Jul 30, 1983
The U.S. Department of Agriculture recently reported that this year’s winter wheat crop would be nearly 2 billion bushels, the third largest crop in history. Incredibly, it would seem, this happens at a time when nearly 20 per cent of the potential acres of winter wheat was left idle, mostly under the incentives of the federal government’s PIK (payment-in-kind) program. Under the PIK program, the government is transferring its stores of surplus grains and fibre to farmers for them to sell, rather than growing more for the market. The intention is to limit production while shrinking the government surplus, thereby putting an upward pressure on prices to protect the farmers’ position.
Ironically, however, the yield per acre of winter wheat is the highest this year that it has ever been. That is, the productivity that the U.S. wheat farmers have achieved is so great that today, with 16 per cent less land planted than last year, they can harvest just 8 per cent less than their record crop of last year. The situation is similar for farmers in virtually all phases of U.S. agriculture.
It is this very efficiency of American agriculture which goes hand-in-hand with a situation where the majority of the farmers are either threatened with bankruptcy, or at the least have become totally dependent on government supports or on income from elsewhere than their farms.
U.S. agriculture is the most productive in the world. In 1981, for the world as a whole, 44.7 per cent of the economically active population was engaged in agriculture. For Western Europe, the figure was 10.1 per cent. For the Soviet Union, it was 15.8 per cent. But for the U.S., it was 2.1 per cent. Such a low figure is even more remarkable, considering that 40 per cent of U.S. farm acreage produces for export!
Today’s productivity is the result of a process going back to the end of the last century, when the country underwent a rapid industrialization. The U.S. went from a predominantly rural to a predominantly urban population about the time of World War I. While the total population of the country has continued to grow since then, the agricultural population has continued to decline. In the post-World War II period, the drop has been sharp, from 23.6 million people living on farms in 1950 to 5.6 million in 1980, a decline of more than 76 per cent.
The vast majority of farms in the U.S. can in some sense still be called “family farms.” In fact, less than one per cent of farms in the U.S. are directly corporate owned. But there has been a marked trend toward concentration reflected in the declining number of farms and growing average acreage. In 1950, there were 5.6 million farms in the U.S., averaging 213 acres. By 1980, there were 2.4 million, averaging 429 acres. The size of the average farm more than doubled while the number of farms declined by nearly 43 per cent. In recent years, the rate of decline of the number of farms and the farm population has slowed somewhat; this apparently is only because the numbers have nearly reached rock bottom.
This decline in the number of farms and in the farm population is an indicator of the extent to which the success of the farmers in the U.S. has been turned against them. As they nurtured capitalist development, they also more and more saw themselves destroyed as entrepreneurs.
In many cases, the income from the farms is inadequate for their survival, and the farmers must find supplementary income, either as part-time wage laborers or by operating their own small businesses apart from the farm. Moreover, approximately half of U.S. farm families make less than 2,000 dollars a year from farming. The majority of these farmers hold full-time jobs off the farm and have holdings small enough that they can work their own fields part-time, outside the regular work week. In other words, most of the population we might superficially consider to be farmers in fact earn most of their living and spend most or much of their working time as workers.
There has been a trend in recent years for sections of the bourgeoisie to locate new plants in rural areas, taking advantage of this newly available part-time and full-time labor. During the 1960s, manufacturing employment grew 4 per cent in metropolitan areas, while it mushroomed 22 per cent in small towns and rural areas. The figures tend to be higher in the less densely populated areas. In the 1970s, the trend continued, although less dramatically as new plant investment declined with the deepening economic crisis.
Each farmer must try to make his farm more efficient and therefore more competitive just to stay afloat. To do this, the farmer can try to bring more land under cultivation, and to apply new technologies, both mechanical and chemical. But this process implies at least a short-run increase in the farmer’s indebtedness and a corresponding risk of failure. Those who succeed in expanding their holdings are then able to make more efficient use of the newer technologies. They can continue to grow at the expense of those who tried, failed, and were forced to abandon the land and enter the proletariat.
The most productive operations set prices in the competitive marketplace. The smaller farms cannot use the same technology as efficiently as the larger ones and cannot survive at the prices which that technology implies. The consequence is the increasing concentration of farming.
