FINDINGS
The Development of National Agricultural Policy
Policy Prior to the New Deal
Roosevelt’s New Deal agricultural policy might have been radical in its applications, but not in its genesis. During the 1920’s, agricultural legislation was presented by agrarian spokesmen spurred by the early depression and its chronic failure to achieve full recovery thereafter. Prominent legislation was the McNary-Haugen bill of 1924, which raised farm prices by having the government buy surpluses and sell them abroad at world market prices. Additionally, domestic prices were protected by a tariff. The difference in the higher domestic prices and the lower international prices would be covered by an “equalization fee” charged to farmers (Winders 2009). Though McNary-Haugen was reintroduced into Congress multiple times, gaining support as the Great Depression worsened, it never became law, with President Calvin Coolidge vetoing it twice. What the bill more importantly introduced was an agrarian agitation for direct government relief.
The McNary-Haughen bill introduced the government’s capacity to affect farm politics and economics directly. President Herbert Hoover favored efforts to help farmers through voluntary and cooperative agreement: agricultural cooperatives that would relieve farmer’s economic burdens through branches created, not directed, by the government (Hamilton 1991). Hoover signed into law the Agricultural Marketing Act (AMA) of 1929 that centered on providing financial and managerial support for agricultural cooperatives (Hamilton 1991). Notably the AMA created the Federal Farm Board that had the authority to buy surplus crops (Campbell 1962).
Policy under the New Deal, 1932-1939
One of the main policies of the New Deal was the Agricultural Adjustment Act of 1933. The Agricultural Adjustment Administration (AAA)[2] and the Commodity Credit Corporation (CCC) were enacted under the Department of Agriculture as a result of the 1933 Agricultural Adjustment Act. It tried to alleviate the effects of the depression—the particular dilemma posed by the fact that, despite large surpluses of agricultural products, there continued to be severe food shortages in most parts of the country (Poppendieck 1986).
AAA was created to control farm commodity supply and raise farm income. The AAA controlled the supply of seven crops: tobacco, milk, corn, wheat, cotton, rice, and peanuts. Its primary goal was to raise farm prices to stabilize national demand and supply cycles for food production. It tried to achieve this through two central programs: price supports, and production controls. Price supports were based on “parity”, or a simple balance between the amount a farmer spends on production and the amount he receives back in profits (based on the ratio of farm prices from 1909-1914) which aimed to give agricultural commodities pre-Depression purchasing power relative to other consumer and industrial prices. Price supports were achieved through CCC loans, or non-recourse loans; where if market prices were to fall below price support levels, CCC purchased commodities from farmers at the price support level as a means of pulling the commodities off the market, controlling supply, and raising farm income (Winders 2009; Poppendieck 1986).
The second strategy, which focused on production controls, was administered by AAA to limit the supply of agricultural commodities. Programs like crop reduction, plow ups and animal slaughter were designed to lower farm supplies. If farmers cooperated they were given price supports. Conferences were held with representatives of famers and farm organizations to learn and discuss AAA plans. Farmers were invited to sign contracts with the Secretary of Agriculture to reduce immediately (by destruction) or in the long term (with less sowing) their farm acreagea and commodities. In return for cooperation, each farmer revived benefit payments or other rights. These payments were financed by a tax on the first processing of a commodity for domestic use (Farley 1936).
While AAA’s primary goal was to raise farm prices for most commodities, it attempted to achieve its goals by implementing different practices for different products. AAA attempted to lower yields and any surpluses available in order to increase demand and prices. This entailed the destruction of products, including plowing up freshly sown crops, reducing acreage sizes prior to sowing, and slaughtering more animals than demand required.
