15 September 2009

Support for Farmers

This article is excerpted from the book Outline of the U.S. Economy, published by the Bureau of International Information Programs. View the entire book (PDF, 3.26 MB).

In the early 20th century, according to the U.S. Department of Agriculture, more than half of the U.S. workforce was employed by the small, diversified, rural, and family-run farms responsible for most of the nation’s foodstuffs. Today, U.S. agriculture is concentrated on a small number of very large, specialized farms employing less than 1 percent of U.S. workers. The acreage of the average farm has tripled since 1940, and half of U.S. farm sales come from the largest 2 percent of all farming operations. American farmers received $285 billion for their crops and livestock, plus $12 billion in direct government payments in 2007. Farm imports totaled $70 billion, while exports came to $82 billion.

Federal programs to shore up farmers’ incomes arose in the Great Depression of the 1930s. The goals were to assure minimum farm prices for specific farm commodities and to further support farm prices by paying farmers to limit production. Although consumers bore the cost of the resulting higher food prices, many considered this approach reasonable when most farms were small and farmers’ incomes were relatively low.

Federal policies began to change in the 1970s as foreign export markets grew in importance and U.S. agriculture shifted away from predominantly small farms to large family holdings and corporate farming. Federal legislation in 1996 replaced price supports on specific commodities with direct payments to farmers based on historical production, but gave farmers flexibility on how much of their land to farm.

Until the 1980s, half of the U.S. farm exports were major bulk commodities such as wheat, corn, soybeans, cotton, and tobacco. Livestock accounted for 10 percent of exports. Horticulture products, led by fruit and vegetables, accounted for 9 percent. Today, livestock makes up 16 percent of farm exports; horticulture products, 21 percent; and bulk commodities, 36 percent.

As with manufactured goods, fluctuations in the dollar’s value against other currencies produced shifts in agricultural trade. But the changing tastes of American consumers played an important part, too. In the early 1980s, an American consumed, on average, 810 kilograms of food a year, of which 72 kilograms was imported, according to the U.S. Agriculture Department. In 2002, consumption had climbed to 900 kilograms and imports per person averaged 118 kilograms. As U.S. household wealth increased in the late 1990s and early 2000 decade, consumers spent more on imported high-value farm products, from wine and beef to cut flowers. American wheat, corn, and other bulk exports remained competitive because of the high productivity of farmland, the expansion of large-size family and corporate farming, and agricultural technologies. Ethanol, most of it refined from corn, made up nearly 3 percent of U.S. motor fuel in 2005.

U.S. farmers have readily adopted genetically altered crops since their introduction in 1996. Genetically altered soybeans and cotton require less herbicide to control weeds. These varieties now make up more than 70 percent of all soybean and cotton acreage planted in the United States. Cotton and corn have been engineered to resist insects by producing their own toxins, and these varieties are also gaining rapid acceptance in the United States.

But genetically engineered crops remain controversial because of critics’ concerns about their environmental impact and some public misgivings about the technology generally. The ultimate response of consumers and governments around the world to this science will have major consequences for U.S agriculture.