tv History of U.S. Agricultural Policies CSPAN October 7, 2018 12:50pm-2:01pm EDT
and that is really striking. and indeed, it certainly looked like a battle. >> tonight at 8:00 eastern on c-span's "q&a." next on "american history," in a capitol hill briefing for members of congress and their staff, three agricultural historians discussed the history of u.s. farm bills, beginning with the first adjustment act passed in may of 1933 to help farmers during the great depression. the national history center hosted the 70 minute event. >> ok. i think we will start this session. good morning. my name is dane kennedy. i'm the director of the national history center, which is the sponsor of this event. i want to welcome you to this event on the history of federal
foreign policy. this is part of an ongoing series that is on cert by the center that brings historical perspectives to current issues. i should say that the center is strictly nonpartisan. the purpose is to provide the historical context that can help inform policymakers and the public as they deal with very difficult issues. i want to at knowledge before we go any further the financial support of the mellon foundation, which made this series of briefings possible. i want to thank amanda perry, our associate director who made all of the arrangements for the event. i would like to thank the office of gerry connolly, who made possible the booking of this room. as many of you probably know, ingress is currently engaged
reconciling two rather different versions of a farm bill. a house and senate joint committee is doing so. this is the consequence of a passed roughlyis every five years without much controversy, increasingly with more controversy. we will see how this comes about, but i thought it would be useful to get experts who could explain to us how the farm bills came about, and how they have evolved over the years and arrived at the present point we are at. we have three leading experts in the field. the first one is david hamilton, associate history professor at the university of kentucky. and i should say all of the biographies are on this sheet as well as a brief summary of the
topic. phillips,l be sarah professor of history at boston university. and finally, senior economist for domestic policy in the office of the u.s. department of agriculture. each speakill do is about 10 minutes, and we will have about a half an hour to have two and a with all of you -- to have q&a. >> thank you. thank you for being here this morning. it is a pleasure to be here, particularly with sarah and ann. my wife's response was, you have never spoken on this topic of farm policies in the 30's, 40's, and 50's in your life.
my daughter's response was that given the topic, 10 minutes was more than enough. 1933, congress passed the agricultural adjustment act. it had been passing farm legislation for many years, but never anything like this. title i of the act vested the department of agriculture with the authority to create a nationwide control apparatus to tax processors, to establish a benchmark price ratio tied to pre-world war i farm and nonfarm prices, and much else. the broad mandate, title i took up just 12 printed pages. tucked away in one of those pages was a section stipulating if provisions ceased to be in effect with the president who finds and proclaims the national economic emergency in relation
to agriculture, it has ended. this never happened. 1936, the supreme court declared it unconstitutional. congress rushed force with a stopgap replacement, and in 1938 they passed a second adjustment act. in 1941, further legislation promised higher fixed support prices throughout the duration of world war ii. this was supposed to give way to a much revised set of policies after the war had ended. in 1948 andpassed 1949 retained these high supports. this set the stage or 15 years of fierce partisan and regional battles over foreign -- over farm policy. effect of these various bills was to transform the department of agriculture
from an institution dedicated to building better functioning markets and creating public hads into a department that vast responsibilities for subsidizing and rejecting the american farm economy. for the nation's 6.5 million farmers in the 1930's, the new regime of commodity programs profoundly changed the economics of agriculture. 1996, thoughl nonmilitary, the economy was shaped by public policy -- particularly the policies established by congressional farm bills. begin,did all of this and why was it a mix of policies? why did the policy emerge as a congressionally centered bill. the termination clause in the 1933 act has never been in
another bill since then. no did -- in other words, presidents were given this power any longer. why did policies designed to confront to national emergencies , brutal inflation and the need to offset costs of world war ii, why did they remain in place well after the depression and after the war had ended? what we all know. some of the answers we all know. implemented, creates new paths and close others. politics, cost benefits, and winners and losers. so why did it all begin? the answer is, a farm economy badly damaged by the recession during world war i clobbered by the
collapse of the world trading system, by price levels that fell 65%, by the seizing up a credit, by the ballooning of ofts, by the massive rash foreclosures and farm failures. there had never been anything like it. it demanded a new policy response. but there are other parts of the story that are often ignored. economy was farm massively ill-prepared for the evolving 20th-century, well before the depression the farm sector was deeply troubled. there were too many farmers and farm workers who were trapped by unproductive farms with no access to capital, no means of managing risk, and the farm economy was marked i a deep-rooted disequilibrium. this vastly compounded the challenge of 1930's policymakers and policymakers after the
1930's. depression, the new deal responded with a mix of policy. the u.s. was not alone in imposing controls and protections and subsidies of the farm sector. this was worldwide. but few imposed such extensive supply controls. why did the u.s. do this? it remained in place for decades thereafter. and the answers really rooted in the global nature of american agriculture, its dependence upon exports. by 1930 american prices had been pushed out of line practice largely because of policy mistakes that produced an enormous buildup of carryovers and surplus stocks burdening the american market. paradoxically, the hoover administration and insurgents
