Facing the farm crisis

| 5th June 2000
Big may look impressive, but life can be hell for the individual in agriculture today. The problems are vast and complex, and do not lend themselves to easy answers. So what is the agricultural crisis all about, and what can be done to tackle it? Steven Gorelick seeks out the true root of the crisis.

Glamorous excess is a staple of the mainstream media, even in its economic reporting. Stories about soaring corporate profits, exorbitant CEO salaries, improbably high stock prices, and the billions made by obscure dot-com start-ups so dominate the news that one could easily believe the global economy is making everyone (else) rich. But high-flying winners are the exception in today’s economic casino, and no-one is losing out more than small farmers.

Crisis - what crisis?

In country after country, farmers are said to be in ‘crisis’, a word that only hints at the devastation besetting rural communities. In Europe, 200,000 farmers and 600,000 beef producers gave up agriculture in 1999.  UK farm income, according to the Farmer’s Guardian, has dropped by as much as 75 per cent over the past two years, driving more than 20,000 farmers from the land. British farmgate prices for virtually every commodity — including beef, lamb, milk, pork, chicken, eggs, oilseed rape, fruit and vegetables — are so low that farmers are getting less for them than they cost to produce.

American farmers are doing no better. Farm income in the US declined by nearly half between 1996 and 1999, with farmgate prices so low at the end of 1998 that pork was selling for barely one-quarter of the farmer’s break-even price.  The US Department of Agriculture (USDA) estimates that this year’s price for major commodities like cotton and soybeans will be the lowest in more than 25 years. This economic disaster is translating directly into human suffering: suicide is now the leading cause of death among American farmers, occurring at a rate three times higher than in the general population.

The farm crisis has wider implications. Since farmers and farm workers are the economic linchpins of their communities, entire rural economies are in decline. In the UK, for instance, 90 per cent of rural businesses were forced to lay off staff last year. Rural economies in the US also depend heavily on farmers: when 235,000 farms failed during the US’s mid-1980s farm crisis, 60,000 other rural businesses went down with them.

Statistics like these represent an acceleration of trends that have been underway for generations.  In the West, where rural populations have been declining since the end of World War II, villages and small towns are being sapped of vitality, and many of their social and economic institutions are simply disappearing.  Today, four out of ten parishes in rural England have no shop or post office, six out of ten no primary school, and three-quarters no bus service or health clinic. In the US, where only 1.5 per cent of the population still lives on farms or ranches, it is not unusual to find places like McPherson County in Nebraska, which has lost two-thirds of its population — as well as 19 post offices, 58 school districts, and three entire towns — since 1920.

If rural communities in the industrialised world are under siege, their counterparts in the South are even worse off. In China, for example, the modernisation of agriculture has already led to the uprooting of more than half the rural population in the last two decades.  Pastoralists in West Africa have been displaced by cheap meat imports from Europe, while Indian farmers who grow traditional oilseeds like sesame, linseed, and mustard are being driven under by soya imported from the US. Mexican beef producers are losing ground to US producers, whose inroads into Mexico’s markets have tripled since NAFTA was ratified.

Export-led destruction

It is not surprising that farmers, connected as they are to an immobile landscape, suffer in a globalised economy that subsidises mobility and rewards those with no allegiance to place. Today’s economic ‘winners’ include investors who scour the planet for the highest return, moving capital from country to country at electronic speeds. Farmers, however, can’t simply pull up stakes and move their farm. Once they are hooked into the global economy, they are easily victimised by an economic and technological juggernaut that destroys the smallest and most localised enterprises.  Nonetheless, the precise aim of agricultural policy almost everywhere is to pull farmers into an export-led global economy that is likely to be their undoing.

Meanwhile, most policymakers are so wedded to their economic assumptions that they are unable to acknowledge how disastrous the globalisation of food has been for rural communities. Even when the negative impact of the global economy is acknowledged, governments usually prescribe more of the same as a remedy: they call for expanded export markets, lower trade barriers (particularly in other countries), improved ‘productivity’ through higher technology, and — in rare moments of honesty — fewer farmers.

What the framers of farm policy must be aware of, however, is that the very structure of today’s global economy is fatal for the small farmer. Not so long ago, each region offered numerous economic niches for small, diversified farms, which provided the wide range of products nearby consumers needed. 

The globalisation of food, on the other hand, impels every region to specialise in whichever commodity its farmers can produce most cheaply, and to offer those products on global markets.  All foods consumed locally, meanwhile, must be brought in from elsewhere. 

The highly-specialised farms this system favours are most ‘efficient’ when they are large, monocultural, and employ heavy machinery. Attaining the scale needed and the equipment required can drain the capital reserves of all but the biggest farmers, saddling the rest with a debt burden few can escape.  Eventually, small farms are driven under, their lands consolidated into those of the largest and wealthiest farmers.

