A Farewell to Farms
Missourinet reports that the federal farm bill has increased the maximum loan under the Beginning Farmer Loan Program from $250,000 to $450,000. The rationale for this? According to Tony Stafford, director of the Agriculture Business Development Division within the State Department of Agriculture:
[...] too many young people are leaving the farm. He hopes the enhancement of the program will lure more Missourians to return to farming.
Au contraire; it is more likely that not enough young people are leaving the farm. There is nothing intrinsically important about farms. Farms are valuable because they do one thing: produce food. If we can produce more food with fewer farmers, great! Then people — the most important resource we have — are freed to work on something else of value.
Throughout the 20th century, U.S. farm output has increased despite the fact that fewer people have chosen to be farmers. According to the Federal Reserve Bank of Dallas:
Since 1948, agricultural production has doubled, while total input use, including labor, land and machinery, declined slightly. [...] Between 1948 and 1996, agricultural labor productivity increased more than eightfold. The number of people fed by one farmer has jumped from 15 in 1950 to 128 in 1995, including 34 outside the United States.
Because production doubled and productivity increased by a factor of eight, fewer people are working in agriculture despite this doubling of production.
In A.D. 1000, almost everyone was a farmer. Now, almost no one farms in industrialized nations. A quick comparison of living conditions seems to favor present times. You might object that the driving factor here is technology, not the amount of farmers we have. But you would be missing my point: The fewer people we have farming, the more people we have working on other things, like technological advances.
Farm subsidies such as the Beginning Farmer Loan Program only serve to slow down the tremendous gains in prosperity we have been achieving during the past couple of centuries. And for what? According to Stafford, to get a few Missourians back on the farm. Why, exactly, do we want them on the farm again?
Market interference usually aims to bring out positive externalities, either real or contrived. Farm subsidies are no exception. I think that many Americans (and Missourians) believe in the farm lobby for two main reasons:
1) The Midwestern farmer-family is a romantic ideal. If your ancestors didn’t directly contribute to small-scale farming, they almost certainly interacted with it. In short, it’s an American tradition.
2) We don’t do well without food and, relative to the romanticized era characterized above, we increasingly import food from abroad. The surest way to ensure continued domestic production is through subsidies.
A little economic musing debunks both points:
1) Life is, perhaps universally, better now than then. You live more comfortably than your ancestors in part because your meals come primarily from agricultural machinists and not traditional farmers. If economic growth is unappetizing to you, at least realize that the model farmer is virtually extinct and that any subsidies paid out to him will more often benefit those who replaced his job with large-scale, mechanized operations.
2) In addition to being the world’s largest importer of food, we are its largest exporter. Even if only considering imports, we have no factual grounding on which to justify protectionist subsidies. Milton Friedman challenged supporters of domestic iron production in the ’50s to responsibly investigate the cost-to-benefits of stockpiling cheap foreign iron instead of paying higher prices to produce the home-made stuff. The same could be asked of domestic agriculture supporters.
Missouri’s strong position in national food production gives these sentiments local significance. To this bill’s credit, its restrictions keep taxpayer money out of large, established agriculture firms. Even so, we should critically examine legislation that interferes with the market, especially if it is predicated on unreasonable sentiments.
Comment by Dan Grana — July 8, 2008 @ 1:54 p.m.