Dan McLaughlin

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To Home Page Latest Newsletter Column Archives Click to get these columns for your local paper	Post Comments Below © 2007 Daniel J. McLaughlin Farm Bill Follies Family farms are very similar to Mom and Pop grocery stores or general stores or butcher shops. Those shops used to dot the landscape in towns all across America. Before the age of efficient transportation and refrigeration, computers, and advanced technology, prices were relatively high, and local family owned stores could make an adequate profit. Those high prices that gave the small shops the ability to thrive, however, were the same high prices that burdened every other family in the economy and kept standards of living relatively low. As technology advanced and productivity increased, prices declined. With better transportation and preservation methods, economies of scale brought about the rise of large stores and reduced costs. The new stores were able to be profitable while offering low prices and a bewildering variety of different products. Small local stores couldn’t compete with this and, with few exceptions, mom and pop grocery and general stores are artifacts of bygone times. Is that good or bad? For the local store owner it was very bad. For the consuming public, however, it was very good. Even low income people now have access to a wide variety of food and many other products at a very low relative cost. Family farmers have been subject to much the same pressures as family shops. Advances in crops, methods, machines and other technology produced a situation where fewer farmers were needed to feed the population. Farm prices should decline as productivity increases, as would be expected in every industry, in every time. In the farm business, however, something odd happened as this little piggy went to market. In the 1930’s, legislation was enacted to alter the inevitable economic consequences of progress. Politicians wanted to help the poor farmers who were being squeezed by the increase in productivity and fall in prices. A whole raft of measures was concocted to keep farm prices high. The correct understanding was that, if supply can be artificially restricted, prices would be propped up. The various methods included the destruction of massive quantities of crops and millions of head of livestock. While it effectively reduced the supply, it was kind of embarrassing for the government to be seen destroying good food at a time when millions of people were starving in the Great Depression. The method was changed to enforcing restrictions on amounts a farmer could produce. Vast amounts of acreage were plowed under. The government also paid farmers to not plant crops, and bought vast quantities of commodities to keep them off the market. The various efforts did bear fruit. Supplies were limited and high prices were maintained. Hooray for the wise leaders in Washington. They were successful in forcing up prices for food, clothing and other necessities for the millions of unemployed workers and their families languishing in the dark years of the 1930’s. Not only were prices artificially high, but the vast amounts paid to farmers not to produce had to be collected from consumers, a double whack. Fast forward to 2007. The legacy of the 1930’s still haunts us. Under the Farm Bill and other legislation, huge quantities of government purchased commodities still distort markets, billions of dollars spent on subsidies still have to be collected from real people, and higher prices for agricultural goods still hurt consumers. What’s the solution? Government should quit the subsidy and support business. Just as Mom and Pop Groceries disappeared because they were inefficient, high cost operations, inefficient farms should be allowed to follow suit. Efficient operators will easily earn a profit as supply equalizes with demand, something not seen in many decades of intervention. A farm is a business, nothing more, nothing less. I would like for everyone to succeed, but any business that cannot succeed without government support is not a viable business. The current Farm Bill is this year’s version of the same old laws that hurt consumers and take money from my pocket and yours to subsidize an industry that is now dominated by massive agribusinesses that don’t have a stitch of concern about family farmers. Mom and Pops get my respect. The owners are generally hard working, diligent people. If they cannot make a profit, however, they need to turn to a career where they can be more productive. Turning to government for protection and support is stealing money from the pockets of everyone else. Farm programs need to be thrown in the dust bin of history, where they belonged eighty years ago.
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Daniel Mclaughlin Copyright © 2006 [Daniel McLaughlin]. All rights reserved. Revised: 01/06/08

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Farm Bill Follies

Family farms are very similar to Mom and Pop grocery stores or general stores or butcher shops. Those shops used to dot the landscape in towns all across America. Before the age of efficient transportation and refrigeration, computers, and advanced technology, prices were relatively high, and local family owned stores could make an adequate profit. Those high prices that gave the small shops the ability to thrive, however, were the same high prices that burdened every other family in the economy and kept standards of living relatively low.

As technology advanced and productivity increased, prices declined. With better transportation and preservation methods, economies of scale brought about the rise of large stores and reduced costs. The new stores were able to be profitable while offering low prices and a bewildering variety of different products.

Small local stores couldn’t compete with this and, with few exceptions, mom and pop grocery and general stores are artifacts of bygone times. Is that good or bad? For the local store owner it was very bad. For the consuming public, however, it was very good. Even low income people now have access to a wide variety of food and many other products at a very low relative cost.

Family farmers have been subject to much the same pressures as family shops. Advances in crops, methods, machines and other technology produced a situation where fewer farmers were needed to feed the population. Farm prices should decline as productivity increases, as would be expected in every industry, in every time. In the farm business, however, something odd happened as this little piggy went to market.

In the 1930’s, legislation was enacted to alter the inevitable economic consequences of progress. Politicians wanted to help the poor farmers who were being squeezed by the increase in productivity and fall in prices. A whole raft of measures was concocted to keep farm prices high. The correct understanding was that, if supply can be artificially restricted, prices would be propped up. The various methods included the destruction of massive quantities of crops and millions of head of livestock. While it effectively reduced the supply, it was kind of embarrassing for the government to be seen destroying good food at a time when millions of people were starving in the Great Depression. The method was changed to enforcing restrictions on amounts a farmer could produce. Vast amounts of acreage were plowed under. The government also paid farmers to not plant crops, and bought vast quantities of commodities to keep them off the market.

The various efforts did bear fruit. Supplies were limited and high prices were maintained. Hooray for the wise leaders in Washington. They were successful in forcing up prices for food, clothing and other necessities for the millions of unemployed workers and their families languishing in the dark years of the 1930’s. Not only were prices artificially high, but the vast amounts paid to farmers not to produce had to be collected from consumers, a double whack.

Fast forward to 2007. The legacy of the 1930’s still haunts us. Under the Farm Bill and other legislation, huge quantities of government purchased commodities still distort markets, billions of dollars spent on subsidies still have to be collected from real people, and higher prices for agricultural goods still hurt consumers.

What’s the solution? Government should quit the subsidy and support business. Just as Mom and Pop Groceries disappeared because they were inefficient, high cost operations, inefficient farms should be allowed to follow suit. Efficient operators will easily earn a profit as supply equalizes with demand, something not seen in many decades of intervention. A farm is a business, nothing more, nothing less. I would like for everyone to succeed, but any business that cannot succeed without government support is not a viable business.

The current Farm Bill is this year’s version of the same old laws that hurt consumers and take money from my pocket and yours to subsidize an industry that is now dominated by massive agribusinesses that don’t have a stitch of concern about family farmers.

Mom and Pops get my respect. The owners are generally hard working, diligent people. If they cannot make a profit, however, they need to turn to a career where they can be more productive. Turning to government for protection and support is stealing money from the pockets of everyone else. Farm programs need to be thrown in the dust bin of history, where they belonged eighty years ago.

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