New economic modeling from Campaign for Family Farms and the Environment shows benefits from system of fair prices and reserves to moderate food supply disruptions, help farmers diversify and build resilience
Missouri/Iowa/Minnesota/South Dakota—New economic modeling released today found that policy tools focused on fair market prices, reducing volatility and the strategic use of reserves in the next Farm Bill would benefit farmers, consumers and the environment. Commissioned by the Campaign for Family Farms and the Environment (CFFE), Economic analysis of the agricultural market volatility relief program concludes that a combination of reserves and set asides, combined with price bands, can improve farm income, limit price spikes for consumers and open opportunities for greater diversity on the farm.
The report by agriculture economist Daniel G. De La Torre Ugarte, Ph.D., was commissioned by CFFE, a coalition led by family farm organizations based in Missouri, Iowa, South Dakota and Minnesota. The report uses an agricultural policy simulation model based on USDA price projections, and finds that a commodity crop program that sets price bands for several key grains to ensure they don’t dip below cost for farmers or become unaffordable for consumers; puts crops into reserves if prices drop too low and releases from the reserve when prices rise too high; and sets aside land from commodity crop production if reserves grow too large, can be effective in moderating prices and securing a stable food supply.
In most years, below cost corn and soybeans used as cheap animal feed have served as a subsidy for the factory farm system of animal production. The cycle of over production and below cost prices has driven many small and mid-sized crop farmers out of business, promoted consolidation of farmland ownership, and expanded the factory farm system of animal and dairy production. Current Farm Bill programs are designed to benefit global grain and meat companies who buy and use grains, even as they leave the U.S. food system vulnerable to climate and political disruptions, such as recent droughts, the pandemic or Russia’s attack on Ukraine.
CFFE proposes the next Farm Bill include the key goals for an Agricultural Market Volatility Relief Program that:
- Reduces volatility and ensures better prices for grain farmers.
- Stabilizes supply and reduces price volatility for consumers.
- Stops the system of below-cost feed that props up the factory farm system.
- Addresses past discrimination in the design and implementation of supply management programs to ensure all farmers can access programs on an equitable basis.
- Creates economic opportunities for farmers to transition to more diversified, regenerative cropping and livestock systems.
“Our food and livestock production systems are much in need of an updated system of policies to address their destabilizing and damaging volatility” said Carmen Fernholz, a Land Stewardship Project member from Madison, Minnesota. “Consumers and farmers alike need these policies incorporated into the Farm Bill that allow farmers like the young family currently operating my farm to continue to invest in more sustainable and diversified crop rotations that will result in healthy soils, clean water and vibrant rural communities all while returning livestock to the land.”
“We know that overproduction of corn and soy fuels the factory farm system and injures independent family farmers like me,” said Darvin Bentlage, a fourth-generation grain and cattle farmer and member of Missouri Rural Crisis Center. “Year after year, I’ve witnessed the price for corn and beans below the cost of production, which gives corporate meatpackers a steady source of cheap animal feed. Taxpayers are forced to fund farm programs and government sponsored insurance to make up some of the difference, and consumers pay more at the grocery store.”
“For a good part of the 20th century, farm policy attempted to address overproduction and stabilize prices for farmers and consumers using tools like price floors, grain reserves and set aside programs,” said Rebecca Wolf, Food Policy Analyst from Food & Water Watch. “Though not perfect, they helped counter the persistent volatility that harms both consumers and farmers but benefits the handful of companies that control these markets.”
“A modernized approach to supply management needs to address past discrimination in the design and implementation of supply management programs,” said Ava Auen-Ryan, Farming and Environment Director for Iowa Citizens for Community Improvement. “New programs should be designed with equity in mind to ensure that all producers can access these programs.”
“The constant price volatility in commodity crops, resulting in below-cost prices in most years, makes it hard for farmers to invest in more diverse, climate-resilient farming systems,” said Ben Lilliston, Director of Climate Strategies at the Institute for Agriculture and Trade Policy. “With increasing climate disruptions, it’s time to revisit the use of grain reserves, and expand and improve conservation programs to give farmers more options to get off the corn and soy treadmill.”
These reforms to commodity programs are only part of a suite of policies CFFE is calling for in the next Farm Bill: strengthening competition rules to ensure fairness in agriculture markets; addressing historical discrimination at the USDA; supporting a pathway for farmers out of the factory farm system; rebuilding regional and local food system infrastructure and markets; steering public research and extension toward diversified cropping systems and small, beginning or socially disadvantaged farmers; strengthening the farm safety net to make it accessible to farmers of all sizes and types of production; and reforming trade policies to prevent the dumping of below-cost crops while protecting U.S. markets.
Links for the Agricultural Market Volatility Relief Program
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Campaign for Family Farms and the Environment (CFFE) is a coalition of four state-based farm and rural membership organizations and two national organizations organizing for independent family farmers, rural communities, clean water and air, and a democratically controlled food system. CFFE is composed of the Missouri Rural Crisis Center, Iowa Citizens for Community Improvement, Dakota Rural Action, Land Stewardship Project, Food & Water Watch, and the Institute for Agriculture and Trade Policy.