Today the largest farms employ substantial numbers of laborers, mechanics, and other personnel. The 800 largest farms in the U.S. average 9,500 acres and about 14 million dollars each in annual sales. This means that only 3/100 of one per cent of the farms account for more than 13 per cent of the sales. Those farms which are 1000 or more acres are only 7 per cent of all farms, and these account for more than half of all agricultural sales. At the other end of the scale, 66 per cent of the farms are 180 acres or less and account for only 9 per cent of sales.
The “weeding-out” among farmers has proceeded quite far. On the one hand, the majority of the farmers have been driven into the proletariat. On the other, a small number of the most successful farms become capitalist enterprises, hiring wage laborers to work large blocs of land. The small independent farmer no longer dominates agriculture and, in fact, seems close to extinction.
The farmers are being squeezed between contradictory forces. On the one hand, even with the decline in the number of farms, there are still enough of them that the competition among them holds their own prices down. On the other hand, they must in many ways deal with giant enterprises which dwarf them, and which have their way with the farmers.
The farmer must purchase fuel, seed, feed, fertilizer, equipment, and other supplies from giant corporations. In 1981, for example, four companies sold 83 per cent of the farm equipment in the U.S. In fertilizers, 8 companies control 90 per cent of potash and 40 per cent of nitrogen sales. These are giants like Caterpillar (1982 sales of 6.5 billion dollars), Halston/Purina (4.8 billion), and DuPont (33.2 billion), not to mention the fuel companies.
Having dealt with such suppliers, the farmer does not simply take his produce to the supermarkets of the cities. Once the farm’s commodities are produced, they are bought, processed, transported, and marketed by other capitalist giants. Four companies make and sell more than 90 per cent of breakfast cereals. Five companies control 85 per cent of U.S. grain exports. Consider, for example, General Foods (1982 sales of 8.4 billion dollars) and General Mills (5.3 billion).
Squeezed by such giants, the farmers are heavily dependent on banks and other lenders to finance their continued operation. But the resulting debt only adds to the farmer’s burden. Farm debt in the U.S. reached approximately 215 billion dollars as of last January 1 (which was 4 times as high as in 1970 and double what it was as recently as 1978). This is close to 90 thousand dollars debt per farm at a time when the net annual income per farm has dropped below 8,000 dollars.
The farmers are trapped in the framework of a capitalist economy which does not work for them. Wherever they turn in their business dealings, they confront enterprises which enjoy economies of scale which the farmers cannot dream of attaining. The result in agriculture, as in other sectors of the economy, is that the great part of the proceeds of the industry go to those who are so advantaged, regardless of the real value they add in the production process. In agriculture, they impose terms on the farmers that in many cases prevent the farmers from producing their crops at a cost less than the price they can get for them.
The results can easily be seen in “who gets what” of the consumer’s food dollar. Today 65 cents of it goes to the processors and distributors. At least 20 cents go to the suppliers and financiers. So a maximum of 15 cents of the food dollar goes to the farmer.
Some farmers have attempted to at least stabilize their position in the marketplace by entering contracts with major processing companies. The farm may still be owned by the farmer, but the processor provides supplies and equipment, makes major decisions on planting and harvesting, and pays the farmer for the produce according to the contract. But such a contract does not change the balance of power between the two parties. Indeed, it codifies it. A change in the relationship can be dictated by the stronger party, and not by the weaker.
The farmers are so squeezed in all these relations that they have been forced practically to become wards of the state. Government subsidies to farms for 1983 are projected to total about 21 billion dollars (including about 12 billion under the PIK program), which is almost exactly the anticipated net farm income for the next year.
The massive intervention of the state in U.S. agriculture in the last several decades has ostensibly been intended to support the struggling small farmer. In fact, the consequences have been to strengthen the larger farms at the expense of the smaller.
The U.S. government has for more than 50 years used a variety of devices to subsidize agriculture, including the purchase and storage of market surpluses, direct payments to farmers to leave fields fallow, and most recently the PIK program. These programs generally encourage the tendency toward concentration in farming and, consequently, the ruin of the small farmers.
It is the largest farms which can best employ the state’s handouts. They can leave fallow a portion of their fields, take all the subsidies up to whatever limits might be imposed, take additional savings through reduced labor costs, and continue to profit from the production which continues on other fields and other segments of their operations.
