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Ag economist takes on popular measures

Luther Tweeten says the most common fallacy he hears is that U.S. farmers can’t compete without subsidies. “That’s just not true — we can do very well,” says the retired agriculture economist and author. “That doesn’t mean it won’t be painful to adjust, but it must be done.”

First introduced to Delta Farm Press readers after his appearance at an Arkansas State University economics forum some 18 months ago (see, the professor emeritus at Ohio State University continues to have the ear of politicians and testifies before them regularly on agriculture issues. He is unapologetic about his stance on agriculture subsidies, but insists his mind is open to alternate viewpoints.

“I appreciate anyone who wants to refute my conclusions,” he says. “I’ll go out of my way to hear someone who disagrees with me. I want my views to be challenged. If I’m wrong, I want to know.”

It’s an election year, so populist measures — especially in agriculture — have been making noise across the country. In a wide-ranging conversation on Sept. 24, Tweeten touched on state, national and world politics and how he believes agriculture will be affected in each realm. Among his comments:

On populism at the state level:

“I’ve been involved in a number of expert witness cases. One involves Amendment E in South Dakota, quite a momentous case. Basically, South Dakotans passed a constitutional amendment outlawing corporate ownership or corporate operation of farm property. Even production contracts were outlawed.

“Corporations involved in farming prior to the law would’ve been allowed some time to divest themselves of ag holdings. But eventually they would have been forced to conform. Co-ops were required to divest themselves of production. There was even some question of whether marketing contracts were legal.

“Following extensive hearings and court maneuvering, Amendment E has been found unconstitutional.

“Another example of populism is Iowa’s anti-packer ownership laws. Packers aren’t allowed to own livestock.

“One of the differences between Kerry and Bush is Kerry favors legislation that would rule out packer ownership except 14 days before slaughter. Bush doesn’t favor that.

“I think it’s a strange law. People would think it a big joke if we told General Motors that they can’t produce parts for their own machines. Yet we’re willing to do it in the farming sector. If passed, it would cause upheaval for companies like Tyson who would be required to let loose many of their holdings. I don’t believe this legislation would benefit the farming community.”

On country of origin labeling (COOL):

“Another area where Kerry and Bush differ is COOL. Kerry is for COOL and Bush is, if not against it, indifferent.

“I don’t think COOL will make any difference in terms of demand. It’s already voluntary, and no one has ever accused agribusiness of missing a chance to make a buck. It won’t have much economic benefit for farmers.

“Depending on how rigid the COOL documentation is, it could be costly. For example, if animal ID was required all the way from farrowing through slaughter, it could be expensive. However, we may be coming to such a system for other reasons anyway — to trace pathogens. So there may be some complementarities with that specific issue.

“The over-arching effect of COOL would be to once again teach people to ignore labels. When buying a piece of clothing, how many people look at the label and let the country of origin influence a purchase? Obviously, not much — this is mining the same vein.”

On the Bush and Kerry positions on ag subsidies:

“I’ve looked at both position statements very carefully. There’s almost no trace of ag policy in either. This is a marked change from the 1950s and 1960s, when presidential candidates would devote an entire speech to ag policy. Now, ag policy is a footnote.”

Is that because a war is on or have we shifted our collective psyche from the rural to the urban?

“It’s both. They think there are bigger fish to fry than agriculture.

“Furthermore, there’s a bidding war between the parties. They’re in a very tight race where even 1 percent of the vote can make a huge difference. In many farm states, that 1 percent can be swung by being for or against the current farm program. Neither party is willing to concede that 1 percent.

“Kerry voted for and Bush signed the 2002 farm bill. So they’re already on record as favoring it.

“The only way I see a major change in farm policy is if there’s a landslide victory. If one party gains major control, ag subsidies will immediately be on the chopping block.

“The truth is both parties desperately want to cut farm spending. Bush would like to put farm money in tax cuts. Kerry would like to put it in health and education. But they can’t do what they want as long as the electorate is evenly split.”

On ag policy views as they relate to region:

“In the South, people are much more adamant about receiving help from the government. I believe that’s because the South’s comparative advantage is relatively weak in many of the crops grown: cotton, sugar and rice. Other countries — many of them sub-tropical — can compete with us growing those crops.

