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Tennessee agricultural economist urges “Common Sense Farm Policy” at National Farmers Organization annual convention; other news

(Wednesday, January 31, 2007) ­ CropChoice news

1. Farm Bill proposals a good first step, says Organic Trade Association, but organic farmers need more
2. NFU President Tom Buis reacts to Administration's farm bill proposal
3. Tennessee agricultural economist urges “Common Sense Farm Policy” at National Farmers Organization annual convention
4. The population bubble
5. Are corn prices really too high? An editorial comment on corn prices and the new farm bill
6. The dirt on our farms

1. Farm Bill proposals a good first step, says Organic Trade Association, but organic farmers need more

For Immediate Release _Contact: Barbara Haumann, 413-774-7511, ext. 20; bhaumann@ota.com

Greenfield, Mass. (January 31, 2007)--The Organic Trade Association (OTA) today called the U.S. Department of Agriculture's 2007 Farm Bill proposals for organic agriculture a good step in the right direction but cautioned that organic farmers need more resources to meet the needs of domestic and worldwide markets.

"While organic farmers and the rest of the organic business community appreciate being mentioned in the proposal, organic farmers need a Farm Bill that reflects a farm-to-table strategy," said Caren Wilcox, OTA's Executive Director.

"OTA proposed a comprehensive plan to integrate organic production into USDA's many programs," Wilcox said. "Organic farmers need access to the same resources that conventional farmers receive from USDA. The Department acknowledged a few of those needs today, recommending market data and price collection efforts that will bring information about organic agriculture and trade closer to parity with information given to conventional farmers."

For example,

  • Each week USDA publishes the wholesale prices of a long list of commodities, fruits, and vegetables - but only those conventionally grown.
  • USDA also collects trade data, how much of each crop is imported and exported and at what price. But, again, only for conventional crops.

"Such information, considered basic for today's savvy farm businesses, is not available to growers of organic crops, the vast majority of whom are small, family-run operations," Wilcox said.

Furthermore, USDA called for a small increase in cost-share support for current organic farmers, but appeared to offer little technical assistance to enhance transition from conventional farming to organic.

The OTA plan focuses on four priorities:

1) Fostering transition to organic agriculture and trade by providing technical assistance to aid in the conversion of farmland from conventional to organic;

2) Eliminating hurdles to organic agriculture and trade by creating appropriate risk management tools and developing an organic export policy and strategy;

3) Initiating and funding organic agriculture and economic research as privately funded research is limited, and there is much to be learned about the fundamentals of organic production; and

4) Maintaining and enhancing current agency programs so the National Organic Program (NOP) can keep pace with the growing organic sector. Credibility of the organic standard is critical to the organic industry, and that credibility will be either enhanced or short-circuited by the actions of the NOP.

USDA today proposed spending $61 million for organic agriculture over 10 years, whereas OTA has called for that amount and more to be included in each year of the coming Farm Bill.

"USDA's proposal is a first step, and the Organic Trade Association looks forward to working with Congress to advance organic agriculture even further in the 2007 Farm Bill. A few of OTA's requests were included in this proposal, and for organic farmers to be most successful, OTA will keep working for more," said Wilcox.

The mission of the Organic Trade Association is to promote and protect the growth of organic trade to benefit the environment, farmers, the public and the economy. OTA envisions organic products becoming a significant part of everyday life, enhancing people's lives and the environment. As a membership-based business association, OTA focuses on the organic business community in North America. OTA's nearly 1,550 members include farmers, processors, importers, exporters, distributors, retailers, certifiers, and more. For further information, visit OTA's web site at www.ota.com.

