John F. Kennedy is reported to have remarked that he didn’t want to hear about agriculture from anyone except John Kenneth Galbraith, and didn’t want to hear about it from him either. As President, Lyndon Johnson nursed an incurable longing for the rustic pleasures of the LBJ Ranch, but he avoided farm-policy questions when he could. Public officials are alternately wary and weary of agricultural policy. There is ample reason for both attitudes. Farm voters are notoriously hard to please, and farm-policy debates are seldom stimulating. Yet the need for agricultural policy will not go away simply because frustrated politicians wish it. Advanced technology on the farm assures plenty of food for consumers. It also requires stable prices, and there are tar too many farmers to arrange such a result without federal help.
Official lethargy on this score was shattered late in May this year when the House of Representatives, reacting against million-dollar payments to big farms, overwhelmingly approved a ceiling of 820,000 on direct subsidy payments to any farm. This revolt against the old order in farm policy teas a replay of a surprising House action in 1968, an action later reversed by the Senate.
Congressional advocates of a farmpayment ceiling have some good things going for them. Farm-program costs, at $4 to $5 billion a year, are high and moving higher. In a careful survey made late in 1968, 85 percent of the farmers favored limiting farm benefits. City people are nearly unanimous in objecting to the big budget drain for farm programs when other priority needs beg for funds. Most important, advocates of farm-program reform in the House of Representatives and the Poor People’s Lobby have skillfully contrasted giant federal payments to a few farms with the handto-mouth budget granted federal food programs by Southern-dominated Agriculture Committees in both houses of Congress, despite evidence of widespread malnutrition. Congressman Paid Findley (R., I11.) has reported to the House that the cotton and wheat areas with the largest number of big farm payments were doing least about hunger and malnutrition. Finally, a study prepared last year at the request ol President Johnson has destroyed the claim of the agricultural establishment in both political parties that surpluses and economic chaos would inevitably accompany a ceiling on farm benefits. Budget savings of $250 million per year are now anticipated by those who favor payment reform, and the savings could be doubled if the payment ceiling were set at $10,000 instead of the $20,000 that was proposed.
Those members of the Congress who opposed the ceiling on farm benefits claimed that such a plan could not be administered, that it was unworkable and unfair, and that it would not save money. Fortunately for the public, none of this is believed any more, at least not in the House of Representatives.
Parity Parity Parity
It helps to know some of the words and symbols, if one is to understand the need for change in farm programs. Parity, price supports, and direct payments arc the key words.
Parity has been the battle cry of farmers since the 1920s. Public discussion of farm policy, however, has been clouded by three parity doctrines. Parity in the abstract is hard to argue with; it is essentially a fairness doctrine. The effort to find out what is fair for farmers, however, has spawned two competing statistical measures of farm parity.
Parity prices originated a generation ago out of what seemed to be a sensible notion: that farm-product prices should increase in step with the general price level; this would maintain the farmer’s purchasing power. Conceived before the new technology revolutionized farming, the parity-price system has failed to account for recent rapid gains in productivity. If farmers were guaranteed 100 percent parity prices in 1969 (instead of the present 65 to 70 percent of parity), wheat, corn, and cotton prices would increase by about 50 percent. Crop surpluses would be inevitable, and the Agriculture Department budget would soon rival the Defense budget. Clearly, the parity-price doctrine is obsolete, although not quite dead.
Parity income is a more recent standard. Simply put, the parity-income doctrine says that a good farmer investing his capital in an operation large enough to employ him more or less fully should be able to earn as much farming as he would earn operating any other small business. A recent Department of Agriculture study showed that a half million of the biggest farmers producing two thirds of our farm products are meeting this standard, at least on the average if not on every farm every year. Net incomes on the largest farms, thanks partly to big payments, are generally far above parity; rapid land-price escalation as faints are enlarged is a clear sign of this. In contrast, the smallest and poorest two million farms could not earn parity incomes on the farm even if market prices were doubled or tripled.