like milo reno, their answer was what we might call de-globalization. a complete massive permanent retreat from global trade. massive controls of the farm economy. fixed prices or a drastic contraction of the size and scope of american agriculture. the new deal answer was a different one. it proposed a temporary retreat from export dependency while trying to rebuild the global trading system. trying to restore a kind of open economy. hence it implemented incentives for voluntary protection controls. it implemented price supporting loans in exchange for controlling output. all of this was initially intended a stopgap emergency measures protect an unprotected part of the american economy through the depression. also, trying to encourage more
systemic structural changes or adjustments. there is a reason why their first act is the agricultural adjustment act and not the agricultural recovery act. in addition, these farm policies were designed to enable farmers to continue to make decisions about their farm operations. about what to produce, how to produce it. to in other words sustain innovation. now an amazing feature of the , new deal farm programs was the extent to which they were localized down to the farm level. they depended on decisions of several million farm operators. whether to control acreage, whether to put crops in the hands of the ccc and so forth. at a time when so many members of congress had farm constituents, constituents now depended on the new program, this helps explain why congress
assumed control of farm policy. policy had by the end of the 1930's reduced a very different politics of agriculture. a politics that we live with today. from 1938 to 1941, farm policy was centered in congress and even more so in world war ii ag communities had immense leverage to exert because of the dynamics of the war demands. they transformed commodity policy from the new deal emphasis on support policies as a shock absorber to support policies aimed at rigid controls from price stabilization to , price determination. there is a policy irony to all of this, or there would be. that is that the policies of regulating, controlling, subsidizing after world war ii
became combined with the limited limited restraints on giving farmers the leeway to innovate. all of this encouraged a market centered revolution and - productivity. the parts of the input suppliers, the equipment manufacturers, seed companies, pesticides and insecticides, this will produce a new agriculture. what we now have is a new agriculture governed in the 1950's by outdated policies. policies aimed at the depression, policies aimed at world war ii. there are contradictions galore. but the nature of congressional politics was such that the cost of changing these policies was much greater than the cost of allowing them to survive.
this produces the protracted farm policy battle of the 1950's, continuing on into the early 1960's. just briefly, what did all of this achieve? this early phase of american farm policy? it allowed american agriculture and american farmers to survive the depression and avoided the annihilation of the form world of the 1930's that would have happened at those prices gone to world levels. it created a farm economy less prone to non-farm economy shocks. it allowed american agriculture to finesse the equilibrium. -- the disequilibrium. it made possible gradual structural changes. never fast enough for today's economists, but significant nonetheless. it created or prepared the foundation for a vastly more productive american agriculture. it produced many winners. i would argue among the winners, midsize farmers, certainly large
farmers that produce many losers, marginal farmers, tenant farmers, the rule for. rural poor. there were many failures to the policy but also unrecognized successes. the challenges of this new farm system would be taken up increasingly in the 1960's and beyond. that is a story that my colleagues are going to explain. thank you. [applause] >> thank you for having me here today. my story does serve as a transition point between david's and anne's story. there have been changes since -- continuity in policy since the 1930's. but the major decade every shuffling of the decade that produced the farmville on the -- farm bill we know today came
out of the 1960's. that is the context i want to look at today. there was a key reshuffling in the 1960's that did two things. first, required farmers to accept market prices as the basis for much of their business planning, even though other forms of commodity support continued. as david said, the new deal programs were remarkable in the sense that they facilitated innovation. other sorts of market progress, but the one thing that they did not do was align domestic prices with world prices. the 1960's farmers are forced to align those prices. also in the 1960's, as a result of explicit urban bargaining, farm bills, and they were not together yet, but congress considered at the same time commodity support along with food stamps. food assistance with the poor. this is the origin of the food stamps program that became snap
which is now three fourths of , farm bill spending. the major contestation today. the historical question, the historian in me asked why that moment? the answer was outrageous food surpluses. at the end of the 1950's there was a crisis point in these programs that david described. agricultural surpluses, the portion that the government stored as a result of maintaining domestic prices, technically loan rates but we can call them domestic prices. the storage costs increased genetically. at the end of the 1950's , get this, commodity storage costs was the third-largest item on the federal budget. the third-largest item after after interest on the debt. the government was paying over $1 million a date to story grain. the 1950's was a time of remarkable partisan
irresponsibility. nobody was taking claim over this, no one was trying to solve the problem. it is not just that the political parties were avoiding it. the problem was going to require americans to make two very -- to choose between two paths. on the one hand, do you allow farm prices to align with global prices, thus precipitating hemorrhaging of the whirlwind -- rural farm population. this will allow only larger units survive and multiply in the farmers will go away. or do you prop up the system, expensively keeping farmers together as one class, and that is just an expensive proposition. nobody wanted to take on this challenge. president kennedy is not known for farm policy, but he should be. under john f. kennedy there was a remarkable attempt centered in the usda, liberal economists in the usda decided to present congress, and this is something
