Is U.S. Agriculture Policy Doomed?

Blumenthal: A disconnect in ag policy could cost farmers. Bill Spiegel

Published on: Feb 25, 2005

After 20 years of studying world agricultural trade, Gary Blumenthal is perplexed. Consider the Doha round of World Trade Organization trade negotiations. Developing countries blame the United States for their plight, but Blumenthal, who was in Reno, Nevada addressing the North American Grain Congress, says the blame is misplaced.

"Three-fourths of the world is poor. That’s not due to American agriculture. It is an overwhelming and economic and social problem. Too many people are trying to make a living in agriculture," says Blumenthal, the CEO of World Perspectives, a Washington-based consulting company specializing in agriculture.

The 2002 U.S. Census of Agriculture indicated the number of farmers in the U.S. was down 22% since the 1997 census. Yet, 24% more people were employed in the food handling business, Blumenthal notes. "Agriculture is not a dying business, it is an evolving business."

South America, he adds, has been weaning farmers out of agriculture. Yet in China, more than 70% of the population – 850 million people – are employed producing agricultural products. "Because more people are born in the world every year, we are creating more farmers. But because of technology, we need fewer farmers."

But developing countries don’t want fewer farmers. They want the U.S. to alter domestic farm policy. "Their answer is to eliminate subsidies, because they believe that low-cost labor makes their farmers more efficient. Meanwhile, they want special and differential treatment from developed countries," Blumenthal says. The world economy operates on an export-driven mentality. But, he adds, "Export surplus alone does not a great economy make."

That’s not to say, however, that U.S. farm policy is not without problems. Its purpose, Blumenthal says, is to stabilize prices and keep farmers on the farm. But in the last 13 years, the U.S. government has spent $225 billion to keep farmers on the farm. According to Blumenthal, 35,000 farmers produce 50% of the country’s food. 60,000 farmers, he explains, have been propped up by U.S. farm policy.

Farm programs encourage farmers to raise more cotton, but the world has a surplus of cotton. Meanwhile, the U.S. imports more fruits and vegetables because the country’s production is flat. Yet, consumers want more fruits and vegetables – and USDA’s own dietary guidelines encourage that consumption. "There is a disconnect in farm policy," he says.

That disconnect combines with two other factors that could jeopardize U.S. farm policy. The international community desires that the U.S. eliminate price supports. Plus, an ever-more-urban population is being led to believe that direct payments are not as beneficial to them as conservation, or "green-based" payments.

"The public doesn’t like the smell of manure and they want clean water. Should we spend more money on conservation at the expense of price supports; to retain the public’s confidence in farm programs," Blumenthal asks. "The money will continue to flow to agriculture, but the justification may change."