Acton Commentary

Free Economy Farming


As the legislative priorities of the 107th Congress become clearer, some things around Washington appear to be in for a change while others will stay the same. Tax forms will look different next year; new campaign finance laws might be enacted; social security may be tweaked. One segment of federal policy that appears to be immune to substantial reform, though, is agricultural subsidies. Since the Freedom to Farm Act of 1996—an initiative intended to reduce subsidy dependence—the dollar amount of federal payments to farmers has increased fourfold.

It has often been noted that Americans have a romantic view of rural life that fuels the sentiment that the family farm needs to be preserved at any cost. Christians, in particular, admire the ideal of the family farm, where the value of physical labor in cooperation with the fecundity of God’s creation is upheld. Farmers participate in a special way in the stewardship mandate of creation. Some theologians, moreover, point to the sacramental character of agriculture as a process by which the goods of the earth are transformed into life-giving nourishment.

These sentiments may explain why many Americans—religious and non-religious alike—are unwilling to question the subsidies that presumably enable family farms to survive. Even among traditionally self-reliant farmers, subsidies are often viewed as a necessary evil, the only alternative to economic ruin.

There is no question that farming can be a difficult and volatile business. There is no point disputing the experience of innumerable farmers who have lost their farms or have been forced to sell and leave agriculture because they have found it impossible to support a family. The question that needs to be posed is this: Are federal subsidies the solution?

Many sincere Christians argue that augmenting market prices for farmers’ crops is necessary because market-dictated prices would be so low as to drive farmers out of business. In solidarity, they say, we must provide financial support to farmers in need.

But this argument fails on two accounts. First, it is mistaken as to the long-term benefit of subsidies. One of the most serious drawbacks of subsidies as they are currently implemented is that they are not restricted to farmers in dire need of aid. Keith Collins, head economist at the Agriculture Department, compares subsidies unfavorably with other forms of welfare: "In our food stamp program we means-test the working poor with strict requirements, but we ask nothing of farmers."

The result of this failure is that, generally speaking, the bigger the farm the better the federal benefits. This is not the way to preserve family farms, which tend to be smaller. "The data shows that government subsidies are tilting the playing field in favor of the largest farms," says Clark Williams-Derry, senior analyst at the Environmental Working Group (quote from Elizabeth Becker, "Far from Dead, Subsidies Fuel Big Farms," New York Times, National Edition, May 14, 2001).

Such unintended consequences should not surprise anyone familiar with how government works. When corporations bed down with government, it is usually the players with the most resources that glean the most benefits. As Deanna Dyksterhuis, the proprietor of a family farm in Oregon, explains, "Family farms … are busy taking care of their resources of land, water, and labor. They don’t have time nor do they think about traveling to Washington to ask for special favors and privileges."

For the family farmer, life in the fields may involve more than earning a living—it may mean preserving an ancestral homestead, a cherished way of life, or a system of roots in a turbulent world. But farming is also a business—an economic enterprise that is therefore subject to the rules of economics. Subsidies for food, like subsidies for any other item, distort market signals and prevent normal adjustments in supply and demand. How can a farmer know when to cut back on corn and expand the soybean crop when prices are distorted by non-market factors?

The distortion of market signals, furthermore, ultimately damages the competitiveness of the American farmer. Under normal market conditions, businesses that are most agile, adaptive, and innovative survive and prosper, while those that cannot—or will not—change will fail. It is wrong to insulate farmers from this process. Subsidies stifle the spirit of entrepreneurship that encourages farmers to adopt new technologies and methods and otherwise streamline their operations so that they remain competitive in a global market. This kind of creativity is itself part of the stewardship mandate.

Again, it is recognized that this process can sometimes be a painful one. But the alternative—centralized decisions as to which agricultural products get subsidized and to what extent—is a prescription for inefficiency, stagnation, and the rewarding of special interests, all of which compromise a commitment to solidarity and the common good.

In addition, agricultural policy should not be viewed in isolation from other issues. It is widely understood, for instance, that the extraordinarily high levels of subsidies enjoyed by European farmers hurt American agricultural exports. American subsidies, in turn, diminish competition from farmers in other nations, who may be able to produce some crops more efficiently than farmers in the United States can. An overall lowering of trade barriers would be part of a solution to the problem of agricultural subsidies.

All of this is not to say that the family farmer will not need help at times to stave off economic disaster. Dependent as it is on the vagaries of nature, farming will always prove a risky business. But governmental intervention may not be the most helpful alternative.

This leads us to the second way in which the argument for subsidies errs: It ignores the principle of subsidiarity. Rural towns have famously been tightly-knit church-centered communities. Why not draw on those resources as solutions of first resort? Social institutions closest to the problem at hand are best able to judge the extent and nature of the aid required. They are also best able to tailor assistance to the personal situations of those in need. For one farmer, introduction to new agricultural products may be more helpful than subsidies; for another, a low-interest loan to get through a bad year may be most necessary. Governmental subsidies gloss over these individualized needs and chafe at the natural bonds of community, discouraging the recognition of interdependence among farmers that could go a long way toward providing a safety net in times of hardship—economic or otherwise.

This personal dimension was the most important issue in the debate over welfare reform, and it is the best argument for agricultural reform. Ultimately, we may decide that sustaining family farms is worth the enormous cost to the public treasury and that we are willing to foot the bill. That kind of concession will not make it right. Our focus should be not so much on the preservation of the farm as on the preservation of the dignity and self-respect of the farmer. That federal subsidies will further that goal is a questionable proposition indeed.