the white house was behind, a program that would have guaranteed farmers high prices in return for actually reducing output. to basically make the new deal work as it was supposed to work. farmers never really reduced output, they just got paid for the stuff they produce. the kennedy administration and the liberal economists at the usda said ok, if you really reduce your output, we will guarantee you really high prices. they wanted to present farmers with a clear choice. they believed that requiring farmers to accept market prices even though the results would be , efficient, it would leave them vulnerable to an appropriations process that could not be trusted to deliver welfare payments. given the unique economic qualities of the agricultural sector, individual farmers had no leverage in the broader market and consumer demand in
-- the inelasticity met they would always be vulnerable. there was not these little economists and they did not think there was no magic point where supply and demand would intersect and the agricultural economy would be stable. they just wanted to put a floor under this to keep it from happening and to keep midsize farmers in business. they really wanted to protect the midsize family farm in that thought only a single protective umbrella limited production general pricing would do this. if you fold away the umbrella, cutthroat opposition market prices will walk away a lot more than just the middle. it will wash away everybody. the administration first hoped to bypass congress. congress did not like that idea. next, the administration decided to go slowly. it would have proposals for feed grains. corn is mostly used to feed animals, and wheat. congress rejected the corn
proposal but pass the wheat provisions. since the new deal as david was saying, you cannot just impose a production regime on farmers. they vote on a on a referendum and what's more they have to vote by two thirds. the super majority at the local level. farmers rejected that wheat provision in may of 1963. there were going to be given high prices in return for restricting output. they rejected it, not by a lot, passed by a majority but not by two thirds. this was the first referendum defeat since the new deal. the kennedy farm program basically failed for two reason. first, feed grains, corn, is a long shot. meat consumption was growing, dairy was growing. areas like the south were switching into meat, poultry and dairy production. representatives from the south and midwest were not going to support actions where they worried about feed grain prices
growing. second, farmers themselves made a bet that congress was actually not going to force them to take market prices. the farm bureau, which was an organization that represented mainly corn farmers and mainly the largest units. also blanketed the country with propaganda saying that the kennedy farm proposal was basic -- basically the same as the soviet agriculture. reject it. farmers were right. the congress did not force them to take purely market prices without help from above it. after the failure of the kennedy plan, rural representatives, major farm representatives agreed to the series of bills that steered clear of production control. after 1964, the commodity support program started to rely on payments rather than price guarantees. in other words farm commodities , were to align themselves with market prices in farmers were paid a difference between that and some target price.
there were two tiers after the 1960's and 1970's. 60's and 70's. -- farmers were paid a different between market and target price. after 1964veloped was a new funding formula that save the commodity programs by marrying them to food stamps, to food assistance. starting in 1960 four, congress considered the commodity program along the food stamp program that appealed to urban liberals who threatened to derail all of the commodity programs and less -- unless a food stamp bill was also brought to the floor at the same time. in 1964 liberal politician politicians were not yet expanding to the anti-poverty lobby, the anti-lobby, the civil rights movement but that change rapidly in the later 1960's as black freedom activists, especially in the south expose the property of the malnutrition
-- poverty and malnutrition of african-americans. the first foodstamp bill in 1964 made these programs optional. states and localities did not have to accept it. if you accepted food stamps you then could no longer distribute surplus commodities in bulk. by the end of the 1960's as a result of the antihunger campaign and african-american freedom activists, some of them can't for the usda and the poor people's campaign as a result of this kind of attention. the foodstamp program became a national program. that was firmed up by 1973 as well. a new and endearing budgetary bargain took place in congress. agricultural committee has ruled all the crop programs into a single bill. also the money for food assistance and passed together
-- patched together enough urban votes on the floor. food assistance, commodity programs today, together. this is origins of the farm bill. in the 1960's there was an explicit trading about passage. now they are combined in single legislation. [applause] >> i am a historian but i have working as an economist for a long time so i have a powerpoint. i will to do story from the beginning of the farm bill and talk mostly about what happens to broaden us beyond commodity programs and whose stamps and -- food stamps and other changes
that takes place within the food stamps in particular during this period. like david this is about 50 , years, so trying to figure this out how to do in 10 minutes is tricky. just as sarah said in her story, there is the orientation towards global markets that changes the way prices need to be managed in the u.s. in order to take it vantage of opportunities and trade. it also creates a new kind of risk. it is an opportunity and also creates volatility that makes farming a little more risky. then there is structural changes that david mentions that are ongoing through the middle part of the 20th century that really
change the character of rural america and also affect how farms manage in the new world. finally beginning in the 1970's , we have growing interest from consumers and they are not all urban. it is from the point of view of those who are consuming the food and fiber that is produced that shows itself in a growing concern about environmental impacts of agriculture. an interest in new types of food system was coming up new in the 1970's and 1980's. what i have termed by the simple food policy, that encompasses a huge combination of concerns about food quality, food safety and nutrition, as well as food access and the food assistance program. that is the outline. i will start with the commodities piece of this.
