What does production control plus price supports mean and how did it work under the New Deal?
<p><br>In 1933, in the depths of the Great Depression, so many family farms were going bankrupt that the federal government stepped in to help them avoid eviction and to increase prices for their crops. The Agricultural Adjustment Act (AAA) <a href=”https://fraser.stlouisfed.org/archival/1341/item/457089″ target=”_blank”>declared an economic emergency</a>, justifying action as being in “the national public interest.” The AAA set out to re-establish farmers’ purchasing power, taking the years just before WWI as the base period when the proper balance existed.</p><p>To raise prices for farm products, the AAA reduced the oversupply by setting limits in the form of marketing quotas on the acreage farmers could use for basic commodities, and that first year, some crops were even plowed under. There were also marketing agreements that controlled the quantity, quality, and rate of shipment to market to limit some fruit and vegetable crops. Although agribusiness successfully brought suit against the first version of this parity system, the revised approach set up by the Soil Conservation and Domestic Allotment Act of February 29, 1936, proved more durable and lasted through the 1960s.</p><p>Farm income in 1935 was more than <a href=”https://archive.org/stream/CAT31056120/CAT31056120_djvu.txt” target=”_blank”>50 percent higher</a> than farm income during 1932, due in part to the farm programs. From 1935 through 1974, legislation each year set the level of the price supports from 50 to 90 percent of parity, depending on the supply of each commodity and the changing economic conditions through the years of WWII.</p>
<p>In “<a href=”https://www.iatp.org/sites/default/files/258_2_97261.pdf” target=”_blank”>Crisis by Design: A Brief Review of U.S, Farm Policy</a>,” a paper written by Mark Ritchie and Kevin Ristau and published by the League of Rural Voters Education Project in the midst of the 1980s farm crisis, the three central features of the parity system are summarized:</p><ol><li>It established the Commodity Credit Corporation (CCC), which made loans to farmers whenever prices offered by the food processors or grain corporations fell below the cost of production. This allowed farmers to hold their crops off the market, eventually forcing prices back up. Once prices returned to fair levels, farmers sold their crops and repaid the CCC with interest. By allowing farmers to control their marketing, the CCC loan program made it possible for them to receive a fair price from the marketplace without relying on subsidies.</li><li>It regulated farm production in order to balance supply with demand, thereby preventing surpluses. Since government storage of surpluses was expensive, this feature was crucial to reducing government costs.</li><li>It created a national grain reserve to prevent consumer prices from skyrocketing in times of drought or other natural disasters. When prices rose above a predetermined level, grain was released from government reserves onto the market, driving prices back down to normal levels. From 1933 to 1953 this parity legislation remained in effect and was extremely successful. Farmers received fair prices for their crops, production was controlled to prevent costly surpluses, and consumer prices remained low and stable. At the same time, the number of new farmers increased, soil and water conservation practices expanded dramatically, and overall farm debt declined. What is even more important is that this parity program was not a burden to the taxpayers.”</li></ol>
<p>In the 1960s however, according to Mark Ritchie in <em><a href=”https://www.iatp.org/sites/default/files/2018-01/The%20Loss%20of%20Our%20Family%20Farms.%20By%20Mark%20Ritchie.%20League%20of%20Rural%20Voters.%201979.pdf” target=”_blank”>The Loss of Our Family Farms: Inevitable Results or Conscious Policies?</a> </em>a consortium of agribusiness, banking and university leaders deliberately set in place policies that cut farm prices to drive excess “resources” (that is, farmers and their families) out of the countryside.By the mid-’70s, farm prices were dropping below parity. Instead of a system that had provided stability for family-scale farms, farm numbers were decreasing rapidly and the cheap food policies that we have today were set in place.</p><p>The combination of subsidy and emergency payments to farmers along with the program of crop insurance in the 2018 Farm Bill actually <a href=”https://www.slideshare.net/bradwilson581525/the-hidden-farm-bill-37959389″ target=”_blank”>guarantees low prices that mainly benefit the biggest ag corporations.</a> With production control and price supports, those corporations had to pay farmers decent prices in the marketplace. Just to take a couple of commodities for illustration purposes, according to the National Agriculture Statistics Service, the parity price for <a href=”https://downloads.usda.library.cornell.edu/usda-esmis/files/c821gj76b/r494vw17c/sq87c499d/agpr0619.pdf” target=”_blank”>100 pounds of milk in May 2019 would be $52.80</a>, a bushel of corn would be $13.20. Instead, conventional farmers were getting $18 for a hundredweight of milk and $3.63 for a bushel of corn. Since the 1970s, it is the taxpayer who covers the costs of cheap food. This adds up to a major transfer of wealth from the farmers and the public to the likes of Walmart, Amazon and Archer Daniels Midland, a global food processing and commodities trading corporation.</p><p>Although a few farming organizations — in particular, the National Family Farm Coalition — have continued to demand a <a href=”https://nffc.net/index.php/fffa/” target=”_blank”>return to parity and supply management</a>, for 20 years or more it has been deemed too unlikely to gain any traction in Washington, D.C. Then in a flash of light, the <a href=”https://www.congress.gov/bill/116th-congress/house-resolution/109/text” target=”_blank”>Green New Deal resolution</a> by Sen. Ed Markey and Rep. Alexandria Ocasio-Cortez, a crash program to mobilize all possible forces to prevent climate disaster, has made it “realistic” once again to <a href=”https://jacobinmag.com/2019/04/green-new-deal-agriculture-farm-workers” target=”_blank”>consider this set of root solutions to the food and farm crisis</a>.</p><p>While we can learn a lot from the old New Deal — both from its strengths and also its failures, especially in regard to farmers of color — we will have to design a new version for the 21st century that includes racial justice and equity in the safety net it provides for farms. I can imagine an exciting public process where groups of stakeholders all over the country hammer out the details.</p><p>The challenge we face now is to pull together a big enough movement of farmers, farmworkers, labor unions, environmentalists, faith communities, youth and rural and urban activists of all kinds to transform this climate emergency into an all-out campaign to save human life on this planet.</p>
Elizabeth Henderson farmed at Peacework Farm in Wayne County, New York, for more than 30 years. Peacework CSA was one of the first community-supported agriculture farms in New York State. She is a member of the Board the Northeast Organic Farming Association (NOFA) of New York, and represents the NOFA Interstate Council on the Board of the Agricultural Justice Project. Elizabeth is the lead author of Sharing the Harvest: A Citizen’s Guide to Community Supported Agriculture (Chelsea Green, 2007), with a Spanish language e-book edition in 2017. She maintains the blog The Prying Mantis.This article was produced by Earth | Food | Life, a project of the Independent Media Institute.
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