listed as being subsidized, they receive direct assistance in that the corn and soy that IS being grown is almost all grown for cattle feed operations - a topic we'll get into at a later time.

So how did we get here? :: A Short History of the Farm Bill(s)

Dorothea Lange's "Migrant Mother" is one of the most iconic photos taken of Dust Bowl and Depression-era America. It encapsulates a complexity of emotions, possibilities, and hardships that confronts this mother of two, living as a sharecropper recently moved points westward. As Lange herself recounted:

 I did not ask her name or her history. She told me her age, that she was thirty-two. She said that they had been living on frozen vegetables from the surrounding fields, and birds that the children killed. She had just sold the tires from her car to buy food. There she sat in that lean-to tent with her children huddled around her, and seemed to know that my pictures might help her, and so she helped me.

The story of this photo -- how this mother came to be here, her circumstances, and her surroundings, in all their complexity --  is the story of the Farm Bills origin. Its evolution is no less complex, a series of well-intended actions to protect farmers gone awry and large-scale attempts to systematize the way American agriculture worked, bringing in new stakeholders(1) into the story of American farming.

The Farm Bill began life not as a single piece of legislation, but a series of legislative acts and executive directives brought forth by Franklin Delano Roosevelt to counter two very specific and intertwined events: the increased & aggressively detrimental Dust Bowl and the ongoing economic complications of the Great Depression. The former was a result of increased mechanization and one-crop planting that had come to define Midwestern agriculture in the early 20th century -- deep plowing and planting loosened soil, and when drought cycles hit in the 1920's, these practices allowed large amounts of topsoil to dry out and literally blow away(2). (So much so that the Capitol in Washington, D.C. was covered in a fine film for many years.) The latter was (and still is) the subject of much debate by economists and historians, but the long story short, the price fluctuations that accompanied the market collapse not only left many families unable to afford milk, grains and other products, but also left the prices of many products (determined by the Chicago commodities market) completely under the cost of production. Farmers were producing product no one could by at volumes and costs that swamped any income they did derive from it(3).

In response, and as a part of the early experimentation in what would become the New Deal programs, a series of programs and legislative acts appeared in the 1930's to respond to the economic and ecological issues brought together by these events. Starting with the Agricultural Adjustment Act of 1933, 6 subsequent pieces of legislation would follow through to 1938 with these intial goals:

1) To stabilize price floors for farmers -- a government-backed guaranteed minimum price per bushel on crops -- to ensure that they could remain solvent.

2) To develop incentives for farmers -- government payments directly given to farmers -- to encourage the use of ecologically sound techniques to preserve soil health and long-term agricultural utility of the land.

3) Quotas and government buying programs -- used to keep production at specific levels to keep prices stable, and using the latter to buy the surplus to supplement the first of the major government food programs (food stamps and school lunches).

The initial Farm Bill legislation acted as triage for a farm sector that was bleeding profusely in the 30's, and the Bill retained that character when it was brought up for review in 1948. Going forward, those 3 elements -- price stability and assurances, conservation, and government food programs -- formed a trinity of overarching themes that cover the majority of the present-day 15 titles of the Farm Bill.

From here, individual farm bills matter less than the trends that accompanied them. For example, in the 1950's, complications began to arise with regards to those first and third principles as the General Agreement on Tariffs & Trade (GATT, the precursor to the World Trade Organization) sought to eliminate those sorts of artificial price supports. This lead to a massive restructuring of how payments were calculated and conducted, leading to the introduction of direct payments to farmers (a concept we'll come to in our next post). In the 1970's, we saw the introduction of Agriculture Secretary Earl Butz, man of the "get big or get out" school of agricultural production who oversaw not only an expansion of the subsidy program, but also more tightly focused its benefactors, specifically to the product of corn. The program saw only minor changes in content over the next several decades in terms of content, though the allocations made for its procurement would grow around 35-50% per five year period. In the 90's, we saw an increase for conservation and rural development programs, and the institutionalizing of the organics program. Much remained the same up until the the 2007 Farm Bill, which became a watershed moment for the amount of public attention turned towards its content, thanks to a little book called "The Omnivores Dilemma"(4).

