A Nongovernmental Farm Program

Dr. Roy, Agricultural Economist at Louisiana State University, has devoted nearly a decade studying and helping develop the integrated farming arrangements described in this article.

Many persons have followed the path of least resistance to the con­clusion that the only solution to American agricultural problems is for the federal government to pour billions into the farm program. But I cannot agree that our only salvation rests in Washington. I doubt that the Congress or any federal agency is capable of enact­ing and administering a compre­hensive farm program with jus­tice or equity. Our agriculture is too diversified for that, our farms varying in size and capitalization, with wide dispersions in income that are aggravated rather than corrected by government payments to farmers.

We have agricultural resources committed to wheat, corn, cotton, rice, and other crops, with yields vastly in excess of the quantity which can be moved at the support price. This hurts domestic indus­tries which must buy in this price-supported market. It also hurts our prospects in foreign markets, where we hold a price umbrella over competitors, thus increasing any advantage they might other­wise have had.

Yet, while economists and others have been busy devising and try­ing to enforce unworkable pro­grams, a kind of technological revolution has been happening in many lines of farming—especially livestock and poultry. This went largely unnoticed in the American press until a year ago. The United States Department of Agriculture and many of the agricultural col­leges failed to realize the extent and importance of this potential change in farming patterns.

The change involves economic integration, more popularly called contract farming. However, this contract is not between the gov­ernment and the farmer; it is an economic arrangement between businessmen and farmers. The businessmen supply all or part of the credit and the production sup­plies and assure a market for the produce. The farmer, in turn, sup­plies as many resources as he can, including all or part of the produc­tive labor. In exchange, the farmer gets a guaranteed return for his labor plus a share of profits above a certain level.

Broiler Growers on Contract

Contract farming had its real beginning in the broiler industry where it attained a high degree of perfection and performance. The system is now spreading to hogs, beef cattle, table eggs, hatch­ing eggs, canning crops, and to many other farm enterprises, ex­cept those supported by the gov­ernment. The crops subject to gov­ernment price support account for less and less of the national agri­cultural income. For example, poul­try income is now in first place in Georgia and Alabama, and ranks high in the other southern states of Arkansas, Louisiana, Missis­sippi, South Carolina, North Caro­lina, and Texas. Economic integra­tion started here because cotton was being price-and-acreage-con­trolled out of its markets; the price support program indirectly led to economic integration.

This contract farming in broilers, for example, has been so successful that broiler meat con­sumption has gained considerably on competing meats such as beef, veal, and pork. Broiler prices in retail food stores are lower than during the Depression days. Econ­omists say the results of economic integration in hogs and table eggs could be just as outstanding. Some persons claim that broiler growers on contract work for “starvation” wages, but the facts refute them. Recent research by Southern land-grant colleges shows that net labor returns to broiler growers on con­tract averaged $1.10 per hour.

The farmer has always faced the uncertainties of weather, ani­mal and insect pests, diseases, and income and price fluctuations; and he is fully justified in trying to reduce or eliminate such hazards. But the result, when he has turned to the government for help, has been the added aggravation of long debates, red-tape, and a huge bureaucracy. Far better that farmers work out satisfactory pro­duction, marketing, and income arrangements with businessmen who are in business to supply a market rather than to fill a gov­ernment warehouse.

Advantages of Integration

What are the advantages of eco­nomic integration in agriculture? (1) It does not require government regulation or subsidy because it is a self-adjusting mechanism through the market place. (2) It spreads risks, including that of price fluctuation, among the people who do the integrating. (3) It is based on and builds respect for the personal integrity and the private property rights of all par­ties involved—farmer, business­man, consumer. (4) It shifts or absorbs within its own organiza­tion some of the costs of research, teaching, and demonstration. (5) It has no monopoly advantage or power because it relies on eco­nomic and technological efficiency in its operations and is not a de­vice for market control.

Laissez Faire

What is the moral taught us by agricultural economic integration? It is simple:

Stop interfering; leave people to their own resources and in­genuity, free to attempt some­thing new, free to produce and trade voluntarily to their mutual advantage. In whatever you do—farming, teaching, manufacturing—aim for one thing: produce and offer the goods and services people want and can afford to pay for.

Woe to those who produce for a warehouse or cave or mothball fleet far removed from the exact­ing needs of the market, those who teach the tempting but false phi­losophy of something-for-nothing, those who hide their inefficiencies behind special privileges, subsidies, and protective trade barriers. Any possible short-run gains from such tactics are strictly illusory, for they are at the expense of others, harmful to society, and in the long run destructive of the very ones who seek them. While the pains of adjustment to the mar­ket are sometimes acute, they are preferable to the chronic and eventually incurable disease of subsidy and control.   

Ideas on Liberty

Free-Market Farming

W. M. Curtiss

Restoring the free market to farm products at a time of un­precedented industrial activity in this country would benefit nearly everyone. Taxpayers (and who isn’t?) would avoid the staggering cost of purchasing and storing commodities; marg­inal and submarginal farmers would be induced to seek more profitable employment off the farm; commercial farmers could go back to producing for a market they know exists; and the entire economy could once more get back to a steadily rising productivity, beneficial to everyone.