Headquarters: P.O. Box 547, Greenfield, MA 01302 USA (413)774-7511, fax: (413)774-6432, www.ota.com _Canadian Office: 323 Chapel Street, Ottawa, On K1N 7Z2 (613)787-2003 _Legislative Office: 600 Cameron St., Alexandria, VA 22314 USA (202)338-2900

2. NFU President Tom Buis reacts to Administration's farm bill proposal

Contact: Emily Eisenberg 202-314-3104, eeisenberg@nfudc.org

Contact: Liz Friedlander 202-314-3191, lfriedlander@nfudc.org

"Today we heard the Bush Administration's 2007 Farm Bill proposal, and we have already started to examine their initial proposals closely. I am pleased the administration laid out a proposal in a timely manner. We agree with several aspects of the U.S. Department of Agriculture's proposal, and I look forward to working to move forward with them on mutual areas of agreement.

"At the same time we fundamentally disagree with some basic aspects of their proposal. On first blush, what the Secretary outlined is not what I have heard from farmers and ranchers at the farm bill listening sessions NFU conducted around the country about what they need to survive and prosper.

"Secretary Johanns suggested drastically changing the safety net, with less reliance on the challenges producers face today, and more reliance on how they farmed in the past. He proposed an increase in direct payments, which in my view takes us back to the future - back to a decoupled approach to farm payments. We've dealt with this system before, and we know it is unsuccessful.

"Let's remember, the current farm program has been working. The 2002 Farm Bill has actually saved roughly $20 billion since it was designed to rely primarily on a safety net that only provides support for food producers when prices are low. By encouraging more reliance on direct payments, payments will be too high when they don't need to be, and so low that they leave farmers out to dry when prices fall.

"The Secretary talked extensively on how the current safety net is based on price, and how producers who suffer production losses as a result of weather are not adequately protected. In my opinion, that problem is easily remedied by establishing a permanent disaster program targeted to producers who actually suffer losses. Changing the safety net for all producers to address the weather related production problems seems like a shotgun approach. Farmers do not farm in the aggregate and weather does not occur in the aggregate. We need a permanent disaster program that targets assistance to those who suffer losses.

"I am also disappointed that the Bush Administration did not recognize this important matter and that they continue to oppose disaster aid. It also failed to recognize the need for a competition title, the implementation of Country-of-Origin labeling, and new opportunities for direct producer to consumer marketing.

"In addition, USDA's proposal fell short of what is needed to increase U.S. production of renewable fuels and help national security. Though I was encouraged last week when President Bush set forth an aggressive plan to increase the production of renewable fuels to 35 billion gallons by 2017, his farm bill falls far short."

3. Tennessee agricultural economist urges “Common Sense Farm Policy” at National Farmers Organization annual convention

National Farmers Organization
800-247-2110 or e-mail: nfo@nfo.org
News Release
Contact: Perry Garner, communications director_.528 Billy Sunday Road, Ames, IA 50010

For Immediate Release

MOLINE, Ill. (Jan. 18, 2007)—Echoing what farmers have sought in ag legislation for years, Dr. Daryll Ray, University of Tennessee Ag Policy Analysis Center director, shared his ideas for “A Common Sense Farm Policy” at National Farmers’ annual convention in the Quad Cities Wednesday.

“We need a farm policy for all seasons,” Ray said. The 2007-08 Farm Bill needs to be based on “the realities,” not hope or wishful thinking. It needs to address the unique characteristics of crop agriculture that result in chronic price-income problems.

Ray, an esteemed voice in the agricultural policy arena, noted two major components in current farm policy

1. a policy of plenty which allows for large amounts of cheap food to be produced in this country which benefits consumers, but not necessarily farmers.

2. a policy to manage that plenty with such exports of which farmers are only partial beneficiaries.

Crop exports did not and will not deliver to increase income at the farm level despite the promises, Ray said. A fundamental problem is that farmers don’t get much of the revenue from exported crops, he explained.

The Tennessee economist also said the legislation should account for variation in production due to weather and disease, address trade issues like dumping, environmental and conservation issues, and rural development beyond agriculture.

Ray pointed out that, from a policy perspective, the need for a strategic oil reserve became the focus of discussion with rising oil prices. A more critical need is food security, and the need for a strategic food reserve.