And there, in less than 1000 words, is the historical order and general shifts of the Farm Bills. Does this seem to gloss over a lot? Hell yes. Is it possible to cover all of this matter succinctly? Hell no. That's why I am saving the content of specifics for the individual titles, to give more background and flesh out each topic in greater specifics. My goal here is to make sure these posts don't turn you into some Dinty Moore-snogging zombie and that you get bite-size pieces that give you enough to digest. Like Dorothea Lange's photo, each entry tells part of the story -- and like the photo, there's a lot to process in each title.  So sit back, relax, and digest. There's more to come(5).

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(1) Stakeholders is a delicious term that refers to anyone who has a "stake" or an investment in a given issue or topic. It's also a highly problematic term, in that not all stakes are created or weighed evenly.

(2) Donald Worster, 2004 (1979) Dust Bowl: The Southern Plains in the 1930s (25. anniversary ed) Oxford University Press.

(3) Bordo, Michael D., Claudia Goldin, and Eugene N. White , eds., The Defining Moment: The Great Depression and the American Economy in the Twentieth Century (1998) University of Chicago Press.

(4) Most of this information is being drawn off a number of Congressional Research Service (CRS) reports on the Farm Bill. If you're unfamiliar with the CRS, it's a great institution that boils down the details of legislation and research for members of Congress, with an emphasis on dispassionate, fact-based review. Many of these reports are not available for public consumption, however at http://opencrs.com/ you can find many (search Farm Bill) for some of the ones used here. (Think of it as additional reading for the especially geeky!)

(5) In an effort to be succinct yet brilliant, I am in fact limiting myself to entries of about 1000 words. I could let myself go on for ages on given topics, but 1000 words is almost 4 pages of reading. That's a hunk these days. And it forces me to be concise and consider the most important parts of each section I'm creating here.

So there's this Farm Bill, see....

  At some point today, did you sit down for a meal? Buy a shirt? Sit or hike in a national park? Did you or your child have a meal in a public school? Go grocery shopping at your supermarket, boedga, or farmers market? Drive a car using ethanol or “green gasoline”? Or utilize your unemployment benefits?

  If you've done any one of these things, among many others, you have been involved in an activity affected by the farm bill.

  On its face, none of these things would seem to have anything in common. I mean, shopping and hiking are, like, totally different things, right? Not when one bill covers everything from conservation and food stamps, energy policy and direct payments to farmers (and possibly your suburban neighbors!), all to the tune of $288 billion over 5 years . The Farm Bill is a massive piece of legislation that few of us ever hear about, let alone think about, and yet effects almost every facet of our modern society. (And no, that's not exaggeration.)

But what is this Farm Bill, you ask? 

  Put simply, the Farm Bill is actually a collection of legislative programs that have, for the last 80-odd years, assisted in developing our current food system¹. Originally the result of creating programs to support farmers and farm ecology during the Dust Bowl and Depression (1929 till World War 2, effectively), the Farm Bill over time has come to encompass the following Title programs²: Commodity Payments, Conservation Programs, Trade, Nutrition, Credit, Rural Development, Research & Development, Forestry, Energy, Horticulture & Organic Farming, Livestock, Crop insurance & Disaster Assistance, Commodity Futures & Miscellaneous Programs. It gets reviewed every 5 years for all programs, and modified the same way any piece of legislation is done – through committees (Agriculture, Appropriations, and this year, SUPERcommittee!), letters written to your congressional representatives, and of course, a bevy of lobbying money from agri-business companies, non-profits, trade groups, foreign governments (hah -- Bet you didn't see that one coming!) and public interest groups.

That sounds torridly complicated.

