An Agriculture With A Future; C. Shuman

I think the record will prove that the increases in efficiency on American farms have been reflected in reductions in costs to consumers. It has been reflected in savings as is illustrated by the fact that today the aver age factory employee works only 41 hours to secure the food supply for his family for one month, while as re cently as 1952 it required 51 hours. Food, in terms of purchasing power of consumers, is today as cheap or cheaper than it has ever been in the history of this country. We on the farms of this country have had twenty-five This article is from a 1957 address before the American Meat In stitute. Mr. Shuman is' President of the American Farm Bureau Federation. [376 ] years of experience with government activities in the realm of solving farm problems: twenty-five years of sad experience. In the last five years through both Demo cratic and Republican administrations alike we have had a 23 per cent decline in net farm income.

But out of these twenty-five years of experience we have learned some lessons. So all has not been lost. I list a few of these lessons, not to explain them· but simply to illustrate where we have been. Some Lessons Learned The first lesson we have learned is that prices of farm products are not made in Washington. Farm prices are made where the consumer accepts or rejects our prod uct. Not all politicians have learned this lesson, as judged by speeches that are in the press every day; neverthe less, it is true that farm prices are not made in Washing ton. If they were, Congress would not have permitted a 23 per cent decline in the price of farm products in a five-year period. A second lesson we have learned is that you cannot control the production of agricultural commodities by law. It would be possible, of course, to control produc tion if the cuts dictated by law were sufficiently severe and enforced, but the Congress will not impose restric tions to bring about material reductions in production.

Quotas, allotments, and other devices have generally failed to reduce agricultural production. A third lesson we have learned is that we can price [377 ] our products out of the market. Most farmers assume that people will always eat food; and yet while they will always eat food, they do not need to eat food produced by farmers. Fifteen or twenty years ago the only reliable source for vitamins and minerals in the human diet was food. Today you don't need food to secure vitamins and minerals. You can go to the comer drug store, buy your· vitamins in pills and your minerals in a bottle, take a pill and swallow some tonic, eat a bale of hay, and you are on your way. This is almost literally true. Scientific laboratories can and will, if we insist on pricing our products out of the market, produce the food that goes into the great ma jority of human stomachs. A fourth lesson we have learned is that price has a function. I am sure that most farmers are more and more learning that price has a function. That function is one of change. The most important characteristic of price is change. If it were not for the fact that prices change, and that we need this price change constantly going on, we wouldn't need price at all.

These are a few of the lessons that we have learned. Popular Fallacies Now there are some popular fallacies that ought to be exploded. One of these is that a surplus of farm products in government storage is a good thing. This is absolutely not true. The only really good place [378 ] for us to accumulate our surpluses, our reserves for the future, is in the soil and in livestock. Surpluses in gov ernment hands serve no useful purpose. In fact, they are a millstone around the neck of agriculture. Another popular fallacy is that you don't need to worry about the future in agriculture because all you need to do is wait a few years and population will catch up. We are currently producing about 15 per cent more than this country will consume at current prices. There is no basis for any comfort in this theory because our history indicates that we can increase our produc tivity in agriculture faster than we can population.

We are just now commencing to open new doors to technical knowledge that can mean great increases in productivity in American agriculture. If we applied the knowledge we now have to all of the agricultural produc tion in this country, we could increase our output by 30 to 50 per cent. There is no hope that population will catch up with our productivity in agriculture as long as we continue to stimulate production by artificial means. Despite any probable population increases in coming years, we will still be plagued with ':':surpluses"in agri culture if prices are supported above the free market for any extended period of time. Surplus and Subsidy Another popular fallacy is that you can give the sur plus away. AIl you need to do is to issue food stamps or [379 ] subsidize low income persons or feed the starving in other countries. The level of income of the average per son today is the highest in real purchasing power that it has ever been. There may be a few people in the United States who would increase their consumption if given free food or subsidies to increase their income, but it would be a very small proportion of the population.

For all practical purposes income limitations are not the reasons why many people in this country continue to eat an inadequate diet. It is a matter of choice or a lack of knowledge in most cases. As far as the world is con cerned, of course, there is widespread malnutrition, but again the surpluses that we have accumulated in this country are not the kind of commodities that will correct this malnutrition. There is a world-wide surplus of wheat. Nobody is starving to death because of a shortage of wheat. There is a world-wide surplus of rice. There is a world-wide surplus of cotton, of feed grains. Practically all the com modities we have in surplus are in surplus position every where in the world. True, we can dispose of them gradually if we could shut down the intake into the surplus stockpile. The great need, of course, is to upgrade the level of human diet, both at home and abroad. If we could do that, we would not have surpluses because an adequate diet would use up most of the things which we have in sur plus supply.