AAA’s primary goal was to raise farm prices. It sought to do this by lowering the gross output of cotton that would enter the market: the consequence of less cotton would be an increase in market prices, and a reduced chance of surplus. In 1933, the season’s cotton had already been planted. Since the government could not advise the farmers to plant less (as the cotton was already planted) it implemented plow-ups. On June 19th, 1933, the government contracted with cotton growers to destroy 25 to 50 percent of their acreage in exchange for one of two options: monetary compensation ($7-$20 an acre), or participation in the cotton option program (Perkins 1969, 99). If the farmer chose the cotton program, he would be compensated slightly less per acre but would have the opportunity to buy an equal amount of cotton from the secretary of agriculture. The logic of the program was that since the price of government cotton was generally lower than market price cotton, the grower could buy back an amount equal to the cotton he’d destroyed and sell it with a profit in the market (Perkins 1969, 102). Simultaneously to creating a cotton relief program the AAA also tackled weak wheat prices. Wheat prices had been unsatisfactory for a longer period of time compared to cotton, and farmers had already been dealing with a large surplus. AAA was briefly interested in the US government’s proposed international tariff agreement on wheat (to make it easier to get rid of wheat through exports), but got its wheat relief program rolling through its own grassroots efforts. The wheat program was announced on June 16th, 1933: If wheat growers agreed to reduce their acreage by up to 20 percent when asked to (if asked to) they would immediately be rewarded with benefit payments to be paid in 1933, 1934 and 1935 (Winders 2009). Alongside the blow from the Depression, wheat planters saw their crops wither away in a severe drought in the wheat belt, which brought 1993 output to the lowest level since 1896 (Poppendieck 1986, 111). This took away some of the urgency that would have otherwise enacted drastic wheat plow-ups; instead the government opted for wheat reduction. On August 28th the government demanded those farmers who had agreed to cooperate reduce 15% of their wheat acreage (Winders 2009).
Another pair of commodities AAA affected was hogs and corn. Corn and hogs were linked in a cycle: much of the corn produced in the US was used as hog feed. AAA had to find a balance in its actions. Low corn prices would stimulate hog production, and higher corn prices would lead to hogs converting to a different feed. Pork was additionally perishable. The US had a large farming population with vested interest—more than 60% of US farmers raised some corn or hog. The drought had created a hiatus where AAA could implement longer ranging crop reduction: like wheat, corn reduction as opposed to a plow-up would be implemented (Poppendieck 1986).
Without designs of their own, the AAA committed themselves to the farmers’ own thoughts on the matter. Meetings were organized where farmers could talk to the government directly about both plight and solution. The National Corn- Hog Committee of Twenty-Five was created from the farming community. They recommended the government adopt emergency pig slaughter (Poppendieck 1986). After buying the pigs, the government slaughtered them for one of three purposes: fertilizer, hog feed, and meat for the poor (Winders 2009). The supply of pork would be reduced and the price for the meat increased by immediate slaughter of killing pigs between twenty-five and one hundred pounds (before they grew larger), and killing pregnant sows before they gave birth, providing both immediate and long term relief.
However the sow program was not as successful as AAA hoped, and the government consequently decided to slaughter more young pigs to compensate. To manage such a slaughter, packers started working at full capacity, round the clock. Smaller pigs were “destroyed,” while heavier ones were salted and turned into pork products distributed for relief. However, fertilizer was harder to dispose of, and as a result, ground-up pork started to pile up in stockyards, with some masses eventually being taken to dumps (Winders 2009).
The next important program Roosevelt put into place was the Civilian Conservation Corps (CCC), which was passed on March 31, 1933. Roosevelt proposed that Congress create “a civilian conservation corps to be used in simple work, not interfering with normal employment, and confining itself to forestry, the prevention of soil erosion, flood control and similar projects.” (Helms 1985) Thus, The Act for the Relief of Unemployment was established, which allowed work to be done on federal and state land to control soil erosion, but not on private land. The CCC relied on public works projects done by young men and adults. These projects included building roads and parks, as well as planting trees, building campgrounds and conservational dams, and replanting grazed land. By the time it had reached its end in 1941, the CCC’s employment total equaled about 3.5 million men. This project helped to create a more efficient and healthy environment with an increase of 40 million acres of farmland, a million acres of grazing land, 800 state parks, and 52,000 acres of campgrounds.
Policy during World War II
Throughout WWII, the parity ratio was well over 100, indicating farm prosperity. In fact, instead of surpluses, shortages now existed, and as prices rose, price controls were put in place by the government. To compensate for a loss in income due to price controls, farmers were paid in direct US subsidies. In addition, limits on production were turned over, as production was encouraged by a lift on all acreage allotments and market quotas by 1943 (besides on certain tobaccos). In another tactic to raise production, the government also raised price supports to ensure farmers that once they expanded production; they would be guaranteed protection from the government despite the possibility of a surplus economy. However, this rising productivity during the war was very soon met with growing surpluses despite the decreasing number of farms, due to technological advances in both the chemical and mechanical fields. Nevertheless, demand remained high for a number of years after the war, allowing farm income to also stay heightened (Bowers, Rasmussen, and Baker 1984).