as sarah played out, there was a reorientation to world markets. i will throw this little graft into show how rapidly the expert of agricultural products increased after 1945 to 1950 changes and you get the rapid increase in the 1970's. first time i remember when the world would not be able to feed itself and there was a huge demand, crop shortages around the world. this is just before the green revolution really starts to pay off and increase production in india. there is huge demand, prices are rising, american farmers want to produce everything they can to take it vantage of this. people have heard the term plant defense road. this is what is happening in the early 1970's. there is this idea that we do
not need to worry about surpluses. the world needs everything we can produce. it reminds me very much of the world war i production when there is this huge demand for exports. it looks like it will never end and that does not happen. it always ends. then you are left with dealing how to cope with the production that has been expanded to fill that space. so, within this context we have a change -- i am really going to telescope what happens with farm policy so i don't spend the whole time on this. slowly but surely we give up acreage controls. first because there is no need for them because there is such high demand. and producers are constrained in what they can provide to the market if they are required to produce particular commodities in order to maintain their access to payments. slowly but surely we work towards planting market signals and not for with the program is based on.
as sarah pointed out price is by direct payments. consumers are in the cost of this, which is -- when you're china's elegance competitors in the world market. it switches to these target price and deficiency payments and then slowly but surely less linked to the point where the payments are associated with some sort of historical base. this frees producers to been plant whatever is going to bring the best market return. that is how they are going to respond to global markets. prices are allowed to fall to whatever level the markets will support. in the meantime producers have a fixed payment at one point or some kind of payment based on
the way the markets are moving. as sarah pointed out, very expensive to run these programs. the target price difference and she program you don't price -- deficiency program you don't price for that much but used. the pivot differences between market prices and target prices. at this time also payment limitations are introduced. there are also concerns associated with the structure of farming and they also break the link to parity prices. i think sarah and david both carefully avoided that term. parity prices are essentially guaranteed purchasing power to producers tied to what you could purchase farm prices in 1914, 1909 to 1914. >> the previous 10 years. >> right, ok. all along it has been this idea that farmer should be able to
buy an equivalent amount of stuff from the prices they get for what they produce that is provided to other sectors. that has dropped entirely at this point. other bases are chosen for how the target prices will be set. then i mention it is a time of opportunity, but it is also a time of risk. once you start letting the markets determine prices, even with some kinds of support, producers make decisions that do not always turn out and they don't always have the same kind of guarantee of price per unit that they had previously. in addition, what happens in the 1970's when there are high prices, it is partially artificial. it is production shortages. those are filled in, we get increasing competition from other countries. the eu, for example, has
recovered its agriculture from the postwar period. the green revolution starts to pay off in other countries and they are producing more of their own food. there are new customers but there are new competition that creates a more volatile situation. again, telescoping many years, the orientation of farm policy moves from this price basis protecting a certain income to creating risk management tools. i know that can seem semantic, but just a point out, it has become a core program, you can see the orange section there. this is as it begins to kick in with changes to the law in 1990 and 2000. although there is still quite a lot of subsidy built-in, it does require producers to make a lot of decisions about what risk they are willing to take, how much they are willing to pay for
that risk. it is a reorientation even if it is not a complete opening to the market. it also changes the way government approaches managing risk. since 2008, it's been based on this asked warily sound aces so there is some predictability and typical insurance coverage of losses. we could talk about that in questions, i do want to spend too much time. even within the commodity programs -- in fact, they still call it the price support loans. they are marketing loans that allow producers to delay their sales of their commodity. it is meant to smooth the release of commodity out across the year. those have loan rates that sarah mentioned that essentially act as a floor price. if market price falls below the loan rate than producers can repay the loan at the lower rate
or previous to that they could forfeit the commodity with their payments and keep the difference and not have to repay what they had borrowed. just with the value of the crop was at that time. that is still there but the prices there are very low. corn is between 330 and 350 right now. a lot would happen before the price falls and they would be able to benefit from that gain. that was not the case in the early 2000's. the prices were set somewhat higher at that time. in fact those big peaks are driven by very high marketing loan benefits in that period.