This is not something we secure by legislation or by subsidy. I want to tell you this little story. I have a [380 ] neighbor. He inherited a 120-acre farm forty years ago debt free, with good buildings, good livestock, good fences, and high-level fertility. Today, forty years later, after living off this farm and putting very little back, this neighbor of mine has one of the poorest farms in our community. His net income last year was probably not over one thousand dollars. One of our g.ood senators remarked to me that, of course, this was not adequate for a good standard of living for his family. He suggested that the federal government should pay this farmer a subsidy. In fact, he drafted a tentative bill to pay $2,200 minimum to keep these folks on the farms, and I suppose, to keep them from competing with industrial labor in the city. I said to the senator, "My neighbor had $1,000 net in come in 1955. Under your proposal, Senator, I suppose you would pay him $1,200 to bring him up to $2,200." He said, "That is right."

c'Now," I said, "if you paid him $1,200, how much money would he have for 1956?" He replied, <:<:$2,200, of course; $1,000 he made, plus $1,200 we give him." I said, "Senator, the trouble is that you don't know my neighbor. If you give him $1,200 from the Federal Treasury, the total of his net income would be $1,200.He would not plow a furrow on his farm. The level of his desires, the amount of money it takes to buy his bread and bacon and beans and whiskey is $1,000. You would provide $200 more than he desires to earn." This is the political approach to the solution of farm problems, the idea that you can get something for noth[381 ] ing, the idea that you can buy. prosperity for American agriculture, the idea that you can replace economic laws with political laws. All these things we have found by experience to be unsound. Emotional Errors Now we come to the emotional approach which is so prevalent, and we hear the heart-tearing, tear-jerking appeal to take care of the small underprivileged farmer, the fellow who is getting forced off the land by the great corporation farmers. This is a fallacy which has abso lutely .no foundation in fact. Corporation farming is not ,increasing; 97 per cent of the farms in the United States are family farms. This is exactly the same percentage it has been year after year for the last forty or fifty years.

It is true, of course, that the family farm is becoming more efficient and larger. One family can operate more and produce more per worker than ever before in Amer ican agriculture. We have increased our efficiency 80 per cent in the last fifteen years-more, I believe, than almost any other industry. We have been releasing about 300,000 workers per year to go into industry or other occupations. This is good. This is the kind of basis we have had for progress in American agriculture for the last several gen erations, constant emphasiS on efficiency and the release of more and more workers to go into other occupations to produce the things we cannot produce on the farm. [382 ] If Change Is Forbidden This, then, is the difference between an agriculture with a future and one with a past. If you look at the agriculture of many other countries of the world Sweden, Britain, Italy, France, Germany-you will find that agricultural progress and national progress in most cases stopped when efforts were made to fix or freeze on the farms all the folks that were then on the farms.

I visited in Southern Italy last fall on a small three and-a-haH-acre farm that had been in the same family for over nine hundred years. Their farm was the same size, raising the same kind of crops with the same kind of tools they had nine hundred years ago. There was no opportunity to accumulate capital to expand the busi ness, no vpportunity to develop new methods to increase the productivity per worker. Why were they fixed in this rut? This happened, in part, because a government that professed to want to be kind to farmers passed laws to keep more and more people on the land and set a pattern which either forced or unduly encouraged excess workers to stay in agriculture. This is not a very pleasant prospect for the future if that is the road we are going to travel in American agriculture. I don't think that we are going to travel that road. We have been learning lessons and making decisions.

As yet, the decisions have not been too clear-cut.· How ever, it is well to note that in the last Congress the de cision was made not to return to the pattern of fixing [383 ] prices that has done so much to carry us down the false road in recent years. In the first. year of the application on a very modest scale of the flexible price supports, we halted the :five year decline in farm prices and farm income. Another straw in the wind is that farmers have successfully re sisted efforts to bring the livestock industry under the government control pattern. Government price fixing, crop acreage control, and storage programs have interfered with the natural opera tion of livestock production as a balance wheel in Amer ican agriculture. Prior to these programs, livestock pro vided the function of a natural ever-normal granary. It furnished a means of adjusting total agricultural pro duction to the volume the market would absorb. Today that function has been disrupted with livestock continu ing in a free market, and grain moving in a controlled market.

A Positive Program Yes, the future of American agriculture is good if we have the good judgment to build on the pattern of past success. This means that we must place emphasis upon continued research for new knowledge to bring about increased efficiency of production, marketing, and dis tribution. This means that we must continue to place emphasis upon the importance of the free market and of prices that change to reflect variations in consumer demand and the supply offered by producers.·This means [384 ] that rather than attempting to control production we must work to expand consumer demand at home and abroad through education, promotion, and increased in ternational trade. This means that we must move away from continued dependence upon an all-powerful federal government for the determination of price and produc tion patterns in agriculture. I am convinced that farmers are making the right decision, the decision that freedom of opportunity for the individual is more to be desired than political prom ises of equal shares in a socialistic economy based on security.

[385 ] HOW TO STOP COMPETITION AND RAISE PRICES t" 5"eJe"ic Ba61ial (1801-1850) THIS is the story of the owner of an iron mine in France [in 1847], and his reaction to competition from the owners of iron mines in Belgium. The Belgians were able to produce and ship iron into France at less cost than the French owners could produce it and sell it at home. This fact was reflected in the comparatively low price of Belgian iron in the French markets. Naturally the French people bought most of their iron from Belgian producers instead of from their own do mestic producers. This displeased the French mine owners exceedingly, and the one we are here discussing decided to do something about it. At first he considered the possibility of personally stopping this undesirable trade. He thought that he might take his gun and sally forth to the frontier and kill the nailmakers, locksmiths, and other users of iron who crossed the border to patronize his competitors.