Editor’s note: This op-ed is by James H. Maroney Jr., a law school student, who is a former farmer.
The 2012 Farm Bill is a mare’s nest of legislation designed to fold in myriad national interests in order to get its central purpose passed into law. And its central purpose is not farmers, or farming, as the title implies, but the business of purchasing raw foodstuffs, manufacturing it into food, distributing it and selling it, either to retailers and consumers or to government. The Farm Bill is not oblivious to farmers: the cultivation of soil in which raw food stuffs are grown is the first step in what is referred to as the food chain. The Farm Bill sets the stage for the economics of producing raw foodstuffs; it does not care particularly who makes them, how they are produced or where, only that raw foodstuffs be produced in surplus in order that they be cheap.
That is why the Farm Bill encompasses programs like nutrition, health, rural “development” and food assistance. These are important government concerns, but they should be separated from the Farm Bill: they have nothing to do with farming.
Everyone knows that farming in California, Iowa and Missouri is not the same thing as farming in Vermont. The differences are many, but for our purposes they boil down to weather, soil, water and scale, all of which boil down to quantity at cost, the main thing.
Think of U.S. farming as a set of concentric rings. The innermost circle represents the few, largest, most “efficient” farms, all in the most salubrious weather conditions and the most productive soils. In the 1920s through the 1960s, the federal government arranged, at taxpayer expense, to dam all America’s major rivers in order to supply these farms with water (80 percent of water use goes to agriculture). These programs subsidized farming in the Imperial Valley in California and essentially fallowed farming in the remote New England states where, in the rings of our diagram radiating outward, we find farms with increasingly less salubrious weather, water and soil. These farms are generally smaller due to political or geographic necessity. They are less “efficient.”
“Efficiency” is a measure of cost, which ignores pollution, which since World War II has become an unavoidable byproduct of farm “efficiency.” That is why it does not matter to the authors of the Farm Bill whether a farm is in one part of the country or another, whether it is conventional or organic; in economic terms corn that reaches the market at $4.95/bushel clears the market before corn priced at $5/bushel. Corn that comes to market at $7/bushel clears the market last.
The basic economics of farming has not changed since the dawn of time: wheat, oats, pork, cotton or milk produced most “efficiently” are the commodities bought first. There is no room for sentiment or regional pride in this prescription: wheat, oats, pork, cotton or milk are fungible commodities, that is, wheat or corn grown in Nebraska is identical to wheat or corn grown in Iowa. They are also “perfect competitors”; absent market-distorting government subsidies they compete on price alone.
From a strictly parochial point of view, our concerns in Vermont are (1) that we get enough food to eat and (2) that it is not priced above our ability to pay. The system that is in place via the Farm Bill meets these two requirements and, consequently, Vermont imports 97 percent of its food from out of state. You may like to think of Vermont as a farm state and you may even buy some of your food at the local farmers’ market. But Vermont farms, no matter where they are located or what their scale, are in the outermost rings in our diagram. They are — notably our conventional dairy farms — among the nation’s least “efficient.” Milk is a fungible commodity, identical in every way to milk made in California or Illinois, competing on price alone: the average conventional Vermont dairy farmer’s cost of production is above $22/hundredweight and because California and Illinois dairy farmers can produce milk and ship it east for less — far less — than it costs to produce here, Vermont milk clears the market last.
That is why more of our food is not grown in Vermont. Sentiment, local pride and state programs like Farm to Plate and Save the Working Landscape attempt to flout this ineluctable economic fact. The Farm Bill puts it at its center. But the Farm Bill does not give us what 97 percent of Vermonters had in mind when they told the Survey on the Future of Vermont that they supported agriculture.
That is why more of our food is not grown in Vermont. Sentiment, local pride and state programs like Farm to Plate and Save the Working Landscape attempt to flout this ineluctable economic fact. The Farm Bill puts it at its center. But the Farm Bill does not give us what 97 percent of Vermonters had in mind when they told the Survey on the Future of Vermont that they supported agriculture.
Rush Limbaugh tells his listeners that when the government subsidizes something, we get more of it. And he is right. The federal and state governments both subsidize dairy; but, unfortunately, what we get more of is not farms, which we want, but milk, which we don’t. The farmers are already drowning in milk because subsidies drive over-production, which is driving prices down, not up.
Ending the Milk Income Loss Contract (MILC) program, the so-called “safety net,” will surely reduce production, which, if that were all there was to it, would be a good thing. But production will not fall; it will only continue to shift to the increasingly fewer, increasingly larger, increasingly more “efficient” farms, of which increasingly Vermont has none. The Farm Bill will, therefore, accelerate the absorption of the many small farms by the ever-expanding, ever-polluting few. That is why the Farm Bill is not good medicine for Vermont.
Sen. Leahy is a reliable friend to Vermont’s farmers and his advocacy for the state’s agricultural community is beyond reproach. But Sen. Leahy’s first concerns are (1) that the 99 percent of Vermonters who are not farmers get enough food to eat and (2) it is not priced above our ability to pay. Fine man that he is, Sen. Leahy cannot repeal the classic laws of supply and demand. He cannot alter federal farm policy such that Vermont farms, which are an insignificant, outermost part of U.S. agriculture, will be assured support equal to the difference between the cost of milk made in California and the cost of milk made here. That is why the Farm Bill has a new provision to shift the risk of falling (or negative) profit margins, the inaptly named “safety net,” off the government’s shoulders onto the farmers’ shoulders.
Instead of the MILC program, which, in the face of consistently rising production and relentlessly falling demand, was costing the federal government $23 billion per year without “saving” farms, farmers will now be obligated to buy insurance against annual operating losses. This dramatic shift is tacit confirmation of the concentric rings model.
Vermont conventional dairy farmers will not buy the insurance. Premiums will confirm farmers in the knowledge that they cannot compete with dairy farms in California and Illinois and, in any case, the insurance industry is not in the business of supporting dairy farms for the sake of parochial sentiment.
Vermont dairy farms are an important part of our heritage and our landscape. If this iteration of the Farm Bill is reform, it is not the prescription that will save Vermont farms. It prescribes the status quo for consolidation and expansion, over-production, low prices, rural economic decay, farm attrition and the inevitable lake pollution that attends the application of the conventional paradigm. The Farm Bill has no particular interest in saving Vermont farms and Vermont cannot save them by flouting the laws of economics.
Perhaps the Vermont Agency of Agriculture Food & Markets and our Legislature should stop pandering to dairy farmers, acknowledge that the handwriting is (and for two generations has been) on the wall. It is time to acknowledge that the Farm Bill does not have our dairy farmers’ interests foremost in mind. It is time to incentivize them to get out of the production of commodity milk and for Vermont to get out of the federal milk marketing order program.