Ray also advised that the Farm Bill should include provisions for buffer stocks to provide a reserve supply of grains and seeds in the case of a severe production shortfall -and to ensure orderly marketing. He also called for inventory management of acreage utilization, the same way other industries manage their capacity.

The ag policy analyst supported bio-energy to manage acreage utilization without heavy dependence on idling acreage, and keeping land in production. That way, the Farm Bill doesn’t pay farmers not to farm, and provides a needed energy source. This should include bio-fuels and crops not in the food equation that are not internationally traded, such as switchgrass, Ray suggested.


4. The population bubble

By David Bacon
Prairie Writers Circle

In the Roadrunner and Coyote cartoons there is usually a scene where Coyote, chasing Roadrunner, runs off a cliff. He continues on a horizontal line for a couple of seconds, looking increasingly puzzled and concerned, until he realizes his predicament, tries vainly to reverse course, and falls to the desert below.

This is symbolic of the situation ecologists call “overshoot.” Overshoot is when a species reproduces to a number that its environment can’t sustain.

In 1944, for example, 29 reindeer were introduced onto St. Matthew Island in the Bering Sea. With few competitors, no predators and plenty to eat, the herd increased to about 6,000 by the summer of 1963, consuming almost all available food. That winter most of them died. The surviving population in 1966 numbered 42.

And now the species with the unique ability to change the environment on a colossal scale appears on the verge of making for itself a St. Matthew Island worldwide. At the end of the 19th century the human population was 1.6 billion. It is now 6.5 billion.

The food that made this amazing increase possible -- there’s also sanitation and modern medicine, but food is the base -- came primarily by boosting crop yields with petroleum. With fertilizer from natural gas, with crops bred to capitalize on that fertilizer and with petroleum-powered machinery and irrigation wells, we can produce huge yields -- more than 7,000 pounds of corn per acre, for example. Just one lifetime ago, corn yields were one-fifth of that. Wheat yields have almost tripled. Similar comparisons can be made for other grains.

But, this can’t last. The aquifers, oil and natural gas that made possible a fourfold population increase are finite. Over the coming decades petroleum will become harder and harder to find, extract and put to use, until eventually it becomes unavailable for agriculture in any significant amount. Meanwhile, another 2 billion people are predicted worldwide by 2050.

Increasing attention to the so-called peak oil problem focuses on its impact on airlines, car makers and the stock market. These will suffer, but not on the level of malnutrition and starvation for many, and a continuous struggle over decreasing resources for all.

Is the situation really this dire? Agriculture accounts for a fraction of petroleum use in industrialized countries. We might reduce use elsewhere -- more efficient cars, less plastic -- and use the savings to keep crop yields high enough to feed everyone.

But to make that work, short-term and local self-interest must yield to a long-term, global consciousness -- a tall order. Increased efficiency and alternative fuels might for a time fill the gap left by petroleum’s decline. But we have yet to devise an alternative as versatile as petroleum that can fill its huge role -- especially in the face of relentlessly growing demand for energy. And whatever we do to support population growth will only make overshoot worse in the end.

In addition to unique abilities, we have a serious shortcoming. We are unwilling, perhaps unable, to see ourselves as subject to the same constraints as Earth’s other inhabitants. But in our dependence on the environment for food and water, we most certainly are subject to those constraints. Without a solution, we will die just as surely as the St. Matthew reindeer.

Given Earth’s limits, there already are too many of us for the long run. But the day of reckoning is many years away, and it is notoriously difficult for political leaders to seek moderate sacrifice today to prevent terrible sacrifice tomorrow when there is too little general recognition of the trouble ahead.

Can we be wilier than Wile E. Coyote? It’s hard to be optimistic. There is probably no real solution to this problem, only halfway measures to lessen the eventual impact. But every little bit will help.


David Bacon is a physician and retired Army colonel living in Aspen, Colo. He wrote this for the Land Institute's Prairie Writers Circle, Salina, Kan.

