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The high cost of producing cheap food

Anyone wishing to better understand the costly economic and political externalities of cheap food should spend some time in America’s Midwestern farmland. I drove from Wisconsin to Missouri last week through hundreds of miles of corn and soybeans, the vast majority of which are grown not as food, but as animal feed.

It was easy to find fast food and red meat in the small towns I passed, but it was often difficult to find a decent supermarket with fresh fruits and vegetables. What a terrible irony that some of the richest farmlands in America are often where you’re most likely to find a “food desert,” or a place where it’s challenging to find the components of a healthy diet.

Nearly a century after the Great Depression, we are still farming as we did then, trying to produce cheap calories for a growing number of hungry people — and using vast amounts of fossil fuels — rather than in ways squeezing an overfed but undernourished population of better people. to provide nutrition. that can support the planet and local communities.

Consumers have become accustomed to cheap food. But it is a model that makes little sense from an environmental point of view and has led to enormous consolidation on the production side.

Remember that in the midst of the biggest rise in commodity prices since the 1970s, some farmers are still struggling to stay in the dark. Research from Texas A&M University shows that two in three rice farmers will lose money this year as input costs, including fuel and fertilizer, rise even faster than commodity prices. Corn and soybean producers will make money, but not as much as you might think.

As Joe Outlaw, a professor at Texas A&M, put it in his testimony on the subject to the House Agricultural Subcommittee, consumer inflation may be 8.5 percent, but farmers have been hit by price hikes that are twice as high for seed. For other inputs, inflation is even higher. Herbicide is up 64 percent from 2021 to 2022, and nitrogen fertilizer, arguably the most important input of all, is up a whopping 133 percent. Corn, meanwhile, is up just 4.84 percent per bushel, and soybeans are up just over 7 percent year on year.

Farmers have tried to hedge and pot to explain these spikes, but they are being chased by large, highly concentrated companies that control much of the agricultural supply chain. As Outlaw explained, “Put simply, the input suppliers would not set a price until the producers” [meaning farmers] agreed to take delivery.”

As a result, many farmers, especially small and medium-sized ones, are cutting back on inputs this planting season, which in turn will hurt their future crops. Grain trading giants like Cargill are getting rich, as are many multinational energy companies. But the growers themselves are hardly in the dark.

All this speaks to a model that no longer works. Agriculture in America has been about cheap food for nearly a century. The New Deal encouraged the production of massive amounts of subsidized cereal grains to feed an influx of city dwellers. The Reagan Revolution encouraged further consolidation — think, for example, of four companies that control up to 85 percent of the meat market.

Democratic President Bill Clinton then passed the “Freedom to Farm” law, which eliminated any government management of supply and demand. This is one of the reasons farmers dumped milk after the pandemic; overproduction drives boom and bust cycles. It also makes it difficult to control food inflation now. While the US has strategic petroleum reserves, it has no grain reserves for domestic buyers, despite being one of the world’s largest producers.

The “pile high, sell cheap” paradigm assumes that simply lowering prices will create a healthy market. But it comes at a clear cost to the planet, our health and in some parts of the country to politics. You would think that a state like Missouri, for example, would be fertile ground for Democrats campaigning for a message of corporate greed. In fact, the state voted for Donald Trump in the last election — in part because the failed industrial agriculture model hasn’t been replaced by much else, leaving a disenchanted population ripe for the former president’s dog whistles and his kind of populism, with its empty promises of aid to the white working class.

Many neoliberal economists may shrug and note that farmers make up less than 2 percent of the workforce (the agricultural sector as a whole is just over 10 percent). They may even shrug at the fate of a state like Missouri because they tend to think of aggregate numbers, not individual people in so-called crossover states. But in the American electoral system, these kinds of states still matter – a lot. Together they can make the difference between winning or losing.

So, what should be done? It is right that the Biden administration is seeking concentration in agriculture and energy, as it is in other industries. Indeed, the discrepancy between input costs and raw material prices makes me think the White House has a point about driving up corporate prices. If the commerce department has its way, more nationwide broadband would also help. Ultimately, though, we’re going to have to rethink the whole way we farm in America. Like so much of our economic system, it was built for a different era.

rana.foroohar@ft.com

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