The New Agricultural Revolution; G. Mueller

EVERY AMERICAN school boy and girl is familiar with the agricul tural revolution. It was this revo lution that enabled American workers to leave the farm and build a great nation. The· modern techniques and tools used on our present-day, family operated, com mercial farms are the envy of the world. Even Premier Krushchev came over to take a first-hand look at our tremendous agricultural productivity. Our family farms, bigger and more efficient than ever, are putting food on the typi cal American's table for less than 17 percent of his wages. Cer tainly, if there ever was asuccess story, it is America's family farm. Mr. Mueller, of Clifton Springs, New York, owns and operates a family farm specializing in dairying a.nd cash crops. As farmers, we are presently in vesting twice the amount industry averages in capital tools per man. Because of this heavy capital in vestment, and the fact that most farmers still put in a full. day of productive work, our American farm products remain competitive in world markets. In contrast, each year that passes, we see more and more of our industries failing to meet competition abroad. The shelves in our stores are increas ingly stocked with products "Made inJ apan" and elsewhere.

In spite of nearly nine billion dollars of agricultural products ex ported last year, the United States experienced a minus balance of trade for the first time in 83 years. To make matters worse,dock worker strikes have seriously 259 260 THE FREEMAN May curbed agricultural feedgrain ex ports,. threatening a permanent loss of markets that took years to develop. Thus, agriculture, one of our few industries still able to compete, has been partially shut off from world markets. Our fam ily-based agriculture, the strong est in the world, has a tremendous ability to compete if only permit ted to do so. liThe Farm Problem" Agriculture is overcrowded, as are most other businesses in the United States. We have too many drug stores, too many hardware stores, too many grocery stores, too many insurance salesmen, too many barber shops, and so on•. This is the American way. Busi nessmen are supposed to be free to enter any field of production and trade in which they think they can make a profit. The result is keen competition in most busi nesses. The consumer benefits from competition by getting better serv ice and lower prices. Competition also has resulted in numerous business failures. The typical busi ness earns a slim profit, if any.

Only the best managed firms (those that serve the consumer best), reap a substantial profit. Such is the nature of our cher ished system of competitive enter prise. The· agricultural business is especially crowded because it was the original and only way of life for many Americans. The move ment of workers out of agricul ture has not been rapid enough to prevent this overcrowding. Farm ing generally is a wholesome, healthy, and satisfying work, and many people are willing to accept a lower standard of living rather than give up such a way of life. Farming, because of its appeal, will always be crowded, and profit margins for the "average" farmer will always be low. Only the well managed farm, operated with a judicious amount of modern tools and the latest know-how, will yield a good profit. This is as it should be, for this type of farm operation is serving the consumer best. Time and again we hear dire predictions of the takeover of farming by corporations. It is true that the family farm has changed and tends to look more like a fac tory every day. My neighbor used to be one of the largest poultry farmers in the county with 3,000 layers - and quite successful. But progress has left him behind.

Those in the vicinity who intend to stay with chickens are building 500-foot-long houses to hold 43,000 birds in wire cages, wall-to-wall. These are still family -owned and -operated farms, but they are large and efficient. Likewise, the dairy farms of 30 years ago with 12 cows 1972 A NEW AGRICULTURAL REVOLUTION 261 are now either out of business or have grown much larger. They, too, are still family-owned and -operated. The only corporate agri culture in my county consists of a few acres of vineyards owned by a winery. The United States De partment of Agriculture reports that corporations account for only 1 per cent of our farms, 7 per cent of our farm land and 8 per cent of our agricultural production. A closer look reveals that ninety per cent of these are actually family farms that have incorporated to ease the transfer to the next gen eration. It is apparent that the family farm that has mechanized and is under the skillful management of its owner is still very com petitive. Corporations, with their high fixed costs, have found it· al most impossible to compete with the American family farm.

I think we do not have a "farm problem." In fact, agriculture, be cause of the private research by feed, seed, building supply, chemi cal, machinery, and fertilizer com panies, has kept up with modern methods as well as has any U.S. industry. The development of hy brid seed corn is an excellent ex ample of how private researchers, competing for a profit, benefit all of us - especially the consumer. The research by Land Grant Col leges and by the U.S.D.A. has sup262 THE FREEMAN Ma,y plemen'ted and stimulated this pri vate research. Agri-business sales men, farm catalogs, advertising folders, and numerous farm publi cations, in addition to government sponsored agricultural extension service (county agents), have made this valuable research avail able to all American farmers - big and small. Use of this modern knowledge has made the American family farm the most' efficient in the world. Rather than looking upon agriculture as a serious prob lem, we should consider it our big gest success story.