The technological treadmill

The continual need to purchase the latest equipment, the most potent chemical inputs, and the highest-yielding seeds places farmers firmly on the ‘technological treadmill’. Advances in technology may raise single-crop yields, but they also often lower the farmer’s net income: capital expenses, debt service, and production costs eat up a higher proportion of the farmer’s proceeds, while overall increases in output merely cause the price of global commodities to drop. In the US, for example, factory farming techniques — including carefully controlled heating and lighting, specially-formulated feed, and heavy doses of antibiotics — enable the average poultry producer to raise 240,000 birds each year. But after expenses this prodigious (and inhumane) production earns the farmer only $12,000, or five cents per bird. Such technological ‘advances’ typically do nothing to help farmers, while providing a boon to the manufacturers and marketers of the technologies.

Meanwhile, the global economy’s emphasis on ‘free trade’ often forces farmers into competition with producers in countries where costs are lower due to more favourable climate and geography, lower labour costs, or less stringent environmental standards. Farmers are pressured to become still more ‘efficient’ by increasing the size of their farms, becoming more narrowly specialised, and adopting newer technologies.  The treadmill speeds up, and farmers inevitably fall further behind.

Dependence on international export markets also leaves farmers vulnerable to losses from exchange rate fluctuations and economic slowdowns in distant parts of the world. The immediate causes of Britain’s current farm crisis, for example, include the strong pound, which allows imports to flood the country at prices below the British farmer’s cost of production, while diminishing the foreign demand for British agricultural products. And in the US, nearly one billion bushels of grain — half the nation’s harvest — found no market in 1999, largely because the Asian economic slowdown reduced the demand for US farm exports.

Farmers in the South face similar problems. Those still embedded in a local economy can feed their families with their diversified production, selling the remainder in local markets.  But those who have been drawn into the global food system must specialise their production for export, using the income to buy food. A farmer in South America or Africa can easily be destroyed by a recession in Europe or a bigger-than-expected harvest in Asia. Meanwhile an increasing proportion of the newly-‘modernised’ farmer’s proceeds must be used to pay for equipment and inputs, placing them, as well, on the technological treadmill. The smallest farmers cannot afford those inputs, and are eventually pushed out of agriculture altogether. 

Corporatising agriculture

Another detrimental effect of the globalisation of food is the immense power global corporations have accumulated. The marketing of food to consumers, for example, has increasingly shifted from independent shopkeepers to huge supermarket chains whose virtually identical outlets colonise rural economies. In the UK, each out-of-town retail development built by 1992 corresponded with the closing of roughly 10 independent shops in villages and high streets.  During the 1990s, some 1,000 locally-owned food shops — grocers, bakers, butchers and fishmongers — closed each year. In Italy, the story has been the same: the arrival of superstores known as ipermarcati  have resulted in the demise of 370,000 small, family-run businesses — including  half of the country's corner groceries — since 1991.

Overall, food corporations are taking an ever-increasing share of the price people pay for food, while the farmers’ share keeps shrinking. In the UK, for instance, the food and catering retail price index has risen 50 per cent since 1987, while the price that farmers receive has actually dropped by 3 per cent. In the US, only 21 cents of every dollar spent on domestically produced food goes to farmers, while the remaining 79 cents goes to corporate middlemen and marketers.  

Vertically-integrated corporations now monopolise almost every aspect of farm production and distribution — from seeds, fertilisers, and equipment, to processing, transporting, and marketing.  Through its ownership of grain elevators, rail links, terminals, and the barges and ships needed to move grain around the world, one company, Cargill, controls 80 per cent per cent of global grain distribution. Four other companies control 87 per cent of American beef, and another four control 84 per cent of American cereal. Five agribusinesses (AstraZeneca, DuPont, Monsanto, Novartis and Aventis) account for nearly two-thirds of the global pesticide market, almost one-quarter of the global seed market, and virtually 100% of the transgenic seed market. Control over food has become so concentrated that in the US, 10 cents out of every food dollar now goes to one corporation, Philip Morris; another 6 cents goes to Cargill.

Blame it on the bogeymen

With corporations firmly in control, farmers hooked to the global economy have been reduced to little more than serfs in a corporate feudal system. This metaphor is nowhere more appropriate than in the US hog and poultry industries, where Continental, ConAgra, and Tyson effectively dictate the prices farmers will receive. According to Joel Dyer, author of Harvest of Rage, farmers find it impossible to raise hogs or poultry without agreeing to “terms that are the equivalent of the farmer becoming a hired hand on his own land.”

