American Socialist, January 1956
Mechanization and mergers on The farm have driven millions of farmers out of business, and jammed many of the rest against the wall. Present ‘parity’ policies have hit a dead end; are not reducing the glut of farm products. Needed: A new program.
IN the days after the Civil War, ‘40 acres and a mule’ was the slogan of millions of Americans who took Horace Greeley’s advice and poured into the newly opened farmlands of the West. Since that time, growth in acreage and productivity has made American agriculture one of the most important forces in world food production. With less than one-fiftieth of the world’s agricultural population, it produces about one-seventh of the world’s food.
Despite this vigorous growth over the past century, the picture of the American farmer in recent decades has, on the whole, not been one of abundance and well-being. In crisis after crisis, beginning in the l880’s, large sections of the American farming class have been pressed to the wall, their farms foreclosed or abandoned and they have been driven to seek new employment, if available, in the cities. The recent drop in farm prices once again brings the American farm problem to the fore and points up some of the underlying tendencies that have created it.
There has been a 30 percent drop in net farm income since 1951 and it is still continuing. Though this smaller income now goes to a smaller farm population the drop per capita is considerable. The farmer’s cost-price gap is widening. He continues to pay about the same amount for the things he must buy, but he receives almost one-third less for what he brings to market. This means that the farmer now gets far less of the retail food dollar, and the middleman, the packer, the processor and the bank get more. Where in 1946 the farmer’s share of the retail food dollar was 52 percent, it is now only 40 percent.
THE most impressive sign of the farm difficulty is the growing pile-up of unsold and unsalable agricultural products. This government-held glut has almost quadrupled in the last three years. By March 1955, Government’s investment in surplus farm corn had reached over $7 billion, with about $1-million-a-day cost for storage. There were enough surpluses paid to provide every family in the country with sixteen hundred loaves of bread, an almost equal amount of corn, cotton for one hundred shirts or dresses per family, six pounds or more of butter, and enough cheese, wool, cottonseed oil, barley, beans, tobacco and other products to literally make this country ‘a land overflowing with milk and honey.’ Secretary of Agriculture Benson has stated:
‘A train loaded with all of the wheat, corn, flaxseed, soy beans, and small grains in which C.C.C. (Commodity Credit Corporation) funds are today invested would be 8,123 miles long. It would reach one-third of the way around the world.’
The farmers who produced this abundance in the last three years, especially the small farmers, were not any better off. Neither, for that matter, are large sections of the consumer market. One-fourth of all American families about 12 ½ million, with incomes below $2,000 are not able to afford an adequate diet. Nor are the hungry millions abroad able to share in this abundance: U.S. agricultural exports have declined sharply from their wartime and post-war peaks.
Though the glut of farm products has only appeared in its full force recently, its development reach back over a century. Technological improvements began the 1830’s, prompted by the high proportion of land per person and the shortage of labor. First came the steel plow, then the gradual introduction of harrows, threshing machines, grain binders and other equipment. Until the 1920’s, however, these machines still relied mainly on animal power, which reached a high of some 25 million work animals in 1921.
AMERICAN farmers were sustained during all these years by two main forces: the boom in the domestic market due to industrialization and urbanization and the immigration into the U.S.; and the practically unlimited European demand. During periods of price decline and drought, the farmer pulled through by virtue of the cheapness of the labor of his family. But by the 1920’s, the domestic market leveled off, and European demand weakened sharply—Big Business tariff policy weakened it further. And the bigger farms began to mechanize on a gigantic scale.
By 1925 even his own cheap labor and that of his family was no longer sufficient to enable the small farmer to compete with the new mechanized farms. The ascendancy of the gas-and diesel-engined tractor, which permitted practically all plowing, seeding, cultivating and harvesting operations to be done through various mechanical attachments, forced prices below the level on which a farm family could exist without mechanization.