so in 2002, the marketing loan rates reset much lower in order to finally end that coupled payment. so much for my quick run through. i would like to just put this in because we talked a lot about farm program payment and people are not always aware. that red piece is farm income. that comes from farm payments. for most producers in most years, it's cash receipts and farm related income, which is generally custom higher and other types of activities on the farm that bring in money, even in some of the highest payment periods it reaches about 10% of farm income. in fact, in the u.s. a much lower share of income than in many other countries. quickly, because i only have a key minutes we mentioned , changing farm structure. this is the rising number size of farms.
falling number of farms. falling farm population, even within the rural population. that affects the rural economy. on the left is how many rural counties are dependent on agriculture? 20% of earnings are in agriculture in 1969. in 2012, that is the number of counties. that is actually a little bit exaggerated because prices were so very high. it was a good time for agriculture. the 2002 version shows even fewer counties. what happens in the farm bill -- i added in the farm crisis cousin the 1980's there is a farm financial crisis, a lot of foreclosures. i wanted you see the comparisons between the 1920 farm crisis in -- and the 1980's. it is far worse for that is a comparative peace to this, a similar kind of credit crisis after world war i. those two things together bring
new issues into the farm bill. one is rural development that was brought in in the 1970's. what is different about this is there has been rural development but they are oriented to primarily farming sometimes to move people out of farming, but it is associated with farming. the new rural development programs -- in recognition a large number of rural people, including farmers who depend on the income need this economic development in order to stay where they are. there is a lot of migration to urban areas, especially beginning in the 1980's. also the credit provisions enter the farm bill in response to the farm crisis where the system fell apart and was rebuilt in a more stable way that protects -- the farm credit system is mainly cooperative banks and they are now under a regulation that reduces their exposure.
although, i gather some of that is changing. i will just add in the final of -- consumer attention to farming and food production. we have an impact on environmental programs before the 1970's. actually through the 1970's. they are primarily associated with producing erosion on farms that help with farm fertility. -- reducing erosion on farms that help with farm fertility. this is in this middle period. by the 1970's they begin the national resources inventory. the soil conservation service starts doing more impacts of agricultural erosion on water quality and community issues. as you can see in 1985 we get cross-complaince requirements that producers have to protect highly even notable -- erodable soil and protect wetlands. at the same time there is a lan
retirement conservation reserve program that takes off and carries on throughout this period. the green section is the piece that is most interesting. that is the environmental programs that require producers were currently working to apply more environmentally friendly practices. it is voluntary, but if they participate there are ways that they need to apply these practices. that has become the bulk of the spending on conservation programs. finally, new approaches to production and distribution of food. local and regional foods. organic productions that are brought in as part of the 1990 farm bill. sorry, i have to go through this so fast. i am a commodity policy person. and then food policy. which again i have combined a , wide range of concerns. to me, all of these come
together in this current climate , maybe less so the food assistance. but in this idea that we need to change the farm bill to be a food bill, food policy bill. get away from supporting income benefits for farmers and towards encouraging better nutrition and better food quality, etc. that is a tension that exists now. i wanted to show some of what is behind the current food stamp issue is this large increase in funding that came with increased eligibility increased spending. , that starts to fall off in 2013 but we have had a very slow recovery. the spending remains pretty high. no need for a summary, i will just quit. [applause]
>> sorry i had one extra. , i was can use if i had time. that is the productivity changed since 1948. >> ok, so, now it is time for all of you who have questions to have an opportunity to ask our experts. yes ma'am? >> usda. i was wondering if you could speak to the commodities that have been included as program commodities within the farm bill from the beginning? how that has evolved and changed? act in 1933 was basic commodities. corn, wheat, tobacco, and then eight or nine of these change over time. then there is also legislation, or part of the title i of the
act was a marketing agreement for more specialized commodities. during world war ii everything comes under -- everything becomes almost the basic commodity. after the war you get a massive surplus of potatoes and things like this. this helps reduce important changes in all of this. fewer commodities are covered by the program's now. one of the criticisms of economists for some time has been that the non-program commodities seem to respond to prices and market incentives far better than those programs, or those commodities covered by the programs. >> just to respond to that. in fact, there have been programs for many types of commodities, including specialty crops since the beginning. they have particular kinds of marketing agreements that are allowed that have provided for development of fairly carefully controlled sectors.
