The National Crop Reserve: An Old-School Plan We Need Again
We're spending the month of June trying to understand how America's food system got so out of shape—and what we can do about it. As part of this series, called Forked Up, we asked experts from several nonprofit organizations to tell us their food system solutions. Here's Siena Chrisman from WhyHunger.
Farming can be a strange business. In good years, when the prices for farm products drop because supply is high, farmers can only try to make more money by planting more. But that causes a glut driving prices down further. It's the ag catch-22.
For most of U.S. history, farm policy was designed to protect farmers from the wild price swings unique to a field dependent on nature. A national crop reserve, which worked like the strategic petroleum reserve, used to address this by buffering farmers and consumers from price swings. To keep prices steady for both sides, the government bought extra grain in good years and released it back into the market in leaner years. For farmers, the system included a price floor so prices never dipped too low. For all of us eaters, the reserve limited price gauging by food companies.
The program was a central piece of the original 1933 Food and Farm Bill. It worked pretty well, but it began to be eroded during the Nixon administration. By 1996, all price support systems were gone. Leaving farm prices up to the whims of the market has hamstrung hundreds of thousands of independent farmers. Without price supports, by 1999, corn prices had already dropped by fifty percent. Dire consequences followed: Between 2009 and 2011, the United States lost almost twenty thousand farms.
The prices farmers now get for corn are usually well below the cost of production. Big agribusiness corporations buy up this incredibly cheap corn to produce meat, milk, and processed foods. But corporations aren’t passing their savings on to consumers. While the price you pay at the grocery store may rise along with corn prices, retail prices rarely come down when corn prices fall. In short, the food industry's profit is protected from the costs of its ingredients. Meanwhile, the farmers themselves only get an average of sixteen cents of a consumer’s food dollar. That doesn't sound right, does it?
To address this low-price-and-high-cost emergency and prevent even more farms from going under after the reserve was dismantled, the government began a program of subsidy payments to farmers. You may have heard of subsidies. They’re controversial. The truth is they are also a lifeline for thousands of family farmers stuck in our broken system.
The Senate draft of the Food and Farm Bill proposes eliminating the biggest subsidies, called direct payments, and replacing them with heavy subsidies to help farmers buy crop insurance. This idea is even worse for farmers, taxpayers, and rural communities. (It's a bonanza for insurance companies.)
Both direct payments and crop insurance subsidies, however, are just ways of tinkering around the edges without addressing the underlying problem: Farm policy should not subsidize corporate profits. It should keep consumer prices stable and ensure fair prices for farmers based on food production costs.
There are proven policies to do this: We've got to roll back the clock to 1933 and reinstate a crop reserve and price floor.
A University of Tennessee/National Farmers Union study found that if a crop reserve had been in place from 1998 to 2010, taxpayers would have saved almost $96 billion in spending on farm programs, while farmers’ net incomes would have been about the same. A reserve would have evened out the extreme swings in farm prices of the last decade, leading to more stable (and slightly higher) prices for farmers and more stable consumer food prices as well.
In the last few decades, the government has spent tens of billions of dollars on those stopgap emergency farm payments, while corporations have benefited from artificially low corn prices. A reserve would instead be an investment in a fair agriculture system protected from nature and market forces—with corporations paying the real cost of farm goods.
That's $96 billion saved, and fairer prices for farmers and consumers. We don't need to cut food stamps to makes ends meet, as many in Congress are claiming. Bring back the crop reserve and we'll make sure both low-income Americans and our farmers can eat.