COL Odds are against export-driven prosperity for farmers
If you're a conventional farm policy person -- as most farm leaders and members of Congress are -- Daryll Ray is becoming your biggest pain in the neck.
In recent ag policy columns and September testimony before a House Agriculture subcommittee, Ray, founder and director of the Agricultural Policy Analysis Center at the University of Tennessee, has gored most of your favorite oxen.
For instance, in an early October column Ray exposed the big lie that export-based farm bills are the path to American farming gold.
"Promising export-driven prosperity for crop agriculture is an audience pleaser," the professor observed, "but the odds are against it."
Fact is, "U.S. farmers have enjoyed export-driven prosperity only three times (for a total of just 14 years) in the last century -- World War I, World War II and the mid-to-late 1970s. None were triggered by U.S. farm policy instruments."
Another hallowed whopper, getting government out of farming, would unleash American farmers on global markets and deliver vast profits, was debunked by Ray before House aggies Sept. 29.
According to recent APAC analysis and "counter to the expectation of (free market) advocates... elimination of direct government payments, marketing loan payments, and counter-cyclical payments causes U.S. net farm income to drop from around $50 billion a year to $33-$36 billion a year."
Moreover, the hardest hit would be those who believe they've the most to gain: "Net farm income for major crop producers declines by well over 50 percent."
Then there's the big China fib at the heart of 1996's disastrous Freedom to Farm policy shift.
In 1995, "Analyses by the U.S. Department of Agriculture, Congressional Budget Office, and the [University of Missouri's] Food and Agricultural Policy Research Institute... projected substantial Chinese corn imports," Ray wrote recently.
"In 1996, FAPRI showed Chinese net imports at 500 million metric tons by 2002. Rather than import 500 million tons, China exported 500 million tons in 2002." Facts like these drive ag policy priests nuts because the numbers run counter to most of the faith-based policy drivel they've preached for decades.
Facts like, since 1981 exports of the eight major crops tied to US farm programs have averaged only 85 percent of their 1979-1981 peak despite policy plums as varied as export subsidies and Freedom to Farm. Or, as the search for the export Holy Grail ensued, the cost of U.S. farm programs climbed from a few billion in 1981 to a forecasted $21.4 billion in 2005.
Most of this expense, argues Ray, can be tied to free trade believers who swear global farm and food markets operate in a vacuum of theoretical economics: low food prices will increase consumption and low farm prices will force production cuts.
Neither has happened nor can it ever, he said. Low food prices do not spur people to eat five meals per day rather than three and U.S. farmers won't cut production because subsidies rise as farm prices fall.
The troubling part, and the part that makes him a colossal pain in the neck, is he can prove it. For example, since the adoption of the export-directed 1996 farm bill, corn prices have averaged about 34 cents per bushel less per year and wheat acreage has declined from 75 million acres in 1996 to 58 million acres in 2005.
Has either consequence -- or more than $120 billion in farm program costs -- strengthened U.S. agriculture or boosted exports? No, says Ray, because few farm and congressional policy leaders acknowledge what the last century has taught us: farm markets are not like other markets, exports aren't the single key to farmer prosperity and government programs aren't the problem.
Most remain tied to wishful thinking of what might work -- exports, program cuts, agribusiness goodies-- rather than acknowledge what has worked, some variation of supply-management.