The origins of some “market signals” in agriculture and food

Photo of corn from existentist on FlickrAt a meeting of the South Dakota Corn Growers Association on January 5, 2008, Acting Secretary of Agriculture Chuck Conner had much to say about the current state of corn and renewable fuels. After extolling our nation’s glorious efforts in making ethanol from corn, Conner commented:

Our growing appetite for renewable fuels and the standards the government has set to accelerate the growth of this industry are both having a positive impact on the markets that you produce for all your commodities. As these markets have emerged over the last few years, producers like yourself [sic] have been able to make your planting decisions based on the signal that the market is sending you instead historically where you might have turned to government support programs for that signal. That’s how we ended, ladies and gentlemen, with 13 billion bushels of corn this year and the largest acreage of corn that we have had since 1944. Farmers took their signal from the marketplace.

We will use that production not only to meet all of our energy needs. But I would note, that for the livestock sector, that we will feed more corn for livestock this past year than what we did the previous year.

I have sympathy for the livestock industry because they are paying more, but, in terms of available supplies, more is available as a result of farmers responding to those market signals.

These signals from the "marketplace" are basically, "Plant more soy, wheat, and corn. Use whatever means necessary to increase yield (tons of transgenics, massive quantities of fertilizer, heaps of herbicide)." Not exactly the most popular message here at The Ethicurean.

Where do the signals come from?

The marketplace and the signals to which Conner refers did not naturally evolve through the magic of "free markets" or because of some other mysterious force. Instead, they were created by years of government policy that have pushed for more and more corn. There were rule changes in the 1970s that made it advantageous for farmers to grow as much as possible. In more recent years, Congress and the White House have set mandates for the use of ethanol as a gasoline substitute, given ethanol producers a hefty tax credit, and continued the massive subsidy programs for corn growers.

In the case of corn, signals (the government-created ethanol binge) align nicely with agricultural policy (grow more!). But in other sectors, real market signals are attenuated or silenced by government rules. One example of this: fresh fruits and vegetables in the Midwest and Great Plains. Back in August, the Des Moines Register had an article (which I blogged about at Eat Local Challenge) telling how USDA subsidy rules are preventing farmers in the region from expanding their fruit and vegetable acreage in the face of significant demand for local food. Many farmers — especially those who rent land — can’t afford to switch crops because any "program acres" that are used to grow to fruits or vegetables will be permanently removed from USDA programs.

Then there are the meat and dairy sectors, where the freedom of the market is corrupted by the concentration of too much power among too few companies (as Tom Philpott so ably described in a piece for Grist) and a lack of processing facilities that prevents ranchers from meeting consumers’ demand for meat from humanely raised animals. Sunday’s New York Times featured a great article (requires free registration) on government subsidies for factory farms: the Environmental Quality Incentives Program (EQIP), a cost-share program to help farmers implement environmentally-beneficial projects on their farms, was expanded in 2002 to allow CAFOs to apply for funding. Since CAFOs are some of the most environmentally destructive farm operations, they’ve sucked up most of the funds to build manure digesters or re-line their lagoons (from which air pollution and odor continue to spew). In 2006, the government shelled out $179 million to CAFOs, compared to $74 million to help farmers improve grazing practices. The author goes so far as to suggest that the program should be re-named "The Factory Farm Incentive Program."

The signals described above were created by high-priced lobbyists, outsized corporations, and misguided politicians. We can send our own signals by voting with our forks — shopping at farmers markets, patronizing restaurants that serve sustainable seafood, buying organic — asking tough questions at the mainstream grocery store, and telling our elected officials what we think. It will take a while, but then again, the cornified nation wasn’t built in a day either.

Photo of corn pile from existentist’s flickr collection, subject to a Creative Commons License.

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