some of that is behind why you can't put plants fruits and , vegetables on base in our current programs. it is about protecting those commodities. but also -- i will lose my train of thought now, but i lost my train of thought. >> historically it is an assumption that only these basic commodities have ever been helped. which is just not true. there have been a variety of means, ad hoc year-to-year means to intervene on the problems of any particular commodity. farmers are pretty savvy in getting something called section 32 funds, which they got the receipts from tariffs. and got it put toward surplus management issues for commodities that were not considered basic at any one time.
the secretary of agriculture has had a leeway to support a wide range, almost any kind any particular time. if they give you time? >> it did. i will say something about section 32. what i meant to say is what sarah was pointing out about what happens when if we just let these programs go, it is pretty clear in the specialty crop areas that these are very large operations. they are very diversified regionally, and by commodity -- there is -- the effect of not having programs to protect midsize producers can be seen in the way, especially crop production has developed in california and other places. they are much less tied to farm programs. they are much more oriented to the market, but they manage it in part by being very, very large.
>> is there a -- of having this commodity focus, this places it into the hands of the congressionally centered policy. ongoing bargains and integrates a vested interest in these programs. it is essential to the shift of policy centered from the presidency to congress. >> and also, in fact, a very large share of u.s. farm production is covered when you cover those major commodities. so, although it seems to be a small number, it gets bigger and bigger. i think there is something like, i just counted the number of commodities covered under marketing loans. i think it was 28 and it grows. crop insurance covers 130 different commodities.
obviously the biggest participants are these traditional commodities. just to speak to section 32 for a moment, it is one third of tariffs, which is the share of tariffs that were attributable to agricultural goods. the biggest share of that goes to supporting the school lunch program now. originally it was more freely used, but something -- i do not know the percentage, but about $300 million goes to this program to provide commodities to nutrition programs on an intermittent basis. the rest of it is dedicated to purchases that provided low-cost to school lunch programs and other child and adult feeding programs. that has changed a lot of times. some of these things the authorities have continued, but the way they are used has changed. >> there is also a big strategic difficulty in designing a program for a storable commodity versus a perishable commodity.
when we think about the way these have developed historically, think grain, things that can be stored, can become traditional commodities in the sense that it could be like money. that is why a lot of the focus -- i looked at the ccc grain storage profiles, and it is what can be stored, whereas perishables have needed a different set of programs, but it does not mean they have not been supported this whole time in different ways. >> any questions? >> where is technological change on farms in all of this? is it affecting the way lawmakers react or how farmers respond? >> i can show you this productivity slide. you guys go ahead and talk about that while i pull us up. -- pull it up. it is up there now. let me just fill it.
how do you do this? that's just a frame of reference. this is a total factor productivity slide. the red line is input, the level of input, which stays fairly stable. then the green line is how much output is coming from that consistent level of input. that is where the technology is affecting the productivity. in 1958 is where the tractors outnumbered the horses, and then you see these other additions of chemical and robotic and biotech scenes and various other things that happen there. it drives the problem of
structural change, or problem, or benefit, whichever way you are looking at that. the slide i had showing the number of farms falling. actually, the farm size is going up to about 400 on average is very low because we cannot -- -- we cannot count tiny farms in the u.s. census. in fact, another slide that i decided not to show, the share of farms over 2000 acres has been growing consistently for the last 15 to 20 years, probably longer. the lower levels are staying fairly stable, maybe growing a little. in the middle, the farms under 2000 and above 300 or so, you just see this very clear decline. that is too big for not being full-time, not being big enough to earn a living as a full-time farm. >> productivity from 1900 to
1925 is stagnant on what economists would call total factor productivity. from 1925 to 1935, it kicks up slightly. after 1940, we see as slides suggest, the sustained gains. to some extent, as the usda economists like to argue, persistence pays, that the research and investment in productivity would take years, decades to be realized. they are subsidizing and reducing uncertainty in a culture by creating a new credit system. you actually have greater investment in tractors and in biological innovation. like hybrid corn. it is an interesting policy market nexus that has fueled this.
it is vital to understanding the changes. >> it is also important to understand the tension these have created. many of these technological innovations have been environmentally problematic. if you are thinking about how to use this unwieldy yet persistent structure of the farm bill to bring about other kinds of agricultural production, then what do you do in terms of the environmental externalities of this kind of production? how do you slowly shift the ship around and create different incentives? that is a big tension. the historic productivity gains based on certain kinds of technologies versus the new environmental sustainability objectives that many reformers would like to see. >> that is true with labor as well. we are at an odd place of shortage of labor. other times there has been this issue of reduced need.
