9.11.2015

Winning Supply Management
Food Issues Book Club, The Politics of Food Supply Chapter 3 (Part 1)

Hello all!  Welcome to the NOiG Food Issues Book Club, wherein I read books about food stuff, summarize each book by chapter, and then attempt to apply that book chapter's ideas to the New Orleans food environment and my own experiences.  Fun right?!  Check out previous installations here.  I'd love it if you'd read along and join in!  And now, without further ado...

The Politics of Food Supply, Chapter 3 (Part 1):
Winning Supply Management - A New Deal for Agriculture, 1933-1945

Summary:

"In the depth of the depression, a time of dire need and despair, the Federal Government began to pursue a seemingly irrational policy: restricting the production and availability of many essential goods, including food."  Just a few months after his election, Franklin Delano Roosevelt signed the Agricultural Adjustment Act (AAA) into law as part of his "New Deal."  The act was drafted by members of the new administration's Department of Agriculture with assistance from agrarian economist Mordecai Ezekiel, based on previous legislative efforts, and influenced by farm organizations and policy experts.  It was also necessarily designed to be acceptable to the southern Democrats that then held powerful positions in Congress.

Among other provisions, the Act provided price supports for certain commodities and also restricted acreage.  The Community Credit Corporation (CCC) was created by the Act to administer its prescribed prices supports.  When market prices were above accepted levels, farmers could market their crops.  When market prices fell below the target price, though, farmers forfeited their crops to the CCC for the established support level price, limiting supply and exerting pressure on the market.  Farmers were thus paid a reasonable price for their crops whether sold on the open market or forfeited, and the government obtained surplus crops to do with as it wished.

The price supports were based on "parity" with a brief, five-year period of agricultural success:
"Price support levels were meant to raise agricultural prices, and hence farm income, relative to other consumer and industrial prices.  Therefore, price supports were based on "parity," which aimed to give agricultural commodities "the same purchasing power in terms of goods and services farmers buy that the commodities had" in the period 1909 to 1914, when agricultural prices reached historic heights relative to other prices.  Price supports, then, gave agricultural prices parity with industrial prices, based on the ratio of prices between 1909 and 1914."
In addition to these price supports, "AAA required farmers to adhere to acreage allotments, which were determined by growers' historical production of basic commodities."  Farmers who did not adhere to acreage limitations could not receive price supports, even when farms remained small.  Those farmers who nevertheless chose to ignore acreage restrictions could be limited by the USDA in how much of a crop they could put on the market.  "Whether through restrictions on acreage or marketing, production controls under the AAA sought to eliminate surpluses and their degenerative effect on agricultural prices and farm income."  In this way and others, larger operations were advantaged by the Act.

Commodities initially covered by the AAA were corn, wheat, cotton, rice, tobacco, and peanuts.  Both price supports and control efforts for these crops were funded by a tax on agricultural processors.  This tax, unsurprisingly, was highly controversial.

Other provisions of the AAA involved the destruction of commodities.  One of the Act's first iterations came in the form of the Pig Purchase Program, wherein the government purchased and slaughtered approximately 6 million hogs to raise the price of pork and other pig products.  Farmers were also paid to reduce hog production.  The slaughtered pigs were used as fertilizer, hog feed, and food for the poor.  The government was not alarmed that much of the fertilizer went to waste, "because the central goal of the programs was to remove pigs from the market - not to provide relief for people left poor and hungry in the economic collapse."  Similar overproduction-destruction tactics were used for crops and cotton; to ensure an increase in pork prices, production of feed crops was also reduced.

The 1933 AAA did decrease production, which resulted in increased agricultural good prices and thus farm income.  Nevertheless, the Act faced opposition from some farmers, some government administrators, and most strongly from the processing corporations footing the bill via taxes.  Some farmer organizations opposed price supports based on parity: National Farmer's Union president John Simpson argued that such prices were too low, amounting to less than half the cost of production.  Some also argued that "agricultural production should not be reduced until all Americans had adequate diets."

The Farmers Independence Council, a voice for meatpackers, "claimed to be protecting the liberty and independence of farmers from government control" in its opposition to AAA's government oversight provisions.  Other farm organizations recognized that the costs of taxes on processors were ultimately paid by farmers in the form of increased processing fees.  The FDR administration used distasteful tactics to discredit these organizations.