The Resettlement Administration (RA) worked to relocate struggling families to communities run and funded by the federal government. The goal of the Administration was to solve the problem of poverty and landless farmers. A major bill established by the RA was known as the Bankhead Bill of 1935. Its purpose was to enable the government to evaluate and purchase land based on its longevity and sustainability. Then, the government would be able to resell the land fairly to tenants and sharecroppers who were landless. The bill was passed by Senate in 1935, but rejected by the House of Representatives. However, as a direct result of this bill, Congress passed the Bankhead Jones Farm Tenant Act of 1937. This act established a credit program that would help farmers purchase land. The Resettlement Administration later became the Farm Security Administration in January 1937. (Gabbert)
Congress then passed the Research and Marketing Act of 1946, which added duties to the Department of Agriculture, including distribution, transportation, and marketing. The act also established research in the area of human nutrition. It gave a value to each food item and was a general first step in making reforms based on health and nutritional values as we do today. The first major research bill was signed by the Senate on March 8, 1946. It was known as the Flannagan-Hope bill, named after John Flannagan and Hope, members of the House Agriculture Committee.
Post-World War II Policy
Agricultural policy enacted immediately after WWII focused on stabilizing the prices of agricultural commodities through providing different federal price supports for different commodities and by modifying the formula for establishing parity. These acts included the Agricultural Act of 1948 and the Agricultural Act of 1949 (Bowers, Rasmussen, and Baker 1984; Cochrane and Ryan 1976). Price supports were necessary for basic commodities (cotton, wheat, corn, tobacco, rice, peanuts), “Steagall” commodities (hogs, eggs, chickens, turkeys, milk, etc.), and wool. The new parity formula took changes in productivity over the last decade and direct farm labor costs into account, lowering parity for basic commodities, and increasing it for livestock, rice, and tobacco. The 1949 Act also provided for donations of surplus products to domestic and foreign impoverished families (Agricultural Act of 1948 1948; Agricultural Act of 1949 1949).
As the nation continued to recover from the effects of WWII, agricultural policy began to center around several issues: 1) the improvement and protection of farm incomes, 2) the reduction of federal costs of farm programs, 3) the reduction of surpluses, and 4) the promotion of foreign and domestic trade supplies. To this end, several laws were enacted that augmented each other by addressing the same issues: the Agricultural Act of 1954, the Food and Agriculture Act of 1962, and the Food and Agriculture Act of 1965. The 1954 Act also authorized a CCC reserve for foreign and domestic relief of shortages (Agricultural Act of 1954 1954; Food and Agriculture Act of 1962 1962; Food and Agricultural Act of 1965 1965).
These three Acts also marked the beginnings of a related agricultural-food provision system as a means of reducing surpluses, laying the foundation for programs such as food stamps and school lunch programs. The 1954 Act provided for food donations to programs such as veterans’ hospitals and school milk programs, while the 1962 Act established donations to nonprofit school lunch programs (Agricultural Act of 1954 1954; Food and Agriculture Act of 1962 1962). The Food Stamp Act established a cooperative federal-state program that provided food assistance to low-income households (Food Stamp Act of 1964 1964). The Agricultural Act of 1970, the Agriculture and Consumer Protection Act of 1973, and the Food Security Act of 1985 were enacted to further strengthen and improve these programs. They ensured that food stamp programs reached the neediest, and that food and fibers would be abundantly available at reasonable prices. These acts also worked to protect farm incomes (Agriculture and Consumer Protection Act of 1973 1973; Agricultural Act of 1970 1970; Food Security Act of 1985 1985) .
Beginning with the Food and Agriculture Act of 1962, legislation addressed farm land usage and partitioning. The 1962 Act expanded the use of lands, both economically and socially (Food and Agriculture Act of 1962 1962). The Agricultural Act of 1956 established the Soil Bank, which was divided into an acreage reserve program that allowed a yearly land-rental program for basic commodity producers and a conservation reserve program, which provided farmers with annual payments for converting land into conservation uses (Agricultural Act of 1956 1956). The Food and Agriculture Act of 1977 based acreage programs on domestic and export needs (as determined by the Secretary of Agriculture) (Food and Agriculture Act of 1977 1977). The Food Security Act of 1985 created conservation reserve programs that removed prairie and wetland areas as usable farmland (Food Security Act of 1985 1985).
Recent agricultural policy has focused on modifying and maintaining programs for the coming years. The 1985 Act lowered government price support for many commodities, while the Federal Agriculture Improvement and Reform Act of 1996 eliminated the link between the market prices and income support payments. Instead, production flexibility contract payments were instituted, which were fixed and independent of market price (Schertz 1996). The Farm Security and Rural Investment Act of 2002 and the Food, Conservation, and Energy Act of 2008 extended agricultural programs through the fiscal year 2012 by again adjusting federal payment and support levels and by stressing conservation of land and energy use (Young 2008; Economic Research Service 2008).
