Localists, agrarians, and other dissidents, critics all of the American politico-economic ethic of biggerbetterfastercheapermore, occasionally celebrate a rhetorical liturgy of execration, in order to damn Earl Butz, Secretary of Agriculture under Nixon and Ford, and advocate of the "get big or get out" philosophy of agriculture. Butz's philosophy was sufficiently loathsome to warrant the condemnation, though he was more a symptom and symbol of the system than its cause. The system, in all probability, may be traced, in its lineaments, to the early nineteenth century, when Hamiltonians throughout the nation won the debates over 'internal improvements', and public moneys were committed to the construction of highways and canals; the foreseen and desired results of these 'improvements' were an increase in commerce and the development of integrated regional - and in some cases, international - markets. Such markets developed, gradually wearing away many less expansive, less lucrative local markets. In time, the development of the railroad networks, another benefaction bestowed by the State, in both its national and state forms, upon the commercial (and speculative) classes, would accelerate this trend. Also contributing to the consolidation of American agriculture was the typical Great Barbecue era combination of usurious rates of interest on loans to farmers and unsupported, free pricing in commodities; this latter factor, in combination with the monetary constraints of the gold standard, as well as the vast increases in cultivated lands made possible by the opening of the West, resulted in great volatility in prices, amidst a general trend of decline. When the smaller, unluckier farmers couldn't earn enough to retire, or even roll over, usurious debts, there were always luckier, larger, more connected farmers waiting to expand.
It's easy to be mislead into thinking that the plight of the small farmer is something that burst into national awareness in the 1980s, but consciousness of this plight antedates even the first Roosevelt presidency, and was in fact more or less concurrent with the Gilded Age. Without going into the details, this concern was eventually translated into policies of price support and production management. It would be charming to think that these policies responded directly to the original concern, which they might have, had they been implemented in the 1880s or thereabouts; in reality, they arrived around the time that the balance had shifted decisively in favour of larger farms, and the mass-marketing of standardized commodities and packaged foodstuffs. Many small farms would continue in operation for another generation or two, but the die had been cast, and the policies ended up supporting the dominant agricultural interests, both because they had attained critical mass in the marketplace, and because they could command political leverage.
The consequences of this development are predictable, if perhaps unexpected by some: the profits of American agriculture are roughly equal to the subsidies provided through the Department of Agriculture.
Francis Cianfrocca explains:
Here’s a rough thumbnail: What’s the biggest grain crop in the US? It’s one of the varieties of wheat (red winter, if memory serves, but don’t quote me). Total market $30 bn/year. Another dozen or so grains (other wheats, corn, soya, sorghum), are smaller but still in the tens of billions. Let’s be conservative and say grains, cereals and things like sugar total less than $300 bn. (I left tobacco out of it.) Ranching and forest products (minus the paper industry) come to about the same size each.
Profitability in large US businesses tends to high single digits, especially in competitive spaces. What we’ve really just done is to add the auto and banking industries to the government-profited list. And they want to invent a green-tech industry from scratch, which will be government-profited from day one.
The Ag Dept budget is a bit more than $100 billion (discretionary and non-discretionary). Much of it is food stamps, but the part that is subsidies to farmers, ranchers and foresters (minus paper products) is pretty comparable to the total profitability of the industry.
The significance of this can, and should, be stated starkly: Big Agriculture, by which is meant the vast commercial conglomerates and all of their industrial operations, are essentially a vast corporatist-political enterprise, a rolling Five-Year Plan in which profits and engineered and insured at public expense. The inception of agricultural subsidies may have come when larger agricultural operations attained critical mass in the system, but the subsidies themselves have enabled those operations to become ever larger. (It must not be forgotten, moreover, than the very existence of interstate transportation, the public provision of roads, and the tax deductibility of transportation costs, provide additional layers of subsidy.) Industrial agriculture is not something that would have resulted from the operations of any free market, even laying aside the artifactuality of all markets, their social embeddedness - their existence in, and dependence upon, relations of custom, expectation, and power, most particularly when we cease to be conscious of this dependence - inasmuch as any global free market in agricultural goods would see the withering away of most American agriculture, undercut by foreign producers - as legions of developing-world farmers know.
It is far from clear that such an outcome should be desired, for a legion of reasons, and that leaves us with two options: either American agriculture should continue to be structured as an exercise in corporatist dirigisme, despite the facts that its profits owe largely or entirely to the political side of the relationship, and that the cost-benefit analysis goes negative when the externalities of this form of agriculture are reckoned, or American agriculture could be restructured along regional and local lines, via a combination of a removal of subsidies and the maintenance of existing trade protections. Cheap agricultural commodities are a case of the seen and the unseen in economics. We see the low, low prices. Unseen, or at least not understood in their full significance, are the taxes paid to sustain this system, and the profits of its operators. At this point, we're no longer arguing about the economic benefits of one system or another, as the costs probably come out in a wash; rather, we're debating the underlying values of respective agricultural systems - who pays, and how, and whom is benefited, and in what ways. A move towards localism would have the benefit of forcing more costs out into the open, and onto end users - among many other things.