The Omnivore's Dilemma - Michael Pollan [29]
How can this possibly be?
George Naylor has studied this question, and he has come up with a convincing answer. He’s often asked to speak at meetings on the farm crisis, and to testify at hearings about farm policy, where he often presents a graph he’s drawn to explain the mystery. He calls it the Naylor Curve. (“Remember the Laffer curve? Well, this one looks a little like that one, only it’s true.”) Basically it purports to show why falling farm prices force farmers to increase production in defiance of all rational economic behavior.
“Farmers facing lower prices have only one option if they want to be able to maintain their standard of living, pay their bills, and service their debt, and that is to produce more.” A farm family needs a certain amount of cash flow every year to support itself, and if the price of corn falls, the only way to stay even is to sell more corn. Naylor says that farmers desperate to boost yield end up degrading their land, plowing and planting marginal land, applying more nitrogen—anything to squeeze a few more bushels from the soil. Yet the more bushels each farmer produces, the lower prices go, giving another turn to the perverse spiral of overproduction. Even so, corn farmers persist in measuring their success in bushels per acre, a measurement that improves even as they go broke.
“The free market has never worked in agriculture and it never will. The economics of a family farm are very different than a firm’s: When prices fall, the firm can lay off people, idle factories, and make fewer widgets. Eventually the market finds a new balance between supply and demand. But the demand for food isn’t elastic; people don’t eat more just because food is cheap. And laying off farmers doesn’t help to reduce supply. You can fire me, but you can’t fire my land, because some other farmer who needs more cash flow or thinks he’s more efficient than I am will come in and farm it. Even if I go out of business this land will keep producing corn.”
But why corn and not something else? “We’re on the bottom rung of the industrial food chain here, using this land to produce energy and protein, mostly to feed animals. Corn is the most efficient way to produce energy, soybeans the most efficient way to produce protein.” The notion of switching to some other crop Naylor gruffly dismisses. “What am I going to grow here, broccoli? Lettuce? We’ve got a long-term investment in growing corn and soybeans; the elevator is the only buyer in town, and the elevator only pays me for corn and soybeans. The market is telling me to grow corn and soybeans, period.” As is the government, which calculates his various subsidy payments based on his yield of corn.
So the plague of cheap corn goes on, impoverishing farmers (both here and in the countries to which we export it), degrading the land, polluting the water, and bleeding the federal treasury, which now spends up to $5 billion a year subsidizing cheap corn. But though those subsidy checks go to the farmer (and represent nearly half of net farm income today), what the Treasury is really subsidizing are the buyers of all that cheap corn. “Agriculture’s always going to be organized by the government; the question is, organized for whose benefit? Now it’s for Cargill and Coca-Cola. It’s certainly not for the farmer.”
Early that afternoon, after George and I had been talking agricultural policy for longer than I ever thought possible, the phone rang; his neighbor Billy needed a hand with a balky corn planter. On the drive over Naylor told me a little about Billy. “He’s got all the latest toys: the twelve-row planter, Roundup Ready seed, the new John Deere combine.” George rolled his eyes. “Billy’s in debt up to his eyeballs.” George believes he’s managed