By the 1930’s mechanization of farms had reached a level where it utilized over one million tractors and 5 million other vehicles. The labor saved through these devices at that time was estimated at over one billion man-hours per year, enough to account for half a million workers. In addition, 60-70 million acres of land formerly needed for the feed of draft animals were now able to be turned over to other purposes.
The collapse of industry in the Great Depression of the thirties put the final skids to a whole section of the farming population. A farm labor force estimated at from one to three million was thrown on the open road, and the major portion of those who remained on the land were left heavily in debt and on a greatly lowered standard of living. By 1933 the index of farm prices had fallen off 40 percent from that of 1929 and persons on farms received a total net income less than one-third of the 1929 level.
To find anything similar one would have to go back to the Enclosure Acts of England of several centuries ago which removed large sections of the English farming class from the countryside and threw them into vagabondage. These were the years of the ‘Okies’ and ‘Arkies,’ of ‘The Grapes of Wrath’ and ‘Ill Fares the Land.’
ECONOMIC relief which World War II gave to the country through a manpower shortage, increased national income, and large exports of farm products boosted farm prices, and for a short period the agricultural crisis disappeared. Productivity, however, continued to climb and was reinforced by many new agricultural techniques.
The introduction of hybrid corn in the early thirties led to the production of record-high corn crops. Almost every year in the forties and fifties has seen a 3-billion-bushel crop of corn. By contrast, before hybrid corn, a similar crop occurred only twice (1906, 1920), and then by the planting of 15 million more acres than at present.
The development of improved, disease-and insect- resistant strains of wheat, oats, barley, etc., has also revolutionized production. The potato crop, as a result of improved techniques, has yielded as high as 700 bushels per acre on many farms, as compared to 100 bushels per acre in the pre-World War I period.
Improvements in breeding and selection were also extended to the field of animal livestock. New breeds of sheep, hogs, and steers have been recently introduced which promise unexampled yields in wool, meat, and hides. New techniques have increased the milk and butter-fat yield from the average dairy cow by about 20 percent since 1930.
Thus while the farm working population has declined by over 50 percent since 1900, productivity per man-hour of farm labor has more than doubled, and in food grains (wheat, barley, etc.) it has more than tripled with only a relatively small increase in acreage. But the same factors that acted in the twenties and thirties to limit the American market for farm products have continued to operate. As Louis Hacker then pointed out:
1) Population growth was slowing down. 2) Profound changes in dietary habits were taking place. 3) Improved methods of heating homes and the growing elimination of the need for hard physical toil made it possible for men was well as women to dispense with foods with high caloric contents. 4) Cotton was being replaced by rayons and other chemically produced fabrics.
Once the war-time and Marshall Plan demands for food snapped, these tendencies were soon reflected in a fall in farm prices. Producing as independent units, the 5 ½ million farmers are unable to withhold production in times of glut, as industrial corporations can, and wait for a future rise in market demand. The devices of industry, such as ‘retrenchment,’ which involves firings and layoffs, and ‘capital reinvestment’ in new, more profitable enterprises, are cut off for most farmers, who could only fire themselves or their families. The dilemma of the small agricultural entrepreneur confronting a market over which he has no control is illustrated by the fact that a small surplus of 5 percent of eggs last year resulted in a 20 percent drop in farm egg income. And the farmers’ reaction to falling prices, unlike the retrenching capitalist, is to increase his output in an attempt to hold his own, thus aggravating the surplus and driving prices still further down.
TO subsist in the midst of monopolistic industry and a narrowed market requires a commercial farm which is a far cry from the days of ‘40 acres and a mule.’ A W.P.A. National Research Project reported in 1938:
‘Mechanization of the farm involves more than the purchase of a tractor. It practically calls for a reorganization of the farm on a different scale, the acquisition of new equipment, and a higher degree of planning. It also involves a higher capital investment and a greater dependence of the farmer on credit resources and manufactured products in the form of power units, parts, and fuel. Commercial farmers who are not in a position to mechanize face increasing difficulties resulting from competition of the mechanized farms.’
