Something Is Wrong With This Picture: Why Farmers Continue To Plant Commodity Crops Despite Low Prices
The USDA (United States Department of Agriculture) Prospective Plantings Report was recently released. U.S. farmers are expected to plant 97 million acres of corn in the 2020 season. This number is up from last year despite abysmally low commodity prices and decreased demand for biofuels. About one-third of corn production goes to ethanol and with fuel prices driven down by an oil war and less gasoline being used due to Covid-19 travel restrictions, you may ask, why do farmers continue to plant these commodity crops with little return?
The bottom line is that agriculture policy in the U.S. makes it difficult for farmers to depart from a commodity crop rotation, i.e. corn and soybeans in the heartland and cotton and wheat in the south. In the 1930s, Congress first authorized the crop insurance program to aid farmers during recovery from the Great Depression and the Dust Bowl. In 1980 it was officially passed into law through the Federal Crop Insurance Act. Over the years it has gone through several reforms but ultimately doesn’t look that different from the program developed more than 50 years ago. Through the Federal Crop Insurance Act, farmers planting a handful of commodity crops can purchase crop insurance that is heavily subsidized by the federal government and guarantees a minimum payment depending on the chosen policy. While recent years have led to efforts aimed at making federal crop insurance also available to specialty crop growers, these policies, for the few that exist, are still minimally used compared to commodity crop coverage.
In addition to limiting crop diversification in the U.S., our federal crop insurance program inadvertently encourages farm practices that may be detrimental to land conservation. For example, if a farmer wants to maximize their crop insurance payout, they still have to plant a crop and apply inputs even if it is destined to fail. Most of the time this option is more profitable than enacting Prevent Planted acres, which is an insurance provision that allows farmers to receive an insurance payout in the case where a wet spring or other natural disasters such as a flood deems fields unplantable for the year. Because planting is often still the most profitable option, even if the farmer knows the crop will fail, the insurance provisions encourage wasting resources, time and money. It’s not until very recently that a bill has been proposed to congress that would allow farmers in this situation to plant a cover crop for grazing during the summer and fall and still get insurance payments for those acres. Ultimately, our crop insurance program has to play a part in promoting farm conservation practices rather than be a deterrent to farmers adopting better farm practices.
HOW DO WE CHANGE OUR SITUATION
1. Don’t Blame Farmers.
A farmer holding soil from his field
Pointing fingers and laying the blame on farmers isn’t going to do much good. Farmers have to manage a positive economic return based on the programs and rules they are provided. In recent years, the only path they see to staying in business is continuing to plant commodity crops. To improve these situations, a revision of our crop insurance program would benefit farmers, the environment, and potentially our food supply. We need to write policy that encourages rather than discourages farmers from adopting practices such as: no-till, cover crops, and a more diverse crop mix, on their farm.
2. Create New Markets
Photo of dried lentils from a farm in Montana
Farmers will never plant a crop without a market. At least with commodity crops such as: corn, soybeans, wheat and sorghum, there is a known elevator down the road that will take the crop. I know one farmer that planted red lentils without a market, and they have now been sitting in the bin for 7+ years without anywhere to take them. Finding and building new markets for crops is not an overnight job. There is infrastructure and learning that has to be built up over time. We have to start working on building these markets now and that will take effort across the agri-food industry.
3. Create Agriculture Policy & An Insurance Program that Promotes Diversity
Photo of soybeans right before harvest.
As long as we are subsidizing farming in the United States, these subsidies should apply to all farmers. Local food systems and specialty crop growers cannot compete against the commodity system, in part, because they cannot produce food as cheap without the financial support. We have built an uneven playing field that sides with the commodity system. Our food is falsely cheap. American’s spend only 9.7% of their disposable income on food, which is lower than most nations. While we aren’t paying for higher food prices in the grocery store, we are paying for it in many other ways including through our tax dollars that go towards the crop insurance program.
The status quo of our current commodity crop system will not be rewritten overnight. Changing how we subsidize the production of the food we eat is not an easy process. The additional lobbying power of large agri-business in D.C. also plays a big role in maintaining the status quo; however, I believe that policy changes are paramount if we want to encourage a system that is better for people and the planet.
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