Draft Paper – Not to be cited without author’s permission
low prices, while family farmers, the vast majority, get virtually nothing (see Box 2, p27), and many are driven out of business. Sadly, not only does this system make it hard for Third World farmers who produce these commodities to compete in their own local and national markets, but low prices and subsidies skewed toward the largest farmers combine to hurt most American farmers as well. One might say that these prices reflect ‘internal dumping’ for America’s family farmers, as prices have fallen on the internal US market by an average of 40% since 1996. 24
In just five years, from 1997 to 2002, the U.S. lost more than 90,000 farms of less than 2,000 acres, while farms above 2,000 acres increased by more 3,600, according to the U.S. Department of Agriculture, as cited by IATP. 25
As the IATP analysts put it:
While the U.S. government has put in place support programs to make up some of the income farmers lose from low prices, it is seldom enough.
26 Larger, corporate farms receive the bulk of subsidy payments. In the US, the steady erosion of independent family farms, the near-necessity of off-farm income to ensure a farm family can continue to farm, and the decline in net farm income, all point to the cost of policies that facilitate the sale of commodities at less than cost of production prices.
Figure 1. Index of farm-to-retail price spread for a market basket of food items in the United States. Source: USDA-ERS,
Consumers do not benefit from these low farm prices either, as is shown by the U.S. farm-to- market price spread in Figure 1. The price spread depicts the ratio of retail to farm prices, and
a rising index means that consumers pay more while farmers earn less, demonstrating the “buy cheap and sell dear” capability of the food industry.