A BRIEF HISTORY OF CROP SUBSIDIES
Before 1930 there were very few subsidized farm commodities; Article 1 Section 8 of the Constitution defines the power that we the American people give to our legislative bodies, and that section makes no mention of agriculture. Things changed quickly in the 30’s as the federal government tried to reign in the despair brought on by the great depression thus signing into law the Agricultural Adjustment Act; and just like that, 156 years of precedence was thrown to the wind. Not that the subsidy programs of the 30’s didn’t serve a purpose; they functioned along with the war effort to stimulate the economy out of depression. However, this was also setting a new era of “muddied” agricultural economics: “The Farm Board had disastrous unintended consequences for almost everyone. For example, many farmers who typically grew other crops shifted to wheat or cotton because they were protected and now provided a secure income. The resulting overproduction forced down the prices of both crops below the price floors, so the government had to buy over 250 million bushels of wheat and 10 million bales of cotton.The costs of buying and storing these crops quickly used up the program’s allotted $500 million. After about two years of buying surpluses, the government finally just gave them away or sold them on the world market at huge losses.”
Then with the Agricultural Act of 1970 a payout cap was set at $55,000 per farmer. This curtailed any corporate aspirations to get rich from farming. That all changed with the Agriculture And Food Act of 1981. This act ushered in a new era of “price support” (defined as: Minimum price for a product, established by a government and supported by payments to producers in the event that the market price falls below the specified minimum.), “loan level” (setting minimum loan amounts that the government would provide to farmers with their excess crop used as collateral). These two features encouraged burgeoning agribusinesses to use their government subsidies to acquire as much land as possible (a procedure that truly tore at our social fabric) and produce as much crop as possible thus sustaining and eclipsing their previous financial gains.
By the 90’s crop subsidy trends continued to escalate as the US government raised the amount of tax-payer money they would pump into the agricultural economy. The result of all of this is the food production system we have today – huge agribusinesses like Cargill, Archer Daniels Midland, and Monsanto vertically integrated (defined as: The process in which several steps in the production and/or distribution of a product or service are controlled by a single company or entity, in order to increase that company’s or entity’s power in the marketplace). This system has completely taken away the small farmer’s power of seller choice. Small farmers have become “price takers” forced to take whatever price big farm would offer them. This has fueled a sense of competition between smaller farmers to underbid their neighbors by pennies per bushel. This competition affected community trust levels and began to fray the “social fabric” (defined as: The make-up of an area in terms of its social geography, such as class, ethnic composition, employment, education, and values. Trust within the community).