A few farm facts for your Thanksgiving dinner:
• The vast majority of farms are in fact “family farms” meaning they are not owned by corporations, but by households.
• Despite huge productivity gains, the majority of these farms (~70%) net less than $20k per year, requiring off-farm jobs from members of the household.
• The reason for this is the unceasing suppression of prices. The price of corn, milk and all other farm commodities is well below the cost of production, requiring support through the farm bill and putting entire sectors of the economy at risk of extinction.
• Family farms typically work on contracts with “big ag” – companies like Perdue, Smithfield, Monsanto, etc.
• “Big ag” is not agricultural. It is a corporate layer to manage the sourcing, selling, and PRIMARILY the price manipulation and speculation on farm commodities.
• Big ag does not even own much in the way of infrastructure – grain storage, slaughterhouse, meat-packing, shipping, etc. These too are usually smaller privately-held companies working at will or on contract for the large corporations.
• When we talk about “big ag” we’re talking about Wall Street. If you want to understand how this works read “Merchants of Grain” by journalist Dan Morgan, which explains the business model of Cargill, the world’s largest privately-held corporation.
• Here’s the upshot – big ag needs a monopoly not so they can profit on retail sales. The monopoly on contracting and pricing, and precise knowledge of farmer activity gives companies like Cargill a monopoly on INFORMATION, which they leverage into price suppression and success in the commodity futures markets. Why do you think the Chicago Mercantile Exchange turns over $1 quadrillion per year in mostly agricultural futures?
That is big ag’s harvest, and farmers pay dearly for it. Cargill and Butterball can’t afford to let turkey farmers or any other farmers have independence and leverage because it takes away this monopoly.
There are two simple federal laws that will solve this problem, put family farms back on the road to prosperity, and help grow and modernize rural America.
1) A 1% Wall Street Sales Tax. A tax on derivative speculation will hit big ag harder than anyone, and totally change the perverse incentives in agriculture.
2) “Parity”- a guaranteed federal price floor for agricultural commodities. The USDA monitors the production cost of every commodity – factoring in the costs of land, labor, fuel, seed, etc. Farmers must be guaranteed a price for what they produce that reflects those costs plus a livable wage. This requires only a threat from the USDA to purchase these products, and food marketers have no option but to pay the same.
Happy Thanksgiving, and please spare a thought for the hard-working, too often overlooked family farms that put food on your table today!