A Farm Policy to Return Farming to Families
Updated: Jun 5, 2020
It’s long past time for transformational change in U.S. farm policy. A persistent theme of government farm policy has always been support for “family farms,” even as each new farm bill has resulted in fewer farms and farm families.
Farm bills from the 1930s through the 1960s were designed to keep enough family farmers on the land to provide domestic food security for the nation. However, virtually every significant U.S. farm policy during my 50-year career as an agricultural economist in one way or another has promoted the industrialization of agriculture, meaning the demise of family farming.
Since the 1970s, farm policies have subsidized specialization, standardization, and consolidation of control – first into larger farms and more recently under corporate control. The goal was efficiency through “economies of scale.” The idea was that if we made food cheap enough that nearly everyone could buy enough good food to keep them healthy. Government food assistance programs would fill the hunger gaps for the unemployed, elderly, and disabled. Rural development programs would ease the burden of transition for families who could no longer make a living farming and the communities supported, and supported by, farm families.
However, such farm policies no longer make sense. So little of consumer incomes is spent for food and so small a portion of food costs are associated with farming, that the efficiency of farming makes very little difference in food costs. There are few people left on farms to be transitioned into factory and office jobs, even if those kinds of job opportunities still existed. In addition, the industrial farming methods supported by government programs are now the source of rising public concerns including risks to public health, environmental pollution, mistreatment of farm animals, and exploitation of farm workers. Hunger in America has only grown worse under the “cheap food” policies promoting industrial agriculture. Rural communities are degenerating into “rural ghettos,” with all of the associated economic, social, and cultural problems. The industrialization of American agriculture is creating far greater ecological and social costs than can be justified by any remaining economic benefits.
We need to tell American consumers and taxpayers the truth. The domestic food security of every nation of the world still depends on keeping farmers on the land who are committed to the ethical principles of stewardship and citizenship epitomized by traditional family farmers. Long run food security depends on meeting the basic food needs of all in the present without diminishing opportunities for those of the future. In the U.S, this means transitioning from the current industrial agriculture to a regenerative, sustainable agriculture. To facilitate this transition, farm policies must provide agricultural opportunities for new and existing farmers who share the traditional values of family farming and view farming not simply as a bottom-line business but as a socially and ecologically responsible way of life.
Government spending for farm programs that currently subsidize and support industrial agriculture would be more than sufficient to fund programs that incentivize and support a transition to sustainable family farming. Currently authorized spending levels for farm commodity programs – including direct payments, various price supports, and crop insurance subsidies – would allow every full-time family farm in the U.S. to receive a payment of at least $20,000 per year. To quality for government sustainability transition payments, farmers could be required to submit a whole-farm plan, similar to plans required for the current Conservation Stewardship Program. To provide domestic food security, the transition program might logically focus on incentivizing full-time family farming and thus might be called the “Family Farm Transition Program” or FFTP.
Government transition incentives could be in the form of guaranteed “tax credits,” similar to those in current “Earned Income Tax Credits” for low income tax payers. For purpose of illustration, if a farmer had a break-even year or lost money, they might receive government payment of $20,000 to help tide them over for another year. Farm families who were approved for the tax credit would pay a higher tax rate than other taxpayers; I have suggested 40% of net farm income. So, if a farm family had $20,000 in net farm income, they would owe $8,000 in taxes, but their $20,000 credit would leave them with a $12,000 government payment to supplement their $20,000 farm income for a $32,000 after tax income. As net farm income increases, the advantage of the individual farmer’s tax credit would diminish. At a net farm income of $50,000, for example, the taxes owed (40% of $50,000, or $20,000) would just offset the $20,000 tax credit. Farmers would owe no taxes and would receive no government payment. (A smaller tax credit and lower tax rate could achieve the similar result.)
