Agriculture Reference
In-Depth Information
lump sum of money no matter what or how much they plant)
does influence farmers, but once again the effects are small.
Research by Bruce Babcock shows that if all subsidy payments
related to corn and soybeans were eliminated, prices would
rise by no more than 7 percent.
We can't finish this section without discussing one of the
most famous secretaries of agriculture: Earl Butz. He never
liked the idea of giving farmers a lump-sum payment regard-
less of how much they produced. Agriculture exists to feed
people, he believed, and it should produce food efficiently
so that consumers pay low prices. Serving under Nixon and
Ford, he made a famous speech where he said farmers should
plant as much as they could, and that if they overproduced he
would find an export market to sell it. That he did, negotiating
a big grain sale to the Soviet Union in 1972, helping the USSR
cope with a major drought.
He also urged farmers to “get big or get out,” which might
seem unkind to small farmers, but as an economist he under-
stood economies of scale, and was ahead of his peers in rec-
ognizing the efficiency advantages of larger farms. Studies
would eventually show Butz to be correct in saying larger
farms would be more efficient. He thus believed that some
farms would grow larger and outcompete smaller ones, and
tried to help farmers plan for their future by understanding
this fact. Because he knew these bigger farms would make
food cheaper, he believed them to be in society's interest. His
opponents might label him as pro-corporation, but his sup-
porters could say he was pro-consumer.
Because Dr. Butz stressed the importance of increasing the
food supply, he is blamed for our heavy reliance on corn, but
increasing corn consumption and production are not the same
things. In fact, the corn exports he negotiated increased corn
prices in the United States, which would serve to decrease—not
increase—corn consumption in the United States. Also, observ-
ing figure 6.1, 6.1, showing corn production from the 1920s until
today, there are definite ups and downs, and that production
