Digging into the Farm Debate: Reviving New Deal Supply Management for the 21st Century

October 10, 2019

Last week, Agriculture Secretary Sonny Perdue told struggling Wisconsin dairy farmers, “In America, the big get bigger and the small go out.” In response, Jerry Volenec, a fifth-generation dairy farmer, told the Associated Press, “What I heard today from the Secretary of Agriculture is that there’s no place for me.” At the heart of Perdue’s callous comment is a familiar, powerful narrative used often to undercut reform efforts to challenge agribusiness power: This is just how the market works, there’s nothing we can do.

Perdue’s fatalism stood in stark contrast to a bold reform idea—put forward by family farm groups at last month’s Farm Aid concert, also in Wisconsin—to solve the farm crisis. A set of policies known as “supply management” is starting to get attention to fix a broken agriculture market, including from presidential candidates Elizabeth Warren and Bernie Sanders. Both senators have recently proposed this major shift in American farm policy, which breaks from the current system of subsidies—and massive trade aid payments from the Trump administration. Instead, the government would directly manage agricultural supply, through a variety of measures, to ensure fair market prices for farmers. This is the kind of role the federal government hasn’t played since the last remnants of FDR’s agricultural policies were deregulated in the early 1990s.

Too much production is driving prices down and causing an economic crisis for farmers. Net farm income has dropped nearly 50 percent since 2013. Farm bankruptcies are up 13 percent. The Federal Reserve (the Fed) reports that farm debt levels are rising, and most farmers are projected to lose money again this year. The main winners in our current system are big grain and meat corporations, while farm groups work with mental health professionals to address the rise in rural and farmer suicides.

Supply management is a set of complementary programs that would help address this devastating crisis. These initiatives—setting marginal farmland aside, storing grain to have as reserves, implementing price floors and ceilings, and controlling the volume of imports—would all work together to ensure a fair price (called “parity”) for farmers that covers their costs, both to farm and to live.

Supply management is not new to US farmers. This approach has long worked for American sugar producers, providing them a fair income, while also protecting them from an export dependence that leaves soy and corn growers vulnerable to a tariff-obsessed president.

The policy also has historical precedent. Responding to a long era of poverty-level prices leading into the early years of the Great Depression, FDR’s Secretary of Agriculture Henry Wallace developed a supply management program that worked well through the 1950s, allowing many small to medium-sized farmers to continue farming and raise families. It also allowed local rural businesses connected to farming to grow.

Yet, alongside the rise in corporate power more broadly, steady pressure from agribusiness gradually weakened the programs with each ensuing Farm Bill, often lowering the price floor. And officials in past administrations hostile to the programs, like President Nixon’s Agriculture Secretary Earl Butz previewed Perdue’s comment this week when he explicitly ordered farmers to “get big or get out.” Finally, the last remnants of the program were removed in the 1996 Freedom to Farm Bill, which was sold to farmers as an opportunity to take advantage of new trade deals, such as the North American Free Trade Agreement (NAFTA) and the formation of the World Trade Organization (WTO), by expanding production. Prices plunged almost immediately, leading Congress to pass emergency aid that ultimately evolved into permanent insurance programs.

The current crisis for dairy farmers in particular is bringing new attention to supply management programs. Nearly 3,000 dairy farms went under in 2018, and that trend is continuing. This is why groups like the National Farmers Union and the National Family Farm Coalition are looking again at supply management policies, including those in Canada, which has a much more stable dairy industry. Wisconsin farmers were reportedly mesmerized when two Canadian officials came down to talk to their Farmers Union about how the Canadian supply management system works.

Of course, any supply management system implemented in the 21st century must address new challenges, including the climate crisis and water pollution caused by fertilizer runoff. We need a system that transitions toward more regenerative agriculture that both sequesters carbon and is more resilient. Notably, the supply management proposals that both the Sanders and Warren campaigns have put forth integrate the expansion of conservation programs that could help drive that transition.

Last month, members of the National Farmers Union blanketed Capitol Hill to talk about the oversupply challenge in agriculture and to educate Congress about the ways to institute more government oversight over the dairy industry. At a recent presidential candidate forum in Iowa, multiple candidates voiced support for fixing agriculture markets and restoring fair prices. Many agricultural states, such as Iowa and Wisconsin, are important bellwethers in the next election. Could supply management become a key political issue as the farm crisis drags on? It seems that is what Senators Warren and Sanders are preparing for—a national debate about how the federal government can and should directly manage agricultural markets to ensure that big agribusiness pays a fair price, one that builds economic security for farmers.