Three Ways Democrats Can Fix the Farm Economy

Executing these ideas may require the White House and Senate, but the House majority can begin developing and publicizing them right now.

The farm economy is in crisis, and Democrats will need to do something about it to have a chance at winning back the votes of rural America. Executing the three policy suggestions below may require winning back the White House and Senate in 2020—but the House majority can begin developing and publicizing them right now.

Break Up Big Agribusiness

For decades, federal antitrust regulators have given carte blanche to mega-mergers in the food sector. To fix this, Congress should pass legislation requiring the Department of Justice to take antitrust action in any agribusiness sector in which the four biggest firms control more than 50 percent of the market. Appropriate remedies range from forced divestiture of assets to complete firm breakups. Meanwhile, mergers between companies with more than 5 percent market share should be blocked if they will result in a loss of competition. Congressional Democrats should also follow up on campaign promises made by Barack Obama by pressing for amendments to the Packers and Stockyards Act that would make it easier for farmers to file unfair practices claims and protect them from retaliation for airing grievances. 

Reform Agricultural Co-ops

By forming cooperatives, farmers can bargain more effectively with monopolistic buyers. That’s the reason farm co-ops are exempt from certain antitrust restrictions on coordination and price setting. However, over time, some cooperatives have become so big that they have themselves become abusive monopolies. In the dairy industry, large cooperatives such as the Dairy Farmers of America and Land O’Lakes have swallowed up rivals, made deals with investor-owned firms, and earned record profits, while their members suffer from record-low prices and go out of business by the thousands. To fix this, Congress should pass a law ensuring that the governance of co-ops remains in the hands of member farmers, and that no co-op becomes so big that it monopolizes the local market for farm products.

Replace Farm Subsidies With Supply Management

A broad array of income support programs subsidize different kinds of farmers. But this approach gives the most benefits to the biggest farmers, results in overproduction, and has failed to stem the trend toward consolidation. It also creates perverse price signals, such as by allowing multinational meat companies to procure feed grains at below the cost of production. A better way is to go back to the supply management approach the U.S. used under the New Deal, in which farmers were paid to reduce acreage when stocks were high, and government provided price supports and bought up surpluses if the market price fell below the designated price floor. This policy tool kit stabilized commodity prices and allowed farmers to predict revenue within a fairly narrow band, making it much easier to plan farm operations. Research by agricultural economists at the University of Tennessee indicates that a revamped supply management system would boost farm income, increase farm exports, and save the government billions of dollars annually.

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Adam Diamond

Adam Diamond, formerly with the U.S. Department of Agriculture, is an agricultural geographer now working as an environmental and food systems consultant.