5. Are corn prices really too high? An editorial comment on corn prices and the new farm bill

Larry Mitchell, Chief Executive Officer
American Corn Growers Association
January 3, 2007

With the approaching 2007 farm bill debate and increased focus on the higher corn demand and prices brought on by expanding ethanol production, it would be helpful to review some facts on farm policy and prices as we move forward.

A quarter century ago, in 1981, U.S. farmers and rural communities were suffering from a hangover after the celebration of Russian grain deals of the early 1970s. That brief period of Soviet grain trade brought about several changes in the way most farmers and policy makers viewed U.S. farm policy. One way or another, the winners of the policy debate convinced almost everyone that 1973 and 1974 were the norm and that every year since then -- all 33 of them -- were the exception.

Their solution to the farm crisis of the late 1970s was to lower prices paid to farmers in order to reclaim the export volume of 1973-74 and prosperity would follow. This has never worked, but the proponents of the lower-prices-to-achieve-prosperity doctrine are to this day winning the debate. Their solution seems to be the farm policy Kool-Aid which we are all supposed to drink without question.

In 2007, those same arguments will once again be answered with the same failed Kool-Aid solution if we fail to put into perspective why so many in the farm policy debate claim $3.50 per bushel prices for corn are too high. Not only will the Kool-Aid peddlers pass out the Dixie Cups again, they have added a new wrinkle to their solution: the elimination of the Conservation Reserve Program (CRP) as a measure to increase corn acres to keep prices low in order to expand exports and thereby provide, once again, prosperity for all.

So the question that must be asked and answered early in the 2007 farm bill debate is “are corn prices really too high?” What price is considered too much to pay farmers for corn? How high is too high? When will the price be so high that our exports will suffer, and if exports decrease, will farmers be worse off financially?

The Agriculture and Food Act of 1981 was written, to a great degree, to address the crisis in the post Soviet grain trading era. The 1977 farm bill probably would have gone further to address the problems had it not been written prior to the awakening in rural America that a pending and unavoidable crisis was coming. Following the massive farm protests of 1978 and 1979, there was intense grassroots pressure in Washington to provide a much better safety net for farmers. Although the grassroots movement did achieve somewhat higher support and subsidies, the 1981 bill attempted to do so while still advancing the lower-prices-to-achieve-prosperity doctrine of the Kool-Aid peddlers. Ever since, U.S. farm policy has focused on the failed “low prices ­ expanded trade” solution while reducing the safety net for farm families lower and lower with each farm bill.

If we review the 1981 farm bill, we find that it set in place a $2.65 price support (loan) rate for corn. Adding the inflation rate to that loan rate, it could be argued that the prices we see today are by no means high in comparison to historic prices.

According to MeasuringWorth.com (1) there are five ways to compute the relative value of a U.S. dollar over time.

In 2005, that 1981 $2.65 corn loan rate was worth:

  • $5.69 using the Consumer Price Index (CPI);
  • $5.05 using the Gross Domestic Product (GDP) deflator
  • $5.78 using the unskilled wage index;
  • $8.18 using the nominal GDP per capita index; or
  • $10.55 using the relative share of GDP.

The corn target price (2) in the 1981 farm bill was set at $3.03 with a 7-percent per year escalator. Had that target price and escalator been retained since 1981, the 2005 target price would have been $15.37 per bushel. But to argue that such an escalator, established when the prime rate was approaching 20 percent and the inflation rate was in double digits, is acceptable in today’s economy would be foolhardy. But what can be argued is what should the 2005 corn target price be using the five ways to compute the relative value of a U.S. dollar over time.

In 2005, that 1981 $3.03 corn target price was worth:

  • $6.51 using the Consumer Price Index (CPI);
  • $5.78 using the Gross Domestic Product (GDP) deflator
  • $6.61 using the unskilled wage index;
  • $9.35 using the nominal GDP per capita index; or
  • $12.06 using the relative share of GDP.