If one-year losses were large, the $20,000 tax credit could be supplemented by existing government income assistance programs. As farm income increases to some higher level, probably between $70,000 and $80,000, a farmer would be better off to give up the special farm tax credit, and pay taxes as any other business. At this point, the family would have achieved an economically sustainable farming operation and would be sufficiently profitable to ensure sustainability without any further government support. The FFTP would serve as a continuing financial safety net for sustainable farmers whose farm incomes remain vulnerable to year-to-year variability in national and global markets for agricultural commodities. Implementation of the transition program would have given the farm family an opportunity to achieve ecological, social, and economic sustainability. The nation would have benefited for achieving long run, domestic food security.
Farmers and ranchers would be free to own, rent, or operate as many acres and to produce as much as they choose, but the tax credit would be limited to a specific amount for each full-time, independent farmer and ranch family participating in the program. Some form of supply controls might be needed to prevent overproduction during the early hears of transition. Current conventional farmers have large investments in land, buildings, and equipment so it would take time for them to adjust to their new economic environment. The post-transition number of farm families eligible for the FFTP program would be linked to needs for domestic food consumption, thus providing a means of limiting oversupply as well as ensuring domestic food security. Agricultural producers receiving income through comprehensive production contracts, such as those for CAFOs or factory farms, would not be eligible for the FFTP. Such contracts could be used to intentionally fix contract incomes of producers at levels that allow only minimal compliance and perpetuate government payments that simply offset corporate production costs.
The amounts in the above numerical example are based on “family incomes” for farm couples filing joint tax returns, or couples in legal partnerships. Off-farm income of family members also would be taxed at the higher “farm tax rate” for families participating in the FFTP program. This would enable and incentivize “full-time family farming” but still allow off-farm income. For farmer operators whose “primary occupation” is something other than farming, the farm tax credits would be proportionally lower and income levels at which the FFTP program would provide a tax advantage would be lower. No one would dictate who should produce what products or how much should be produced. Those decisions would be made by farmers and ranchers, not by the government, and not by multinational corporations.
Farmers and ranchers who chose not to participate in the FFTP would not be required to have a sustainability transition plan to participate in other government programs. However non-participants would not be allowed to exploit the land, degrade the natural environment, or threaten public health or rural quality of life. They would be subjected to current conservation requirements to protect the land but would not receive government subsidies, other than those available to other industries that are similarly regulated. All government farm payments to farmers would be capped at levels required to support a farm family—not a farm business. In general, non-participating agricultural operations would be classified as industry, rather than agriculture, and would be subject to the same environmental regulations as any other industry.
The family farm transition tax credit would provide farmers and ranchers with many of the employment security benefits currently provided to other public workers – minimum wages, unemployment benefits, and workers compensation. They would have the assurance of income to tide them over in years of crop failures, depressed prices, and times of ill health or other economic setbacks on their way to achieving sustainability. Over time, farmers and ranchers would be required to show progress toward sustainability to remain eligible for the tax credit. If, after some specified number of years, they fail to achieve economic sustainability, they could be helped to find employment elsewhere. This would free up their farms for new beginning farmer, who would then be eligible for the farm tax credit. These new sustainable family farmers don’t need government handouts; they just need a fair chance to prove their worth to society.
Skeptics in the Agricultural Establishment will question whether we can afford to abandon public support of large-scale, corporate agriculture in favor of sustainability. Surely, food costs will go higher, they claim, and consumers will revolt. However, such contentions simply are not supported by facts. Americans spend a little less than ten-percent of their disposable incomes for food – a dime of each dollar. Equally important, less than two-cents of each dime they spend goes to the farmer who produces the food – eight and one-half cents goes for packaging, transportation, advertising and other marketing services. Even if farmers received fifty-percent more for their crops and livestock, retail food prices would only need to be ten-percent higher. But more important, with continued industrialization and corporatization of American agriculture, food prices in the future are far more likely to be higher than with regenerative, sustainable family farms. Americans can’t afford the costs farm policies that fail to provide domestic food security.