i think it is a push/pull. you innovate in order to reduce your need for labor in part because you may have difficulty in recruiting it at sometimes. other times you are releasing a lot of labor that is no longer needed when you have a tractor instead of four mules. absorbing that, sort of a neutral term -- helping people find other ways to make a living has been a problem of structural change. maybe less so in the u.s. because of more industrial development than you see in other parts of the world. china has also had a similar kind of ability to bring people into the industrial sector and out of rural, but in other parts of the world, this is one of the key conundrums about increasing productivity in agriculture.
>> what has been happening with research over this period? research funding from usda? >> if i had gone all the way through to my last life, that is one of the things i pointed out. we have not talked about research. research has been in the farm bill since 1977, but it has been part of the usda funded program since the mid-19th century. it is one of the earliest kinds of farm programs. in my full talk, i start with land distribution and science research as u.s. foreign policy. -- u.s. farm policy. there has been a huge investment in the mid century in ag research, both public and private. starting around 1980, the , the balance has shifted. i don't have the slide with me but public research tends to focus on a broader group of questions.
some of them to do with these environmental externalities. to do with different production systems and other areas, whereas private has been primarily seed research in the last 20, 30 years. but also some other kinds of plant breeding and livestock. things that will be profitable, to be simple about it. there is a bit of a crisis in the research funding area now about how much should be provided by public, and how effective what we mostly do now, private/public partnerships to extend public money, whether or not that is the most effective way to get that particular kind of research that comes out of public funding. the difficulty now -- i think there was a parallel system as
opposed to intersected systems in the earlier periods. i don't know as much about that. certainly a lot of critiques of land-grant research and their participation in developing a lot of these technological changes that affected labor and environment and other things , also rural communities. >> can i ask a question about the politics of your story? as i see it, part of the politics of that is the way in which, despite the decline of the farm population and presumably its political influence, it's managed to sustain itself and these farm bills, partly because of the trade-off with urban interests in terms of environmental and consumer interests and food assistance. so, given that fact, is this something that you see as something that is going to continue, or are there points at
which you think this might break down? are there other political factors at play that i have not laid out that might be worth considered understanding of how this farm policy has evolved over time? in from awade historical perspective. i cannot predict. i can say that, from the perspective of public policy, it has been a completely imperfect kind of bill every four or five years. but it has been remarkably flexible in bringing in all sorts of different communities. every time to fight it out. i would like to say that it will end your more or less in that shape as different communities find that at this one table in this unique setting, they can insert and change it in that way.
from what i have read, it seems like people want to avoid the contentiousness of 2014 and get it done this year. but i am certainly not a wise observer of the currency. >> for an economist this is one of the great mysteries. how they survive with the farm population that has declined and declined and declined. what they often explain is that the benefits are concentrated. for those who would lose by not having the farm programs, the cost of being extensive. -- would be extensive. the costs are dispersed to consumers, to taxpayers. so that if the sugar program is eliminated, the price we paid for sugar might decline a few cents, but that will not affect how we vote. if you are a sugar producer, it will. >> i will say one thing about that. the way the farm bill is
financed, i think, has something to do with people continuing to come to the farm bill as for the venue to work out how food and farm spending should be done. there is a designated pot of money that is going towards agricultural production, food policies of various kinds. because there has been this adaptability and there is is very open debate, i think that has kept it a viable vehicle -- terrible combination of words there, for debating in bringing attention to food and farm policy issues that might otherwise disappear from the public debate. i think there has been investment from many sides of the question. >> [inaudible]
in the farm bills? >> that is an interesting question. it has rarely been part of the farm bill itself, but it has been an issue that has been part of the farm policy debate. there is a concentrated control of suppliers, of processors. it is really more of an antitrust issue to some extent. at times, in the 1970's, for instance, the usda economists were very engaged in this kind of debate, particularly in more inflationary economic environments. there has been a sense that farmers have been vulnerable, consumers have been vulnerable. you get some of this argument in in the 1920's and 1930's, a sense that the economy is organized, except the
farmers hence farmers need , protectors and are dependent on public policies because they are vulnerable. to some extent, i think the argument is overstated for political reasons. it perhaps becomes more valid after world war ii. >> one more question. >> i really appreciate the perspective of the historians to talk about it differently than we do a lot. you talked about the less -- last question before this in the presentations. why agriculture? a lot of the explanations you have given scene to be reactionary in the current sense of status quo. but why agriculture kind of from its origins? i do not know what sectors of the economy to mention, but health care, manufacturing, or parts of manufacturing, retail. there are controls and supports. >> i think that many economists
, although they would disagree now still think it is a unique , sector where individual producers have no leverage over a vast market. where the inelasticity of consumer demand means that price swings are quite rapid, and it is very difficult to respond when lower prices do not create the ability to respond in the same way. i'm not being very articulate, but i would say some people think it is a unique sector requiring a certain amount of government assistance and support to function. >> this is a question that no one has ever answered. many, many people have answered it. no one has stopped the question from coming back up again.