Looking at the $12.06 value using the relative share of GDP, it appears that the 7-percent escalator was not that foolhardy after all. Neither is the official USDA calculated Parity (3) price for corn which currently sets at $7.72.

The average price of corn paid to farmers in 1980 was $3.11 per bushel. In 2005 the average price was only $1.90. Corn exports in 1980 were 2.4 billion bushels. Corn exports in 2005 were 2.1 billion bushels. The U.S. accounts for close to 70 percent of the international corn trade.

It is also interesting that while the prices paid to farmers for corn and most other crops have been driven down dramatically during the past 25 years, the prices paid by consumers have followed or exceeded almost all price indexes. According to USDA, the farmer’s share of America’s food dollar was 31 cents in 1981. In 2005 it had fallen to less than 20 cents ­ an amazing decline of 35 percent.

In review, we know that lower corn prices have not expanded exports, have not achieved the promises advocated by the lower-prices-to-achieve-prosperity Kool-Aid peddlers, and have not been passed onto the consumers. We also know that U.S farm policy establishing low corn prices have devastated the economic viability of the nation’s farm families and their communities, rapidly advanced the expansion of integrated corporate livestock confined animal feeding operations (CAFOs), costs taxpayers billions of dollars in farm subsidies, and have driven down world corn prices and devastated farm families around the globe.

We need farm policy that provides a price support to farm families rather than subsidies, an adequate strategic reserve of storable food and feed commodities and a way to curb overproduction of crops now in surplus so that we can plant new energy producing crops to help the nation mover toward energy independence. The new farm bill should also include a standing disaster program, extension and expansion of the CRP, a biomass reserve similar and apart from the CRP to provide incentives for the production and processing of biomass energy use, expansion and full funding of the Conservation Security Program (CSP), and a competition title for livestock producers.

To answer our question, “are corn prices too high?” we conclude: in the historical reference of the past 25 years, they are not too high at $3.50 per bushel. They are not too high at $4.00 per bushel. In fact, using the lowest of the five inflationary indexes listed above, $5.00 per bushel corn is not too high. Let us all abstain from the Kool-Aid this time around.

(1) Samuel H. Williamson, MeasuringWorth.com http://www.measuringworth.com/calculators/compare/result.php Copyright © 2006

(2) Target Prices are used to calculate subsidies paid to farmers in addition to the price support established by the loan rate

(3) Parity Prices are computed under the provisions of Title III, Subtitle a, Section 301 (a) of the Agricultural Adjustment Act of 1938 as amended by the Agricultural Acts of 1948, 1949, and 1956.

6. The dirt on our farms

Ethan Heitner
December 22, 2006

As a vegan who enjoys prowling the local farmer's market for new and delicious produce to cook up, I've long been convinced that the way most Americans interact with fruits and vegetables is fundamentally problematic, and that Big Agribiz is to blame.

We have an agri-culture that is not just unhealthy for humans (pumped full of toxins), but unhealthy for the planet (those toxins run off, and intsensive monoculture planting strips topsoil of its nutrients, turning it into dust), unsustainable (highly dependent on oil) and untasty (ever eaten a decent tomato grown in a family farm?). But I always assumed that the economics of agriculture in America—with huge, super-efficient factory farming—were unbeatable. It's just cheaper that way, and in America that's the only justification you need. This week The Washington Post told me I was wrong .

If you think the above assertions are typical vegan hyperbole, read Michael Pollan's powerful essay for The New York Times, “The Vegetable-Industrial Complex," for a description of how, for example, the modern industrial farming process has destroyed the organic cycle between produce and pastured cattle, creating entirely new problems of feedlot bacteria that are to blame for the deadly strains of E. coli that have been circulating lately. While more regulation might solve some problems, as Pollan points out, it's far more urgent that we radically rethink the way we grow our food. The federal government and Big Spinach “treat E. coli 0157:H7 as an unavoidable fact of life rather than what it is: a fact of industrial agriculture.”

