Innovative ways to stimulate the economy: Subsidize small farmers, not corporate farms

This is just one of the Innovative Ways to Stimulate the Economy suggested by DailyFinance contributors. See them all.

A local farmer and friend, Chrissie Zaerpoor, is known as one of the new farming celebrities. She raises truly free-range chickens for meat and eggs, and grass-fed dairy cows, and she and her husband have a big problem: the government's subsidies and programs are aligned against them. When the two former engineers went out to look for a loan to buy their farm property in Yamhill County, Oregon, they were told to try for a loan on a country estate instead; no one wants to finance a small farm in this economy. Anyone who's watched King Corn or read Michael Pollan's books on food knows that the real money -- and the real government support -- is for big "monoculture" farms selling one of the major commodity crops, chiefly corn, soy, and cotton.

To dismiss small farmers -- who, unlike large corporate farms tend to specialize in a few niche-targeted, high-value crops, and not commodity crops like corn or soy -- and whose primary customer base is typically a local one is, however, short-sighted. Numerous studies and analysts agree that money spent on food grown by local farmers (typically, "local" is defined as within several hundred miles) multiplies by a factor of 1.5 to 3 a dollar's purchasing power; one study by Ecotrust on buying local food through school cafeterias in Oregon came up with a 1.67 multiplier.

What's more, developing small, community-based farms, and selling the resultant food to local consumers, simply makes people happier, as Bill McKibben writes. While consumer confidence may not be a contributor to GDP in and of itseslf, its status as economic indicator is unchallenged. To stimulate local economies and to encourage the sort of consumer well-being necessary to transform our current economic crisis into an entirely different creature -- a robust, sensible economy in which real value is being created -- I would suggest erasing our current crop subsidies, most of which benefit only a few large, multinational corporations after all, and instead spend those development dollars on small farmers who have a commitment to diversity and resource sustainability.

My proposal, while it may be nearly impossible to implement in the current political climate, would have a nearly immediate impact and an extremely high probability of success. It's been widely agreed-upon by think tanks on both sides of the political spectrum that corporate subsidies (which corn and soy payments most definitely are) have no positive economic impact. As the Cato Institute said, "government has a poor record of picking industrial winners and losers, so the economic benefits that these programs are purported to create inevitably fail to materialize. Furthermore, corporate welfare programs ... are anti-consumer, anti-capitalist, and unconstitutional; and create a huge drain on the federal budget." The cost of this program to taxpayers is about $3 or $4 billion each year for the past 30 years.

Corn and soy subsidies have, more than anything else, contributed to the profits of ADM (ADM) and Monsanto (MON), which, says the Cato Institute, has simply fueled more campaign donations. And what's worst, it has failed to reduce our dependence on foreign oil, as the ethanol and biofuels industry these were meant to encourage utilizes more than a gallon of petroleum products for every gallon of biofuel produced -- a senseless and disastrous outcome. In the process, thousands (or millions) of acres of our best and most precious national resource, our rich agricultural soil, has been plundered.

What's more, these subsidies go to the production of food crops that (everyone agrees) contribute to ill health, obesity, diabetes and a variety of other diet-based health conditions (Pollan blames it for heart disease, and most doctors agree). Vegetables and fruits are not subsidized in any way; despite the government's nutrition leaders desperately begging the public to eat more of these foods for the past several decades. Not only are commodity crop subsidies failing to impact our economy positively; they're costing us untold billions in health costs, and it's certain that our nation of junk food-addicted youth will cost our future dearly if nothing is done.

Here's an idea: subsidize vegetable farmers. Subsidize the production of free-range chicken and grass-fed beef, both of which are rich in the "good fats" doctors now agree are key to fighting heart disease and cancer. Subsidize any small farmers who commit to engaging in agricultural practices that reduce erosion, decrease the need for irrigation and petroleum-based pesticides and fertilizers, and protect the future of our national agricultural resources. Subsidize small farmers who commit to selling their produce to schools and at farmer's markets, sure ways to stimulate our local economies and to improve the health of our future population.

There is a criticism -- no, a damnation -- of the concept of organic foods, that they are "elitist," while junk food that our government pays farmers to produce -- high fructose corn syrup that sweetens sodas and doughnuts and chocolate chip cookies, soy that is processed into trans-fatty acids to provide the building block for french fries, candy bars, potato chips -- is the stuff of the common man. That is not just counterproductive, but senseless. These consumers are least prepared to manage the high costs their ill health will create. Let alone pay the billions, or trillions, in costs that will one day be paid by our country to undo the terrible damage that has been done to the environment by the encouragement of industrial monoculture farms.

No logical, rational argument could ever justify our current Farm Bill subsidies, and its current structure would not hold up to even the most rudimentary economic evaluation. A change is required -- demanded -- if our economy is to continue to survive.

Do you think this would stimulate the economy? Tells us why, or share your stimulus ideas. And see more of our Innovative Ways to Stimulate the Economy.


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