"Whenever I go into a restaurant, I order both a chicken and an egg to see which comes first"

Thursday, September 13, 2012

Farm Subsidies Are Wrong–Climate Change Is Yet Another Reason Why

Mark Hertsgaard, writing in the New York Times (9.13.12, Harvesting a Climate Disaster) points out that despite the increasingly strident calls for cutting federal spending, Congress is still intent on passing a Farm Bill which will continue to hand out taxpayer largesse. Data for 2012 indicate that “The Department of Agriculture provides up to $30 billion annually to farmers of corn, cotton, rice, soybeans, wheat, and other crops. It also aids farmers with research, loan, and insurance programs” (Cato Institute).

The proposed farm bill — Senate- or House-style, take your pick — would make American agriculture’s climate problem worse, in two ways. Not only would the bill accelerate global warming by encouraging more greenhouse gas emissions, it would make the nation’s farms more vulnerable to the impacts of those emissions.

Indeed, instead of helping farmers take common-sense measures to limit their land’s vulnerability to extreme weather, the legislation would simply spend billions more on crop insurance — sticking taxpayers with the bill. “It’s like giving a homeowner cut-rate fire insurance but not requiring fire extinguishers,” Jim Kleinschmit of the Institute for Agriculture and Trade Policy told me in an interview.

The thrust of the article is on climate change, and the fact that crop insurance allows farmers to ignore environmental realities and to continue to farm in ways that contributes to climate change:

Agriculture is also a major contributor to global warming: by some estimates, it accounts for roughly a third of emissions globally. The industrialized, meat-heavy food system of the United States takes a heavy toll on the atmosphere; it takes an enormous amount of fossil fuel to run farm equipment and harvest the mountains of corn that fatten livestock. And most fertilizers contain nitrous oxide, a greenhouse gas 298 times more potent than carbon dioxide over a century.

What bothers me most about this is the negative effect that these retrograde farm policies have on private enterprise.  Instead of thinking seriously about what they might do to mitigate the effects of global warming, farmers simply ignore the problem.  Why should they invest a dime when there is nothing to lose?

Farmers can best boost resilience to climate change, scientists say, by improving their soil’s fertility and capacity to retain moisture. That means cutting back on chemical fertilizers, which kill many of the microorganisms that ventilate soil, and shifting to compost and manure fertilizers and crop rotations.

Adopting these reasonable measures under the current political environment of entitlement and subsidy is highly unlikely.

Farm subsidies do more than contribute to climate change – they lull farmers into ignoring other possible dangers to crops, a tendency which could spell disaster in the long run:

Industrial agriculture’s ability to produce gargantuan amounts of food also makes it exceptionally susceptible to [other problems]. Relying on vast monocultures — the miles and miles of cornfields one passes when driving in Iowa — captures economies of scale. But that lack of diversity invites trouble. A monoculture’s uniformity means that if temperatures spike or a new pest arrives, the damage is likely to spread throughout the entire planted area. By contrast, the diversified landscapes of organic agriculture — corn planted between, say, other vegetables and chicken pens — tend to limit damage.

Again, under the current federal support system, farmers can ignore these issues because if they in fact do arise, the crop insurance program will bail them out.

It gets worse:

Instead, leading lobbyists for agribusiness want to retain the current production system but shift the mounting climate risks to the taxpayer. Both versions of the farm bill would expand the $11 billion crop insurance program, a move championed by the National Corn Growers Association. The Senate bill, for instance, would authorize $3.8 billion a year for additional insurance.

But neither version would require farmers to take other measures to reduce their climate vulnerability, like investing in healthier soil. In fact, the draft bills would actually make it harder for farmers to do that because the expanded crop insurance would be paid for by cutting the Conservation Stewardship Program, which helps farmers improve their land’s ecological health.

Private businesses run risks every day with no federal safety net under them.  Thousands of start-up owners borrow money and invest sweat equity to make their enterprises work. Despite this commitment and hard work, most will fail.  It is American competition at its best – only those businesses which can master economics, finance, marketing, product design, management and logistics, real estate, inventory, and labor will succeed.  No one is helping them, least of all the federal government. Why should agriculture be any different?

The argument, of course, is that a strong agriculture sector is in the national interest given the current highly unstable world political environment. Yet, unlike the energy sector, agriculture is and has been a surplus industry – we produce far more than we can consume and export the rest. 

Agriculture subsidies and tax supports do not stop at direct investments.  Energy and water subsidies, both of which indirectly support agriculture are considerable:

Total Federal energy-specific subsidies and support to all forms of energy are estimated at $16.6 billion for fiscal year (FY) 2007 (Table ES1). Total energy subsidies have more than doubled in real terms (2007 dollars), increasing from an estimated $8.2 billion in FY 1999. Tax expenditures have more than tripled since 1999, rising from $3.2 billion that year to more than $10.4 billion in 2007 (Energy Information Administration, 2007).

The federal government has paid over $687 million in water subsidies to hundreds of California and Arizona farmers over the past two years (USDA).  Subsidy payments continue to flow even as municipal water restrictions in both states take effect to address drought conditions and low water levels. (Blue Living Ideas, 2009)

But who is really responsible for this?  The American consumer who demands that food prices be kept low and whose short-term interests drive Congressional decisions.  It makes far more political sense to keep crop protection subsidies up, to allow farmers to enjoy vast economies of scale to reduce cost without having to invest in rational but costly protective measures, and to give consumers low-cost food.

‘Sequestration’ – across-the-board spending cuts may be the only way to reduce agriculture subsidies, since the pusillanimous Congress will never act on their own. I’m ready.  

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