Price supports and payments
Farm prices left to themselves are notoriously unstable. Price support programs, begun in 1933, grew out of that fact and out of the general economic depression. The new programs were supposed to raise prices by reducing crop production and by removing surpluses from the market. But neither the farm programs nor pump-priming expenditures in the rest of the economy brought real recovery in the 193Os. World War II did that, pushing farm prices so high that price ceilings and consumer food subsidies were applied. After the war, the farm bloc in Congress succeeded for a time in maintaining the high wartime prices under peacetime conditions, even though agricultural prices around the world were declining as Europe recovered and began producing again. The results were predictable. By the late 1950s high market-price guarantees and halfhearted production control were creating huge surpluses. More than that, farmers were gearing their expectations to high prices and buying their land at inflated values. Thus they were generating their own cost increases to justify future demands for even higher prices. By 1960, every grainand butter-storage structure in the United States was filled. The annual cost of simply owning and storing the $9 billion farm surplus reached $1 billion in 1961. “How to let go of the bear’s tail” became the principal preoccupation of reform-minded farm officials and economists.
The answer was a system of direct payments to farmers in place of high price supports. In the early 1960s, payments became the key instrument of farm-policy reform, cushioning the impact of an abrupt shift from high to lower price guarantees for wheat and cotton, and providing farmers the cash incentives required to reduce acreages and limit farm output. Big farmers, who had profited handsomely from high marketprice guarantees in the 1950s, became identified in the 1960s as the recipients of huge government checks. The stage was set for the present struggle to reduce the size of those checks.
Recent developments in farming have also helped to focus public attention on farm-program benefits. When farm programs were introduced in 1933, there were 7 million farms in the United States. A few were huge holdings, but most were small, one-family enterprises. Benefits were geared to production, and so farm aid was spread fairly evenly. By 1968, more than half of those farms had disappeared. Today there are 3 million farms, but 2 million of them are small, part-time, residential, or hobby farms. One million top farmers produce nearly all of the farm products marketed, and they get most of the money spent on farm programs. A new study just published by the Joint Economic Committee of Congress, for example, shows that the largest 5 percent of sugarcane and cotton growers get 63 and 41 percent respectively of all the direct benefits from those programs. The largest one percent of cotton growers in California and Mississippi get 25 percent of all the direct federal benefits in those states. Under such circumstances, public concern is certainly understandable.
Clearly, the large payments are not going to the traditional American farm, still typically a one-family enterprise. Instead, they help ensure financial security for such wellheeled enterprises as the J. G. Boswell Company of King’s County, California, which collected direct farm payments of $3 million in 1968 and $4.1 million in 1967. The Boswell Company is a multimilliondollar diversified cotton operation with good connections in Washington. Senators and congressmen are not excluded from farming, nor do they always disqualify themselves when the Congress votes on big farm payments. Family interests of Senator James Eastland of Mississippi (the Eastland Plantation, Inc., and H. C. Eastland) collected payments totaling $142,078 in 1968, down from $189,050 in 1967. In October, 1968, Senator Eastland voted against the payment ceiling which would have cut the Eastland farm payments to $60,000, or $20,000 on each of three farms. Campbell Farming of Big Horn County, Montana, often cited as the model of a modern wheatfarming operation, got $162,897 in 1968. Garst Farms, run by Roswell Carst, the international seed-corn figure and one-time host in Iowa to Premier Khrushchev, got $70,923 in 1966, but only $45,212 in 1968.
Nearly two and a half million farmers get federal payments, but only 10,000 farmers get over $20,000 per year. Most of the big payments go to cotton farmers in California, Texas, Mississippi, Arkansas, and Arizona. When Congressman Findley placed the names of all recipients of $25,000 or more in the Congressional Record this year, the list from the five biggest cotton states filled twenty-one pages. Five leading grain states required only four pages. Concentration of federal payments in a few cotton states makes them really ripe for reform, although sugar and wool, with powerful political support, are also involved.