  And how! It's several dockets of programs within programs, written in the most remarkable claptrap legalese imaginable. All of it is largely written to the benefit of lawmakers who are sending pork projects back to constituents. There are programs in one title that do the same thing as another program, but covered in a different title of the bill! There's the fact that only several hundred million from $288 billion dollars went to fruits and vegetables, and large swathes of money went to cotton and corn humans can't even eat! It's filled with terms like counter-cyclical payments, market registry sheets, and interdependent-transitional payment regimes, and numbers (like $288 billion) that make your mind go Scooby Doo. It is almost enough to make you want to watch Jersey Shore (and that, mind you, only happened the once).

And that's why we're here.

  The origins of this blog came out of my second class with Professor Marion Nestle, entitled (aptly) Sociology of the Farm Bill. After our first week of readings, she proceeded to open the class like so:

Marion: So you all must have done the reading this weekend, much like I did....

various grumbles, half-nods and jilted laughter of us graduate students

Marion: ...but this was a re-read for me. You see, I read all of this over the summer. And reading it again, I couldn't help but feel as if this is all so, so unnecessarily difficult to read.

  Marion, by the way, used to work for the United States Department of Agriculture, and has written a few things herself on the topic. She has a PhD in Nutrition, which as a hard science is even more technical than my social sciences brain wants to handle. And if she is having difficulty, and her class of ostensibly intelligent graduate students is having difficulty, imagine what Joe Citizen would feel attempting to even break into an analysis of the Farm Bill?

  The purpose behind Farm Bill Almanac is to read the tea-leaves a little and break down all the issues involved with and connected to the Farm Bill as we ramp up to its next review in Spring 2012. We're going to be breaking down the individual titles, examine the programs, and relate it back to how you, the readership, are affected positively, negatively, and otherwise by its multitude of programs directly, indirectly, and yes, otherwise.

  We'll also be covering a couple of side-topics – farmers markets, affordability and cost issues, useful infographics on food – so it's not going to be all ho-hum all-farm-bill-all-the-time. The idea is to keep this as accessible and easily explained as possible Not dumbed down, mind you, but easy enough that this topic can finally be grasped, and hopefully, give readers the tools to either understand the systems in place around them, or begin to work on their congressional representatives, volunteer with organizations that reflect their desires for, or just want to get involved with the Farm Bill in general. Because whether or not you care, the Farm Bill does effect your life (& your wallet) in more ways than you know.

These are going to be interesting times with the 2012 Farm Bill. We're already seeing competing measures put forth by various committees and groups of individuals besides the Supercommittee, and even within it there are politics at work. State organizations are beginning to take actions based upon their projections for the Farm Bill. And even now, actions are being taken on programs that are undercutting environmental protections, crop insurance provisions, food stamp programs and financial support for new and beginning farmers. And while none of that may seem relevant to you right now, just be ready – you'll be surprised by what you'll find out.

With the best of regards,

Farm Bill Almanac³

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1  And yes, food system. Because while the Farm Bill deals specifically with agriculture, the way it plays out pretty directly effects what you buy at the supermarket.

2  Think of these as different chapters in the book of the Farm Bill.

3  So you must be thinking “Your name isn't Farm Bill Almanac?!? Who are you?!?!”. A) indeed, it is not my name – my parents weren't such hippies – and B) I'm Stephen Wade. I observed and wrote about the 2007 Farm Bill for the Berkeley Political Review and have been involved examining and documenting Farm Bill-related politics and programs for the last several years. Presently, I'm a graduate student at NYU's Steinhardt School, obtaining my MA in Food Studies, with a focus on conservation & agriculture policy and national food security programs. I come from a analysts background, and my goal here is to best present a breakdown of the Farm Bill programs, without casting major judgment. I will, however, make certain cases for certain changes in programs, but those will be independent entries from any of the breakdown of the individual titles . I also like hiking, muscadet & Tomales Bay oysters, and letterpress.