The Winds of Change A' fundamental change is taking place in the thinking of the Ameri'can farmer. We have long been' singled out by politicians as a group of people to be pitied. Farm publications keep telling us how much we suffer. Our farm leaders are especially sympathetic to our "sad" plight and pledge all sorts of programs to bring-us aid. We farmers have heard this so long and so often that we are begin ning to believe it. The independent, self-reliant, self-thinking farmer is wavering. So often told that we must cooper ate with others and "set our own price," we are beginning to move in this direction. The appeal of collective bargaining is gaining momentum among farm people. Farm editors and farm leaders' would not dare suggest that com petitors in any other business get together to set prices; yet, they boldly advocate a monopoly control over supply by farmers, using such terms as "disciplined marketing"

or "supply management." When examined closely, their object is a monopoly control over the total supply. The result is presumed to be higher prices and returns for the farmer at the expense of the consumer. But let us look at how this will affect the family farm. The family farm is dominant in America today because it is a strong ,compet·itor. It is' dominant because of its ability to survive in periods of low prices. The family farmer can let the' hired man go and work harder himself in 'pe riods of low prices. The farmer's wife. can even take a job in town in order to help save the farm. These are options not available to the larger, more heavily capital ized corporate farms. Interestingly enough, many of the farmers working the' hardest for collective bargaining - and the se curity that, the higher and more stable prices will bring - are the large operators. Through careful management and hard work, they have built ,large, efficient enter prises which they now wish to pro tect. In periods of high prices, they prosper. But low prices put 19'72 A NEW AGRICULTURAL REVOLUTION 263 the large farms to the test, caus ing many to fail. Fluctuating farm prices thus tend to even the score, so that the little fellow. has an op portunity to compete. What will happen to the small family farm when collective bargaining assures stable high prices for the large farmer ? Won't this be the opening corporations are looking for and won't they come pouring into agri culture once we assure a higher profit margin?

To limit "overproduction" when bargaining achieves a better price for farmers, there will have to be some kind of a quota system. Just as laborers wait in line to work on union jobs, so shall young far-· mers wait in line to farm. In good growing years we will be forced to let a portion of the crop rot to insure higher. prices. from the consumer. It will be an entirely new ball game for the self-reliant, independent, competitive farmer. But he will adjust, once he tastes the fruits of collective action. As time goes" on, I anticipate that these quotas will be purchased by the larger growers; and the larger growers will merge and form even larger corporations. Once we establish "rights" as to who can farm and how much, we are opening the door to big busi ness in farming. Just as truckers "rights" are soon purchased by the larger trucking firms, the farmers "rights" will also flow to ward where the money is. By turn ing to collective bargaining, we may be dooming the family farm.

We already have legislation." to prevent buyers from discriminat ing against us when we sell· coop eratively - The Agricultural Fair .Practice Act. The National Agri cultural Marketing and Bargain ing Act (Sisk Bill) is about to be passed in Congress. It would force the buyer of farm products to ne gotiate in good faith with his reg-· ular suppliers and prevent him from buying from· other sources during these negotiations.· The next logical legislative step will be a requirement for compulsory arbitration if negotiations fail. Along with this will have to come a limit on entry and quotas for all existing farmers. In summary, we are witnessing in a few short years the coming of a monopolistic type of collective bargaining for agriculture. Farm ers are accomplishing this through strong and efficient lobbies in Washington. Farmers may soon have the collective bargaining pow ers that it took labor a century of bloodshed to obtain. Even the D.S.D.A., after 35 years of all sorts of farm programs that have failed, now suggests that we try farm bar gaining. The collective bargaining juggernaut is rolling in ;high gear and is on a collision cqurse with 264 THE FREEMAN May the family farm. There is definite ly an agricultural revolution in progress.

The Consumer Is Still King The first priniciple of business is that the customer is king. To prosper over a period of years, a business must serve the customer well. Now, as farmers, we find our selves looking at our customers as adversaries from whom we should demand better prices rather than earn them. Like many unionized wage earners in our society, we foolishly believe we can raise our standard of living -by demanding more for doing less. The time has come for the American consumer to remind the farmer that he is a businessman, expected to compete as he pro duces the food and fiber that our nation needs. Farmers are no more -justified in getting together to manipulate prices than are oil companies, or auto companies, or drug companies, or any other busi ness competitors. It is time to re mind the farmer that competition is still the foundation of free en terprise. True, farmers have more votes and, therefore, more power in Washington than have other businesses. But does this justify a war against consumers? The con sumer, if alerted, has more power - economic or political - than any conceivable combination of pro ducers. Perhaps it is time for consumers to take a hand in steer ing a course for agriculture. , HENRY HAZLITT Welfarism Gone BOTH SOCIAL SECURITY·and unem ployment compensation. were pro posed in large part on the argument of Franklin D. Roosevelt and others in 1935 that they would en able the government to "quit this business of relief."