Late this spring, when the House of Representatives voted a $20,000 ceiling on farm payments, the Majority and Minority Leaders were opposed, as were most committee chairmen. Understandably, the bulk of the opposing votes were from Texas, California, Mississippi, Arkansas, Kansas—the states with the biggest payments. The Senate could vote a ceiling this summer, if urban senators and the leadership take the initiative. If the Senate fails, final action may have to wait until the farm program is reviewed in 1970.
That study was conducted in the Department of Agriculture and became public after President Johnson left office. Its findings flatly contradicted the principal argument the Administration and farm congressmen had made in recent years: that payment limits would destroy the production-control programs and would lead to new farm surpluses. The study also documented the potential budget savings associated with a payment ceiling. All this, even the potential budget savings, seems to have been lost on the new Administration.
The advocates of unlimited payments are now left without any sensible arguments for their position. Previous opposition to the ceiling rested on the argument that big payments are needed to prevent too much corn and wheat production. This spurious claim had a limited validity in the 1961-1964 period of heavy surplus removal, but it has none in 1969 when grain surpluses are down. The Department of Agriculture simply did not know the distribution of payments by size of farm until around 1965. Acting on faulty information, Department officials took an early stand against a payment ceiling, and never found a way to change their position. Now we know that only 2 percent of all feed grains and 4 percent of all wheat would be affected by a $20,000 limit. Even a $5000 ceiling would not materially affect the stability of the feed-grain economy.
Cotton is more concentrated; one third of the crop is grown on some 5000 big farms (out of more than half a million cotton farms) which would be affected by a $20,000 ceiling. Legislative leaders who had insisted that a payment ceiling would cause a grain surplus, now said it would cause a cotton shortage, an argument so symmetrical it seemed plausible. Senator Holland said last year that the prospect of lower payments made “it appear very unlikely that such producers could continue to supply the mills with low priced cotton. . . .” This is a proposition that ought to be tested: if American cotton growers cannot compete on even terms in world fiber markets without unconscionably high federal payments, it is not too early to discover it. Major changes in addition to a payment ceiling are required in the cotton program. The most important is to remove a provision of the 1965 act which ingeniously exempted cotton from any future payment ceiling. This must be repealed before the ceiling can be effective for the crop and the areas with most of the huge payments.
What to do
No firm principles have emerged to direct the Congress toward a particular maximum level for farm payments. Budget savings are the best guide. By that test the $20,000 ceiling is too generous; the figure should be no higher than $5000 per crop or $10,000 per farm, in order to save more money. Reduced payments will not undermine farm-price stability as long as top payments are not forced below those levels. Inevitably, the maximum payment level will be set somewhat arbitrarily: a $20,000 limit will save $200 to $300 million a year: a maximum of $5000 per crop or $10,000 per farm would save $500 million or more. If farms are allowed to split up to circumvent the new policy, however, some of these savings will be lost. This will bear watching; Congress should give the Department of Agriculture firm directions against farm splitting.
These reforms will not silence the sharpest critics of farm programs, who have never accepted the policy of limiting farm production to stabilize prices while anyone anywhere is hungry. So long as the agricultural economy remains inherently unstable, with too many producers to combine effectively to set their own prices the way industrial combines do, the opponents of any farm stabilization effort will probably be disappointed. We need a farm policy as well as a responsive fiscal policy and a compassionate food policy. But a sensible farm policy does not require giant payments.
Farm payments and food programs will inevitably be paired off in the coming debate, although ending big payments will not automatically ensure more food for the poor. The public can’t help seeing tragic irony in Congress’ tight-fisted approach to hunger, in contrast to its open-handed financing of farm programs. Budget pressures alone ought to encourage the Administration to sense its interest in this matter, if principle does not, although White House help may never materialize, given Mr. Nixon’s dependence on the South. Political advantage seems assured for those members who help drive farm-payment reform through the Congress. Big payments lack any legitimacy in real program objectives. It is right, therefore, to end them. Only the most twisted sense of priorities will let us continue to pay millions every year to a few big farms while we procrastinate about ghetto reconstruction, postpone remedial education, close Job Corps Camps, and let poor people starve.