To gain a satisfactory living from farming, the required investment nowadays, according to the Bureau of Agricultural Economics, is between 50 and 75 thousand dollars.
The concentration of land in fewer hands, though not as strong a tendency as industrial concentration, has risen noticeably during the last thirty-five years, and has split the American farming class into a number of sections. Since 1920 the number of large (1000-acre or more) farms has doubled, and those of 250 acres or more has also considerably increased. The small-farmer group of 180 acres and less, which had once constituted the overwhelming majority of American population and owned most of the country’s acreage, had by 1950 shrunk to ten percent of the people of this country (two-thirds of the farms) owning only one-fourth of the country’s acreage. In contrast the large-farmer group of 250 acres or more made up less than one-fourth of all farms but produced about three-fourths of the value of all farm products sold.
Through cheap unorganized labor and large capital investments, reaching as high as $60-70 thousand per worker in the Wheat Plains and Corn Belt, these large ‘farm factories’ have become the dominant element in the farm community. They have diversified into such fields as ranching, cattle-raising, canning, processing and packaging. In many cases, the small farmer has become merely a sub-contractor to these giant associations.
CONSEQUENTLY, agriculture today presents a far different picture from fifty years ago. The number of farms is reduced to 5.4 million, down more than a million. Further, some 2.2 million of these, in the under-$1,000-class when grouped according to value of product, are not really in the running as farms; they figure in the picture largely as rural slums of a degraded nature, or places of retirement or semi-retirement for elderly people, or part-time occupations supplemented by other income. From the point of view of economics, the number of American farms has been reduced to only about 3.2 million. But within this number, only about half a million farms produce an annual product the value of which is over $10,000, and this top 9 percent of the farmers brings to market more than half of the farm products sold.
At the bottom of the farm pyramid stands the agricultural laborer, numbering a force which varies from 2 to 4 million, most of whom are hired by the top 9 percent of the farms that dominates the farm economy. The wage worker on the land represents the lowest-income sector of the American working class, with an average wage, according to the Bureau of Agricultural Economics, of about 66 cents an hour. Due to seasonal fluctuations in the demand for labor he is lucky if he can get six months work a year, and his average annual income, including outside non-farm work, is about $1,000 a year.
The small farmer has been finding himself more and more in competition with these low-paid agricultural workers of the large commercial farms. With his limited equipment and therefore relatively inefficient methods of production, he in some ways resembles the artisan of the early days of capitalism, who was brutally replaced by the more rationalized production methods of the manufacturers.
The problem of the marginal farms—45 percent of the 5.4 million American farms produce only 5 percent of the cash crop sold in America’s markets—is one aspect of the farm problem. But, considered from another view, the entire farming industry of America is one vast problem, which may be stated as follows: Like capitalist industry, capitalist farming tends to out-produce the market. But the farmer has never been able to develop the compensatory regulators that the industrialist has. All of his attempts to combine to fix prices have failed. He is forced by his whole setup to produce more, instead of less, when prices decline.
To find an answer for the farmer’s ability to produce so magnificently, the government has been forced to work out a complicated series of farm relief measures. War production orders cannot be directly used today to bolster the farm economy. As a matter of fact, the proportion of military buying of a basic crop such as wheat has decreased to about one-fifteenth of the 1947 level. The measures which have been developed since the 1930’s boil down to a system of restrictions on the quantity of the product which is permitted to reach the market. First, the farmer must comply with acreage restrictions worked out by the government if he is to become eligible for parity loans or payments. This restrains output. Then, the Commodity Credit Corporation is in the market to buy up and store enough of each product to keep the price up to a certain ‘parity’ level—which, in simplified terms, is a level which gives the farmer a purchasing power comparable to that which he had in a certain base period of the past. Marketing quotas and direct payments to leave land lie fallow (soil conservation) are also used. To pay for this program, tax monies to the extent of a billion dollars a year are expended. In sum therefore, the people of this country must pay taxes to ensure that the prices which they pay for their farm products are kept high; and on top of this they must pay over a third of a billion dollars a year more to take care of storage costs on these surplus products!