In contrast, the small farms have little possibility to hire labor and therefore little or no labor costs to cut. They don’t have enough land to reap the maximum benefits. They don’t have the options available on the large farms to mix production and subsidy in varying proportions to maximize net income. They simply are not in a position to take advantage effectively of the subsidies technically available to them. At the same time, these subsidies make the largest farms even more competitive. A recent report of the federal government admitted that the subsidy programs do not protect the small farmer, but, quite the contrary, “accelerate the trend toward ever larger farming operations” and “encourage economic cannibalism within agriculture.” The PIK program, insofar as it removes the 50,000 dollar ceiling on the total amount of subsides that can be paid, simply will speed up the process.
The situation in agriculture has become most acute in the last 2 years. Favorable growing conditions have led to record-breaking crops in the face of world-wide depression.
The U.S. government has intervened to purchase huge amounts of “surplus” products which are then stored. In 1981, the grain surplus held was 62 million metric tons. A year ago, it had grown to 99 million tons. Before PIK was implemented, it was projected that the government grain holdings would have swollen to 125 million tons this year.
But, despite such massive purchases, commodity prices in early 1983 had dropped sharply from their 1981 levels: corn, 20 per cent; wheat, 9 per cent; soybeans, 20 per cent. The international crisis has sharply diminished the world market, while European crop surpluses paralleling those in the U.S. have put an additional pressure on U.S. producers. In the last 2 years, U.S. grain exports have declined 15 per cent. Total U.S. farm exports declined last year by 11 per cent, the first decline in 13 years.
The consequences of the crisis include the highest rate of farm bankruptcies since the Great Depression. Between 5 and 15 per cent of U.S. farms are threatened with failure. And the increased land going on the auction block has led to a decline in land values, undercutting all farmers’ equity. Since 1981, the total value of farm land in the U.S. has declined about 5 per cent. In some areas, land values dropped 20 per cent last year.
The PIK program reveals the incapacity of the state to protect the farmers from the effects of the crisis. Moreover, there are indications that PIK could be a complete fiasco. Not only did winter wheat come in a bumper crop despite the state’s intention to hold it down; but, in addition, government stocks of cotton have turned out to be inadequate to cover the participants in the program. It is too late for them to plant to cover themselves. For them, this intervention has aggravated the problem rather than eased it, or even created a new one.
A Nebraska grain farmer recently said, “The whole thing is a mess.... American farmers are going broke producing too much food in a world of hungry people.” An incredibly productive agriculture is grossly underutilized as the future prospects of the traditional farmer seem to dwindle virtually to nothing.
In the last few years, there has been some response to the crisis from the farmers. The tactics have included conventional lobbying, the tractorcades of the American Agriculture Movement, and the armed and openly reactionary tax protest of the Posse Comitatus. There have been demands for various forms of emergency price supports and for mortgage foreclosure protection. In a few cases, there have been militant, physical blockings of foreclosure evictions.
Up until now, all these protests have taken place in the virtual absence of any struggle on the part of the proletariat.
It is possible that the impoverished farmers could see a reason and a way to tie their prospects to those of the proletariat. But for that to happen, much depends on the activity of the working class itself. If the working class continues to fail to fight for its own interests in the face of the crisis and the attacks of the bourgeoisie, there is little to attract any farmers to place confidence in it. It is probably more likely that the farmers would identify the workers as among the sources of their own problems. The farmers could react to the working class in a resentful, hostile way, much as the extreme right organization, Posse Comitatus, does today.
However, if the working class begins to fight in its own name and in its own interests, it could offer a new prospect to the farmers already ruined or on the verge of ruin. If the proletariat proposes to challenge the very power of the bourgeoisie itself, the farmers could see the possibility for the full social realization of the fruits of their labors.
American agriculture has become so efficient that it is a virtual demonstration that the solution to world hunger is a social and political problem, and no longer a problem of technology. In this respect, modern agriculture, whose productivity has been most developed in the U.S., has laid the basis for socialist society. If the farming petty bourgeoisie has been virtually destroyed as a class, the farmers have contributed to a heritage which all humanity can share.