Those who stood to lose money as a direct result of the AAA - the newly taxed processors - opposed the act most vehemently.  They did so through the courts.  "Various processors sued the government claiming that this tax was an undue burden and was therefore unconstitutional."  By the time the Supreme Court heard U.S. v. Butler, over 1700 cases had been filed.  The decision in Butler in 1936 ultimately ruled the AAA unconstitutional, because it levied a tax that benefited one group rather than the nation as a whole, and because federally enforced acreage restrictions infringed upon States' rights.  Thus, "supply management policy was lost, at least briefly, under pressure from agribusiness processors."

In response, congress quickly passed the Soil Conservation and Domestic Allotment Act.  The Act "paid farmers to reduce their production of soil-depleting crops, which tended to be defined so as to overlap with the commodities that were overproduced."  Funds came from the general fund of the treasury, and the controls were couched as "in the interest of general welfare."  The AAA was re-issued in 1938, this time drawing from treasury general funds.

Discussion:

Two initial thoughts:
  1. Is it super weird that prices were based on those of a five year period?  Like, really?
  2. Tobacco was covered?  Tobacco has literally no real purpose.  It's like sugar or coffee: people reaaaaaaly like it, but if they never ever had it again in their lives they'd suffer no ill effects and would in fact probably be better off.  This speaks, I think, to how highly we value our vices - or perhaps to the strength of the tobacco industry.
Then there's this doozy:  Six million pigs.  SIX MILLION PIGS.  Six.  Million.  Pigs.  I'm really not sure when I'm going to get over that.  Yet again, we have a stunning example that money is more important to both the U.S. Government and especially to the food industry than hungry people are.  Perhaps we should remind the GMO champions of that...

Let us take a moment now to dissect the following sentence: "The slaughtered pigs were used as fertilizer, hog feed, and food for the poor."
  • Slaughtered pigs used as fertilizer?  This is not now, nor has it ever been, a common practice.  Rotting meat does not make good fertilizer.  It's not surprising, then, that there was little demand for it and it went to waste.  I shudder to think of those storage units.
  • Slaughtered pigs as hog feed?  This is, sadly, a common practice in the industrial meat industry.  Until very recently, actually, when the wider world gained a better concept of what prions are because of "mad cow disease," forcing farm animals to be cannibals was an everyday occurrence.  Farm animals are fed to farm animals to this day - it is only required that they must not eat their own species.
  • Slaughtered pigs as food for the poor?  Clearly this is not ideal.  Ethically and factually, pigs do not need to die for people to be fed.  HOWEVER.  If the government had decided that these pigs would die regardless of how their bodies would be used afterward, which evidence indicates is the case, the absolute least they could do would have bee to use those deaths to help people struggling through the country's worst economic crisis to date.  Clearly, though, the government was concerned only with the welfare of people who happened to own large businesses.  Sound familiar?
It is also quite unsurprising that, rather than cut into profits, processors both passed tax costs on to farmers and also pushed back on paying the tax to the point of litigation.  Of note, one of the loudest voices among the grumbling meatpackers was Oscar Meyer, then "president of one of the largest meat processors."  Yes, that one.

Given my legal background, I exhibit no surprise that this Act was taken down by a SCOTUS decision.  The dissent to that decision is quite interesting, stating in its conclusion:
A tortured construction of the Constitution is not to be justified by recourse to extreme examples of reckless congressional spending which might occur if courts could not prevent -- expenditures which, even if they could be thought to effect any national purpose, would be possible only by action of a legislature lost to all sense of public responsibility. Such suppositions are addressed to the mind accustomed to believe that it is the business of courts to sit in judgment on the wisdom of legislative action. Courts are not the only agency of government that must be assumed to have capacity to govern. Congress and the courts both unhappily may falter or be mistaken in the performance of their constitutional duty. But interpretation of our great charter of government which proceeds on any assumption that the responsibility for the preservation of our institutions is the exclusive concern of any one of the three branches of government, or that it alone can save them from destruction is far more likely, in the long run, "to obliterate the constituent members" of "an indestructible union of indestructible states" than the frank recognition that language, even of a constitution, may mean what it says: that the power to tax and spend includes the power to relieve a nationwide economic maladjustment by conditional gifts of money.
You tell 'em, Justice Stone.

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