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Freedom to Farm
Observations Based On Twentieth Century History
By Clive Perry Ririe
(From NETWORK, the family newsletter,
volume 3, October 1997)

Conventional wisdom is that farm programs are from another age, that they didn't ever work very well and they're worse now. They seem to say that in our present global agricultural economy, old nostrums, even if they were effective in their day, wouldn't be now.

The view that gave birth to the Freedom to Farm legislation that was recently signed by President Clinton, is that if the U.S. and all other countries that produce and export farm commodities would discontinue all market-altering practices (subsidies), the force of comparative advantage would work to establish the niche for each exporter and send the signals that propel each producer to find his place in the grand scheme and that every producer, free of government interference, would comply to the will of the market and use the elements of production that he controls to produce the commodity for which he has the comparative advantage.

The positive premise that market forces will solve all the problems and equitably distribute rewards is questionable and the oft repeated condemnation of all farm programs is completely unjustified.

The New Deal farm programs of the thirties worked well. Their goal was to promote stability on the farm. Because of the great depression, American industry and American financial institutions were nearly destroyed. The influx of workers from rural America to the industrial centers had exacerbated a terrible economic calamity in which the rate of unemployment was far worse than at any time since the beginning of the revolution. Allowing farm foreclosures to continue at such unprecedented rates would have toppled all the banks and increased the unemployment numbers so drastically that the solution to that problem might have been delayed by many costly and wasteful years. It might have destroyed our American capitalistic system!

It was fortunate that in the early days of the Franklin D. Roosevelt's presidency, the Farm Security Administration was born. It acquired millions of dollars of bad commercial loans and allowed farmers to stay on the land. Unemployment wasn't immediately solved nor was farming suddenly made profitable but a terrible situation was stabilized and thousands of banks were saved.

The substantial loss that was anticipated for the FSA never happened because other programs were instituted which improved economic conditions on the farm. Among them was the price support program which promoted orderly marketing of the most commercially important commodities; corn, wheat, cotton, rice, and others, including tobacco. Mistakes were made; for example we now know that one of the serious ones was the inclusion of a tobacco program, but this approach succeeded and the taxpayers' investment in it was rewarded by the return of invested capital, but more importantly, by the return of overall economic stability.

Subsequent farm programs have been based loosely on the economic verities that proved useful in the thirties but they, unfortunately retained most of the errors from the early legislation and compounded those errors by accepting other follies. For the last thirty, we have managed to include enough of the ludicrous to make the whole pie look and taste like a cow pie.

There's little doubt that from among the solutions we might have chosen, the one we have settled on in the Freedom to Farm act is probably the worst.

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