Nov 17, 2009 by Erika
$12 billion per year for industrial agricultural subsidies vs. infrastructure for small farms
If we want an ecologically sound local food system that’s available to everyone, we’ll need to figure out how to reinvest in…lost infrastructure. Small farmers can’t do it on their own. (Tom Philpott)
Philpott is a new farmer who left a career as business writer five years ago. Newsweek published his recent essay on the relationship between government farm subsidies, the cost of food, and how these funds can be better used to support small farms.
He looks at the consolidation of our food system; the loss of local food processing infrastructure; and the environmental, health and safety costs that have been enabled hundreds of billions of dollars in agriculture subsidies.
On cheap food and economies of scale:
Profit margins on small-scale organic farming are numbingly low, even when you charge prices that low-income folks can’t afford. We quickly found ourselves in a paradox: we were growing great food for the rich—which is not what we set out to do—and losing our shirts doing it.
I started to think about the situation as a business writer would. Why was it so hard to squeeze out a living on a small farm? And why were large agribusiness companies and food conglomerates making out like bandits, and doing so by selling dirt-cheap (and low-quality) food?
A classical economist would point to economies of scale. According to this view, vast operations are more efficient because they can spread costs out over a larger base, allowing them to profitably churn out cheap stuff. But scale advantages couldn’t fully explain it. For years, the U.S. government has paid out billions in subsidies every year to the large-scale farms that supply the industrial-food system. Between 1995 and 2006, the last year for which numbers are available, the federal government dropped a cool $140 billion in subsidies for a few crops, mainly corn and soy. That averages to $12 billion per year.
On the consolidation of the food industry and antitrust principles:
What had happened to all the community-scale processing facilities that flourished a generation ago? The federal government watched idly, ignoring antitrust principles, while the food industry consolidated dramatically. Today, four companies process 90 percent of the beef consumed in the United States. In dairy, just two companies process nearly 70 percent of the milk produced nationally. As these giant companies scale up and buy competitors, they shutter smaller facilities and concentrate processing in vast factories geared to large-scale farms. In standard antitrust theory, when four players control more than 40 percent of a market, they have untoward power over their suppliers—in this case, farmers. The result has been a nearly wholesale obliteration of small livestock farms, and an explosion in the size of the remaining operations.
read the full article: How the Government Should Support Local Farms | Newsweek.com
