From In These Times:
> June 4, 2007
Whose Subsidy Is It Anyway?
Farmers take the heat, but Big Ag reaps the farm bill benefits
By David Moberg
The farm bill, which Congress will likely vote on this fall, will affect environmental, consumer, industrial, trade and anti-poverty policies as well as the prices and subsidies farmers receive for producing commodity crops such as corn, wheat and soybeans. Legislators are now conducting hearings and readying proposals, but the outcome is “more up in the air than it has been in 30 to 40 years,” says senior policy analyst Dennis Olson at the Minneapolis-based Institute for Agriculture and Trade Policy. A small opening exists for a new progressive farm policy based on some old principles.
The winners
Conventional wisdom says that the villains in farm policy are American farmers, who have in recent years collected about $20 billion a year in subsidies. But the government provides the subsidies because commodity prices have been so low that most farmers would have gone bankrupt without them. And prices have been low because legislators have written farm policy to drive those prices down to aid big business rather than farmers—or anyone else.
“The important thing for policymakers and the public to be clear on is that the people who get checks written for them under the farm bill are generally not the beneficiaries of those programs,” says Timothy Wise, deputy director of the Global Development and Environment Institute at Tufts University. “So the obvious question is: ‘Who benefited?’”
Consider for a moment Big Chicken—not the tacky 56-foot high tourist attraction near Marietta, Ga., but the industry that turns out more than 16 million tons of poultry each year. Once highly diversified, with nearly every farm producing chickens, the industry is now highly concentrated: The top four processors, led by giant Tyson Foods, control more than 56 percent of production.
Tyson and other giants have consolidated their power by purchasing chicken feed for, well, chicken feed. As soybean and corn prices dropped 21 percent and 32 percent, respectively, after the passage of the 1996 farm bill, the chicken industry effectively collected a subsidy of $1.25 billion a year, according to Tufts researchers Elanor Starmer, Aimee Witteman and Wise. The subsidy—worth $2.59 billion to Tyson from 1997 to 2005—represents the savings for the industry compared to paying for the full cost of producing the grain in its feed.
The cheap, subsidized grain also gave big factory farm operations an edge over diversified family farmers. By feeding animals their own grain rather than buying government-subsidized grain on the market, these farmers have to pay the full cost of producing grain they feed to their livestock. Politically, however, it remains “hard for farmers to make the case that they’re not the welfare cases,” says National Family Farm Coalition Executive Director Katherine Ozer, “but it’s Tyson and Cargill that are the real welfare cases.”
Big Chicken is not alone. International grain traders (like Cargill), industrial users of food and fiber products (ranging from the biggest users, the livestock and meat industry, to processors like Archer Daniels Midland and the vast array of junk food manufacturers), and the corporate producers of seed, fertilizers, equipment and other farm inputs all profit from overproduction and low commodity prices. Even after a long history of consolidation, tens of thousands of independent farm operators still must compete with highly concentrated agribusiness corporations that have the power to set both prices of products sold to farmers and prices paid for farmers’ products.
“You’re talking about a huge savings in a huge industry that never is getting a subsidy check written to it,” says Wise. Until biofuel demand recently drove up prices, most farmers sold corn or soybeans for less than it cost to produce. Government subsidies covered only some of their financial loss, and many had to take jobs off the farm to make up for their farm losses.
Grain traders then sold that corn and soybeans abroad at below-cost prices. Such dumping drives millions of peasants off their land. The displaced peasants flood urban labor markets and thus depress wages. Their exodus from the land also fuels waves of immigration to more developed countries, including the United States—where many get low-wage jobs processing chicken.
http://www.inthesetimes.com/article/3190/whose_subsidy_is_it_anyway/
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