IN the thirties, when parity price supports were first introduced, the object was to sustain farm income in any possible way. The farm crisis, however, remained, and even deepened after 1937 when farm prices fell 20 percent. The drought and crop failures of the middle thirties had some effect, but that soon wore off and by the latter part of the decade farmers were once again producing surpluses far above the capacity of the market. The notion that parity price supports combined with crop reduction can solve the farm problem and preserve the 3 million family-size farms has been consistently refuted. The drop in farm prices since 1951, the mounting agricultural surpluses, and the decline in the total farm population by another five million since 1947 are signs of that. For all of these reasons, a leading expert on the farm problem, Murray Benedict, wrote in his just-published Twentieth Century Fund study:
‘The rate of technological advance between 1920 and 1950 was apparently such that this factor alone would have kept farm production high and prices low until the transition had run its course had it not been for the great increase in demand in the 1940’s. In other words, there is every reason to think that if the war had not occurred American agriculture would have remained in a relatively depressed condition up to 1950 and beyond, probably in spite of governmental efforts to better its situation.’
And for the future, Dr. Benedict holds out this fond hope: ‘The problem might recede into the background, temporarily at least, if widespread and severe droughts should occur within the next year or two or if new large-scale war demands should arise.’
The program of parity payments and other aids to the farmer clearly does not strike at the root of the problem. Through these programs, however, the large ‘farm factories’ with their many competitive advantages have been restrained from eradicating the small-scale farmer in one fell swoop. For this reason many of the big-farm lobbies, such as the Farm Bureau and the National Grange, are in favor of lowering or removing parity payments and controls. These farm lobbies have convinced most agricultural experts that the small dirt farmer must disappear in time in the interests of a more efficient type of agriculture. Lowry Nelson in his book ‘American Farm Life’ states: ‘It is not at all beyond the realm of possibility that 10 percent of the nation’s total labor force could operate the farms, instead of the present 15 percent, and could even increase agricultural production.’ L. H. Schoff in ‘A National Agricultural Policy’ estimates that ‘at least 2 million persons now engaged in agriculture could be released for the production of other goods.’ And the trend is toward measures which will help this process along.
SHORTLY after taking over the national government, the Eisenhower administration inaugurated its program of so-called ‘flexible’ price supports at lower parity levels. Its objective was threefold: 1. To satisfy the demands of the bigger farmers for a return to competition in the agricultural market, so that they could drive out smaller farmers. 2. To reduce the federal budget. 3. To start extricating the federal government from the business of purchasing farm products to keep the price up, as the warehouses were beginning to bulge with unsalable surpluses.
Of these three aims, the administration has had some success only with the first. Farm prices proved so weak that they slid downhill very rapidly, and the administration soon found itself buying far more surplus stocks than ever before. The warehouses are piled high, and the government is spending more money than ever paying for them and for their storage.
The farm situation can be expected, in the near future, to blow up into a sizable crisis. The attempt to keep prices up by government buying is reaching a dead end, as the flood of commodities behind the government dam has grown so great that it threatens to burst it, and prices are falling anyhow. In casting about for a better answer, very few farm specialists are rash enough to promise, within our present economic system, any solution outside the obvious ones of protracted droughts or a new war. There are those who call, quite properly, for an expansion of the consumption of agricultural products to meet our expanding production, through food-stamp plans, expanded school-lunch programs, and other ways of getting the food to the people, but no one expects such a program to be put into effect by either party on the scale that would be required to make a dent in the problem.
Meanwhile, the labor movement continues to echo in the main the Democratic Party demand for higher parity payments. It is time that people within labor begin to realize that the parity system is in bad trouble, and raising parity payments or even distributing them in a more progressive manner does not hit at the root of the trouble. Forward-looking farmers in collaboration with labor are up against the need of making a fresh study of the basic causes for the farm difficulty and elaborating far-reaching solutions behind which their forces can rally.