There’s no doubt about it: Agriculture is a bright spot in an otherwise dreary economy. While the rest of the nation struggles to stay in the black, agriculture’s net income grew by more than 17 percent last year.
Because agriculture is doing well right now, critics of farm policy argue that it no longer deserves government support. But one must really understand the risks inherent to the very necessary business of growing food, fiber and fuel before tossing agriculture policy to the wolves. As with everything, there are two sides to the story.
Farmers shoulder extraordinary risk every year to produce a crop under scenarios that would make any small-business owner quake in her shoes.
A farmer controls neither input costs nor market prices. Input costs are determined largely upon the oil market, because common inputs are inexorably linked to petroleum for their production and slow to respond to changes in that market.
Commodity markets are volatile and cyclical, wildly swinging from day to day, and even more dramatically over the six months between planting and harvest. When the farmer does harvest his crop, he may be forced to take that day’s market price regardless of the likelihood it will be higher tomorrow. Furthermore, in a long-term period of depressed prices, the farmer has no recourse but to sell his crop low, even if input costs that year were at historic highs.
Between planting and harvest, the farmer has no control over that most critical variable, weather. From March to November, every cloud could bring nourishing rain or devastating hail. A string of sunny days could either bake the ground to a crust too hard for seedlings to break through or, at just the right time, facilitate the healthy development of a panicle of sorghum.
A cool spell just before harvest could reduce grain quality – and price – by more than half.
Because farmers take on such massive input costs – hundreds of dollars for each bag of seed, thousands for fertilizer and half a million for one piece of harvest equipment – they depend each year on operating loans from local lenders. Just like when you purchase a home, the banker requires income assurance.
Farmers provide that in a variety of ways. One of them is insurance; another has historically been direct production flexibility payments. The matrix of farm programs encompassed in the farm bill provides a farmer with certainty that the loan he takes out for this year’s crop won’t be the reason he loses his business to the bank if a July thunderstorm decimates his cotton.
Without a level of economic security provided by farm policy, one bad year can destroy a farmer’s business and the goods he contributes back to the physical and economic well-being of this country.
With a rapidly aging population of only 210,000 full-time farmers providing 80 percent of the nation’s agricultural output, every business counts. When an American farmer goes out of business, the thin green line separating the United States
from importing its food the same
way we import our oil grows ever thinner.
America’s farm policy is being refined right now to do more with less – more than 20 percent less. Despite zealous criticism, this one economic bright spot in the U.S. economy does warrant the continued support of the people of the United States.