Many dispossessed rural people are coming to understand the broad systemic forces that are undermining economies and cultures the world over. But the mix of hopelessness and anger, particularly in America’s economically-broken heartland, has made others susceptible to right-wing conspiracy theories that blame rural woes on racial minorities, Catholics, immigrants, a ‘Jewish banking conspiracy’, or a world government run by the UN and policed by swarms of black helicopters.  Like the high rate of suicide among farmers, tragic incidents of violence in Waco, Oklahoma City, and elsewhere should be counted among the costs of agricultural ‘progress’. 

The message, surely, must be a clear one: we need a new way of farming. We need new approaches to agriculture on behalf of government, policymakers and even farmers themselves. This is not some pipe dream: it can be done, and in the rest of this special supplement, we hope to show you just some of the ways in which these problems can be tackled – at both policy level, and on the ground, in the farmyard itself.

The true costs of food

As with other aspects of the global economy, the global ‘free’ trade in food, which is causing the current farm crisis is neither a ‘natural’ phenomena nor inevitable, but follows directly from the policies enacted by governments:

• Global ‘free trade’ agreements treat efforts to protect small, local producers as ‘barriers to trade’ which must be eliminated. These treaties benefit mainly transnational corporations. 

• Massive taxpayer-funded subsidies for transport infrastructures — including multi-lane motorways, bridges and tunnels, high-speed rail lines, harbours, shipping facilities, and airports — make long-distance trade in food seem artificially ‘cheap’. Other infrastructure requirements for industrial production and global trade in food — like instantaneous global communications facilities and centralised energy infrastructures — are similarly subsidised.  One estimate of the benefits received by US corporations alone from subsidies and externalised costs is $2.4 trillion annually.

• Government-sponsored agricultural research and development rarely addresses the needs of small farmers for local markets, but instead focuses on technologies that benefit the largest farmers and corporate agribusinesses. A mechanical tomato picker developed at public expense by researchers at the University of California, for instance, greatly reduced labour costs for the large farms that could afford the machine’s initial cost.  This one technology helped to consolidate California’s 4,000 tomato farms into just 600 in about a decade.  

• Ignored environmental and health costs — from the air pollution and greenhouse gases that accompany fossil fuel burning for transport, to the cancers and birth defects from pesticide use on industrial farms — similarly deflate the price of food from the global system.

• Subsidies to farmers generally support the largest farms far more than small family farms.  Roughly 80 per cent of the farm subsidies given by the UK government goes to the biggest 20 per cent of its farmers, a ratio that describes EU and US farm subsidies as well.

• Regulatory regimes — particularly those that aim at protecting public health — are needed largely because of the hazards of industrially-produced foods and long-distance transport, but place a disproportionately heavy burden on small producers for local markets. One small abattoir operator in Britain, for example, recently had six health inspectors on hand while attempting to slaughter forty sheep. Six inspectors may be necessary to oversee the huge industrial meat-packing plants which are the source of most bacterially-contaminated meat, but they can make it virtually impossible for a small processor to operate.

• Governments routinely give industrial practices with potentially dangerous health implications the green light. In the US, numerous pesticides known to be carcinogenic are used on food crops, and genetically-engineered foods were allowed to permeate the US food supply even though serious questions about their health impacts remain unanswered.

• The monopolistic control of food — though illegal — is largely ignored by regulators, often in the belief that large scale is a necessary prerequisite to global ‘competitiveness’.  For example, the US Justice Department’s anti-trust review of the pending purchase of Continental Grain’s commodity merchandising division by Cargill, the world’s largest grain trader, has elicited loud objections from individual farmers and a wide range of public interest groups concerned about Cargill’s monopoly power.  These comments were summarily dismissed by the government, and the sale is being moved forward. 

Farm facts

  • In Britain, a sheep can be bought for as little as 25p - only slightly more than the price of a single cigarette
  • Modern agriculture is justified on the grounds that it produces more on less land. But this fails to take into account the diverse nature of traditional agriculture. The average small farmer in Chiapas, Mexico, for example, produces maize, squash, pumpkins, sweet potatoes, tomatoes, numerous vegetables, fruits and medicinal plants. The corn stalks are used as support for the beans, and much of what would have been considered 'waste' on large plantations is used to support cattle and chickens. Jose Lutzenberger, former Brazilian Minister for the Environment estimates that 'backwards Indians' produce at least fifteen tons of food per acre - without fertilisers, pesticides, bank loans or governmental assistance.
  • While a small portion of chicken breasts costs up to £3 in some supermarkets, farmers can expect to be paid little more than £1 for an entire chicken. 


This article first appeared in the Ecologist June 2000

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