Pollan is the author of “The Omnivore's Dilemma,” one of the best extensive examinations of why an American diet is ultimately unsustainable. As Pollan mentions, factory farming no longer uses organic fertilizer (cow manure and compost) to maintain the highly complex ecology of nutrient-rich topsoil.

Instead, it relies on an energy-intensive process of producing nitrogen-rich fertilizer from oil and cattle feed from natural gas. It requires about 10 calories of oil energy to produce every calorie of corn grown in the United States. Meanwhile the process, combining nitrogen with toxic chemical weedkillers, is literally destroying the soil that our food grows in. The chemically-enhanced crops we grow in monoculture, like corn, are sucking all the nutrients out of the topsoil, turning it into dust. For more information on “catastrophic agriculture,” the energy-intensive farming that requires the equivalent of“4,000 Nagasakis” in Iowa alone every year, check out “The Oil We Eat,” by Richard Manning.

The argument has always been against these “sentimental” reasons for wanting an organic, permaculture approach to supplant the Archer-Daniels-Midland model of agriculture is that, as elsewhere, economies of scale in agriculture are simply more efficient and better business.

And that's where Thursday's Post front-page story on how federal agriculture subsidies shape the business of farming blew me away. “Federal Subsidies Turn Farms Into Big Business,” their headline read. It's the first in a series examing the politics of farm subsidies, and I strongly encourage you to check it out.

The very policies touted by Congress as a way to save small family farms are instead helping to accelerate their demise, economists, analysts and farmers say. That's because owners of large farms receive the largest share of government subsidies. They often use the money to acquire more land, pushing aside small and medium-size farms as well as young farmers starting out.

We are told that much of what we see is simply the free market at work producing the best results. The reality is that big agribusiness is fueled, funded and made possible by federal government subsidies, which do not go to the increasingly-mythical American family farmer.

"The more subsidies you get, the more money you have to reinvest and expand. That free money distorts the economic pluses and minuses," [says Iowa farmer Thomas Oswald.]

Furthermore, far from invigorating the farm economy, the subsidies to factory farms are destroying the economy of middle America.

Larger, more efficient farms also require fewer workers, offering less opportunity for younger people. Cherokee County has lost one-third of its population since 1960, records show. ...

Contrary to some expectations, the billions in subsidies have failed to slow the exodus. A March 2005 study by the Federal Reserve Bank of Kansas City found that hundreds of counties most dependent on subsidies had suffered the biggest population losses and posted the weakest job growth. "Farm payments appear to create dependency on even more payments, not new engines of economic growth," concluded the study's author, Mark Drabenstott.

Gary Nabhan, over at Yes magazine, has a great piece looking at how small farms selling their produce to their own foodshed (i.e., their local surroundings) instead of shipping them halfway across the world can have a positive impact on community wealth as well as community health. But Michael Pollan sums it up best:

”There’s nothing sentimental about local food — indeed, the reasons to support local food economies could not be any more hardheaded or pragmatic.”

Not that there’s anything wrong with sentimental reasoning. But we need to put pressure on a Democratic Congress to look past the easy storytelling of American farmers out there in some mythical heartland. We need to confront the facts of our agricultural policy: It harms Americans, makes us more dependent on foreign oil, warms the planet and hurts our economy. We need a policy that encourages small, labor-intensive farming over oil-dependent production as part of a local foodshed that reduces the need for shipping and brings money back to farming communities.

It's possible. Over in Castro's Cuba, the collapse of the Soviet Union doomed an economy based on energy-intensive industrial agriculture and cash crops. The Cuban government responded by mandating an agricultural revolution. Organics replaced industrial, and now Cuba is almost entirely self-sufficient when it comes to food—the country is actually de-industrializing and becoming more agrarian. In 1999 the Swedish parliament awarded the Cuban Organic Farming Group its Right Livelihood Award, often styled the “alternative Nobel.”

And if it happens to taste good, hey, so much the better.