“The major cost of farm programs is incurred in the Mid-West. That isn’t necessarily on a producer-by-producer basis, though. The relatively few sugar producers in the South get massive assistance per producer.

“Southern congressmen are much more willing to fall on their swords over farm policy. Essentially they’ll say, ‘Mr. President, if you don’t go with me on farm policy, I won’t be with you on Issue X.’ That isn’t true in other parts of the country where agriculture isn’t as big of a deal.

“Still, I heard the chief economist of the Senate ag committee say, ‘Agricultural policy is bi-partisan and highly parochial.’ That is, no matter what your party, if you’re in a farm state, you go for subsidies no matter what.”

On Democrat and Republican trade policies:

“My position on Kerry’s trade policy is that it’s a killer. The Democrat Party, in general, is made up of groups that aren’t terribly enthusiastic on international trade. Kerry has said he’d insist on environmental and labor conditions on any trade deals.

“Bush, meanwhile, has made free trade arrangements with 10 countries while in office. Kerry says not only will he insist on the aforementioned conditions for future trade agreements, but will revisit those arrangements in all previous free-trade deals.

“Remember, in Seattle in 1999, the trade meeting broke up because the United States and EU were insisting on environmental and labor chapters. Those countries wouldn’t go along with our wishes in Seattle, and they’re not going to now. That’s why Kerry’s plan is a killer. Of course, most politicians are liars — hopefully Kerry is just lying.

“The Republicans don’t come to this with clean hands either. In my judgment, they’ve made an egregious error is ceding the issue of fiscal responsibility to the Democrats. They did that because for years they weren’t in power because they were fiscally responsible.

“The public likes for the government to spend more than it takes in. The Republicans went against those wishes for decades. Then, under Reagan, they found they could become much more popular by throwing money around.

“It’s gotten crazy. The Republicans have been totally irresponsible. We’re running trade and budget deficits approaching $50 billion per month. That’s unsustainable, unworkable and, ultimately, catastrophic. Our great-great-grandchildren will be paying the cost of living beyond our means.

“It’s outrageous that neither candidate is being honest about this. Bush says he’ll cut the deficit in half in five years. Kerry says he’ll do the same in four years. Well, that isn’t much difference and, again, they’re both probably lying anyway.”

On EU ag subsidies:

“It’s my view that the EU (nations) can’t continue their ag programs as usual. They’re already switching to direct payments, just as the Americans have done. But that’s an extremely costly way for the EU to support farm income.

“In addition, they’ve taken on new members and are considering taking on more. Some of these members, like Poland, have major agriculture sectors and are also extremely poor. The poorer countries will be asking for sharp increases in agriculture funding that the EU won’t be able to afford.

“That will mean the EU, not the United States, will likely be the first to cut back farm programs substantially. But they’ll be calling on everyone else to phase out ag programs at the same time. America will be strongly pressured to reduce subsidies because of that.

“At the same time, I must say that there is certainly a lack of support in this country — and in other countries — for international trade agreements. Many Americans are very unhappy with outsourcing of jobs. Bush has put 30 percent duties on steel, has kept out Canadian timber and other things. Free trade isn’t the ‘in’ thing.

“Poor countries, now a part of any new multi-lateral trade agreement, have become major actors. Those countries will also be bringing much pressure on the West regarding farm programs.”

In the past, you’ve called for a phase-out period of U.S. ag subsidies. Has your position changed at all?

“I wrote a book in 2002 and went through the various justifications for ag subsidies. Whether you look at economic equity, efficiency, saving the family farm, protecting the environment — the whole litany of things farm policy is supposed to protect — current programs don’t measure up on a single one of these criteria. It’s difficult to come up with a single economic justification for continuing these programs. The weight of logic is opposed to them.

“Ag subsidies aren’t about economics, they’re about politics. My position hasn’t changed at all, it’s been reinforced.

“On average, farmers are getting wealthier and wealthier. They’re far wealthier than the average U.S. citizen. Why we’re transferring money from people of less means to those of more means is difficult to explain.”


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