i have decided that -- what i see as a bargain that struck in world war i, where producers are asked to not raise -- this is particularly wheat, but they are asked to not raise prices to help the war effort, but also to increase production to help the war effort. there are many things going on at the same time. then, at the end of the war, there is this lack of recognition of this policy affect that then leads to a huge crash. i am looking for a particular point in time where this policy piece happens. there is all the agrarianism and other kinds of issues they get brought up. -- other issues that get brought up. producers could have charged much higher prices for wheat during that war and for other commodities because demand was so high and they played ball. they also increased their production and expanded at their own expense to do that. i just think we come away from that moment with a sense of
producers having put out for government and government having some responsibility for protecting them from what has happened. that, of course, snowballs through the 1920's and then into the 1930's. then, i would say that what happens after world war ii, in part, is a fear of what happened after world war i. in other words, they keep those programs in operation for a number of years in case of a problem. then the korean war becomes a way to sustain it. it has a kind of internal progress that does not exist in other sectors that link. even though i am sure there are other sectors i get involved in these kind of war productions. but they are maybe not -- maybe have an easier way of reestablishing a smaller piece. but the agrarian part -- there is something there, but i do not
know how to define it or describe it, but even now people do not want to see the midsized farms disappear. >> there is policy that is precisely helping that happen. >> it is helping it happen and stopping it from happening. which way is stronger is not clear. but in terms of the popular imagination, it is still there. >> i think there are two parts to it. it is rooted in our earliest history, the jeffersonian agrarianism. this notion that farming is special, farmers are special, rural life is special. there is this kind of mystique that continues to the present day. it is critical in winning popular and political support for farm programs that other sectors of the economy cannot generate. the other part of it is, beginning in the 1920's and 1930's and onward, you develop an idea that it is possible now to have food for all.
we will defeat the drama. henry wallace, the secretary of agriculture in the 1930's, part of modernity is the ability to combat hunger. hence, you can justify these investments in research, in output, in greater productivity. they coexist somewhat unusually and produce these contradictions, but they are thata part of the story there is the stream, if you will, of eliminating or reducing hunger. food for everyone. this becomes really powerful during world war ii. you get the food and agricultural organization. the fao. this is created in large part i some of these new dealers who now want to take a domestic new deal and expand it worldwide. this becomes a vision that animates both public sector and private sector.
many people who work for months, -- work for monsanto and the other companies, this is how they justify what they are doing, it seems to me. >> i think that is a perfect note to end this briefing. please join me in thanking our panelists. [applause] >> i want to thank all of you for attending. >> thanks, everyone, for coming. it is nice to be in a time when this many people want to know about the history of agriculture. [laughter] [captions copyright national cable satellite corp. 2018] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] [crowd talking] you are watching american history tv, all weekend, every weekend on c-span3. join the conversation, like us on facebook. the c-span bus is traveling
across the country on our 50 capitals tour. we recently stopped in indianapolis, indiana, and looking forward to the november midterm elections we are asking which party should control congress and why. the party i want to take over congress is the democratic party. it is not just because i support the values of the democratic they, but because i think republican party has completely abdicated its responsibility to serve as a check and balance on the executive branch. legislation,o certainly the responsibility of congress to be able to serve as that check and balance. we have not seen that. we have seen a presidency run amok. >> in control of congress changes in november, i believe i will be impacted in several ways. i am a college student who is just not getting out of school. i will be entering the workforce. things such as tax breaks or in financial matters that
could decided in congress will directly affect me and my future success. also, i'm an african-american woman and a representation that is there for me and those who are fighting for my rights, my civil rights is very important. i believe this will be impacted if there is a change in congress. year, ifections this by some strange chance that congress should change over to another party, we would have some impact here. but, generally in indiana we are pretty independent folks. as with our infrastructure program we have moved ahead with whatever congress does. we make sure we operate in a responsible and businesslike way. we passed a major infrastructure bill last year. the federal government helps us out, that's great. if they don't, we will continue to march and we are working with water also.