The problems with hunger in America will not dissolve in the next two years. And in that same time span, larger crops could easily push commodity prices down to levels of unprofitability, based on current production costs. The Great Depression will not return, but there will be some parallels.
That is one of the reasons why 532 farm organizations last Wednesday sent a letter to House Speaker John Boehner saying, “We believe that splitting the nutrition title from the rest of the bill could result in neither farm nor nutrition programs passing, and urge you to move a unified farm bill forward.” They promised support of the food programs, which were not addressed by farm groups in their initial lobbying for the Farm Bill.
For decades, the Farm Bill has enjoyed bi-partisan support, and urban members Congress vote for it because of the food and nutrition programs, just as rural Congressmen support the farm safety net. If farm and food policy were split, there is no reason for an urban Congressman to vote for soil conservation and crop insurance.
Carl Zulauf, agricultural economist at Ohio State University, says, “Given the current state of the relationship between farm and nonfarm household income and the current size of farms, it will be hard for the U.S. farm safety net to avoid continuing cuts.” That comes from his perspectives on the relationship of income differences between farm and non farm families. He says, “Average household incomes can be compared back to 1960. In 1960, average farm household income was 65 percent of average U.S. household income. Thus, over the last half century, farm household income has increased substantially relative to income of U.S. households.” But now he says every year since 1996 the average income of farm households has exceeded the average income of all US households. That has also been the case in two out of three years going back to 1972. (The farm financial crisis in the early 1980’s makes up the balance.)
With the financial separation between farm and non-farm households, Zulauf says it becomes harder for the public to support a higher farm safety net, and that is reflected by the reluctance of urban Congressmen to vote for high dollar farm programs.
If farmers are making so much money, where does it come from? You may not be one of those families, but they are out there, and Zulauf points to two dynamics at work. “One is the increasing size of the farm production unit, which in turn is partially driven by technology. The second is the increasing role of nonfarm income (also referred to as off-farm income).” That non-farm income for some large farms is more than the average US household income. And while it may not be needed for survival of the farm, it may be a risk management strategy, says Zulauf.