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Small Farmers Finding a Niche

Back during the Great Depression, deflation, or rapidly falling prices, traumatized an entire society. Farmers were hit hard. These lines from Steinbeck's The Grapes of Wrath memorably echo the confusion about how to stem the tragedy:

Produce at the Davis farmers' market.Click to enlarge.

Photo: Chris Farrell
"I've been thinking about us, too. About our people livin' like pigs and good rich land layin' fallow. Well, maybe one guy with a million acres and a hundred thousand farmers starvin' and I've been wondering if all our folk got together and yelled maybe I can find out something, just scrounge around and maybe find out what is wrong and see if ain't somethin' can be done about it."

Federal subsidies offered farmers a lifeline back then. Today many farmers say they don't like government subsidies, but worry about what would happen without federal money.

America's farm subsidy system is complex. Federal subsidies rarely reach the small, marginal farmer. Roughly 10% of farmers receive 90% of the subsidies.

Still, if the experience of the past quarter century is any indication, deregulating agriculture—as in the case of airlines and financial services—would trigger a painful turmoil. But deregulation might also increase the industry's overall global competitiveness and productivity.

Many small farmers would go out of business without federal financial protection. But the family farm would not disappear with consolidation. After all, most large farms—about 96 percent—are "family farms," and nearly all corporate farms are family owned.

New niche opportunities might also emerge for entrepreneurial farmers to exploit. The number of niche farms is rising, including hobby farms. Small farmers, especially producers of organic farm goods, who work near urban markets are finding loyal customers, such as at the Saturday-morning farmers' market in Davis, California.

"I have a little bit of everything," says one vendor. "Have 51 varieties of tomatoes, 21 varieties of peaches, squash, cucumbers. You name it, we grow it. We have three farms going. Thirty acres of heirloom tomatoes."

Proximity to major urban markets gives these small farmers a competitive advantage. But not enough can benefit from this. Rural America is no longer America's storehouse for food. Instead, American consumers are increasingly reliant on imported food, such as Mexican tomatoes. And that dependence worries Lori, director of Public Citizen's Global Trade Watch.

"Woe be to us," Wallich warns, "at the moment that—actually given drought in some part of the world, and economic downturn in other parts of the world—there is no food to be had, to be exported, and we've made ourselves totally reliant."

Farmers like Marc Curtis from Mississippi share her concern that eliminating subsidies would threaten the nation's food security.

"You've got to be careful in doing that," Curtis says, "because you'll wind up getting yourself in the same shit we're in with OPEC right now."

And as Maya McGuineas notes, farmers are quick to wrap subsidies in the flag after the terrorist attacks of 9/11.

"What we have seen is the repackaging of many policies that senators and reps favor in terms of security. What we are now looking at is a farm bill called the 'farm security bill'."

But the analogy is flawed. During the oil crisis in the 1970s, America was highly dependent on imported energy to run our factories, offices, and cars. Even today, OPEC wields enormous influence because there is no easy substitute for oil. But Stephen Blank says food is different from oil.

"Food is not one commodity," Blank explains. "There are hundreds of products that will make my body go. I can't get apples because the state of Washington decides to boycott; I won't eat apples. I will eat something else. It is impossible to conceive of the whole globe deciding not to sell us food all at the same time."

It's striking how few people, including farmers, are happy with the current subsidy system. One reason is the confusion over what subsidies are supposed to accomplish: Protect the small family farmer, shield farmers from foreign competition, defend national food security, preserve the environment, shore up rural America, or maintain a way of life.

These are all vital public goals. Yet there is a growing consensus among economists and policymakers that farm subsidies aren't achieving any of these ends well. After seven decades of government support, they're wondering if the era of farm subsidies is passing.

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