Tag Archives: Agricultural Marketing Act of 1929

foodconserv

Milk The Taxpayers

From 1929, when the Agricultural Marketing Act  was enacted by President Hoover, through 2008, there was consistent need for agricultural relief. The industry was still receiving massive subsidies from the Federal Government, and the Food, Conservation and Energy Act of 2008 was similar in purpose and scope to its predecessor around 80 years earlier. The striking similarity between the two was the rampant subsidy abuse that farmers exploited and took advantage of on the brink of economic collapse in the United States.

In this Jimmy Marguiles cartoon, which appeared in New York Newsdayin 2008, there is a farmer awaking and yawning who says “5am…time to feed the chickens, slop the hogs, and milk the taxpayers”. Given the date of the cartoon, it must relate to the Food, Conservation and Energy Act of 2008 – known colloquially as “The 2008 Farm Bill”.

According to the National Agricultural Law Center, the Food, Conservation and Energy Act of 2008 was the sixteenth law in the United States that was referred to as a “farm bill” (Hyder). The 2008 bill, similar in intent to the Agricultural Marketing Act of 1929, was intended to subsidize farmers. The 2008 farm bill had an allocated amount of around $300 billion to cover agricultural related costs. This bill also was specific in that it covered a wide range of fruits and vegetables that had not been covered in previous versions of “Farm Bills” (Hyder).

The Farm Act of 2008 was also instrumental in creating the “Average Crop Revenue Election” program – also known as ACRE. This program provided better protection to farmers than previous programs. It gave the farmers more breathing room with subsidies as it paid out to farmers when they had a loss of revenue that could be directly attributed to crop failure, price fluctuations or other specific causes (Hyder).

Within the ACRE program, farmers may elect to receive revenue-based paments instead of price-based countercyclical payments. One of the other main benefits for those enrolled in ACRE – they had a 20% decrease in direct payments and a 30% decrease in marketing assistance loan rates (Cooper).

The bill had a big snafu in Congress. The bill had passed both houses of the Senate and was sent to President Bush to sign. Bush went ahead and vetoed the bill. However, the bill that Bush had vetoed was missing 30 pages from the Congressional version. As such, Congress had to revote on their bill which, again, passed. When the proper version of the bill reached President Bush’s desk, it was again vetoed. Bush’s veto was to the dismay of environmental and agricultural groups. Hundreds of groups sent formal requests to congress to override the veto, despite their own acknowledgement that the bill itself wasn’t “perfect”. The groups stated that the bill was a “carefully balanced and compromise of policy priorities that has broad support among organizations representing the nation’s agriculture, conservation, and nutrition interests” (Hyder). Eventually, Congress overrode Bush’s veto and the Farm Act of 2008 became law.

Since this bill, just like the Agricultural Marketing Act of 1929, subsided farmers, there were no shortage of critics. The European Union, for example, cited that the subsidies in the 2008 Farm Bill were a sign of growing American protectionism. They were seemingly in fear of a trade war after the 2007 food price crisis. Likewise, high tariff’s on imports such as sugar can-derived ethanol from Brazil was upsetting to trade partners who were being taxed heavily (Hyder).

The Duke Environmental Law & Policy Forum released a report about the 2008 Farm Bill. They specifically note the emergency nature of farm bills from the late 1920’s and early 1930’s to the current farm bills which are “monolithic legislation” of the current versions, including the 2008 Farm Bill. One of the issues that they cite with the 2008 Farm Bill is that it focused more on helping urban farmers for the local economy in those urban areas, especially the rust belt areas, rather than the rural farmers (Mersol-Barg 300).

Because the Farm Bill of 2008 did more to help urban farming, high operational costs in those areas can be considered part of the bills issues. Feasibility studies have shown that a 4.4-acre urban farm with $112,000 in revenue would still result in a loss (Mersol-Barg 287). That is where the government would step in – subsidizing the loss to result in the profit. This would benefit, mainly, only the local economy and not the U.S. economy.

Just as an economic disaster followed the 1929 Agricultural Marketing Act, one did with the  2008 Farm Bill as well. The Great Recession of 2008 occurred largely in part to subprime lending and bank failures. The Great Depression and “Black Tuesday” occurred within six months of the 1929 law being passed. The 2008 Farm Bill was passed just four months before the Lehman Brothers and other large banks begin to fall. Though both occurred just months before economic disasters, they were far from the main factor as to why the economy failed.
While a John Knott cartoon “And the Echo Answers: Where!” from 1930 had touched on the need for farm relief that had yet to arrive, this Marguiles cartoon touches on similar problems.

In the Knott cartoon, we see a drowning farmer with wheat and cotton being shown “flooded” by low prices. It is raining heavily, signaling the prices will seemingly decrease and the product demand will suffer even more. The farmer is asking where the relief for farms is because then-President Hoover, Congress and the Farm Board were largely unable to help them. In the 2008 cartoon, perhaps Bush helped them too much to the point of extreme comfort.

At the time that the Knott cartoon was published, the loophole in the Agricultural Marketing Act of 1929 had yet to be fully exploited. That loophole allowed farmers to grow as much as they wanted since the Government would purchase any of the excess crops.

In this 2008 Marguiles cartoon, it is obvious that the farmer subsidies were fully being exploited and therefore agricultural relief was still struggling because of the abuse. The humor in the Marguiles cartoon details the way that the farmers had grown comfortable with the bill. The cap for payment: $750,000. Any farmer making $749,999 or less was eligible to subsidy assistance. So, farmers found loopholes in the law that would allow them to still make a considerable amount of money even if they didn’t really need the money. So, by showing a farmer cozy in bed, it is the same as the farmer being cozy with government existence. They still made money off of their crops and the government stepped in to help fill the “void” in payment.

While nearly 80 years had passed between both laws, neither had worked out for very long. The two cartoons also show a similar pattern: Farm Relief has no easy solution. Throughout the 16 Farm Bills between 1929-2008, there is always need for a new bill to replace the old. The one constant theme, however, is that farmers are taking advantage of Government subsidies to build their wealth while not entirely delivering their end of the deal, though sometimes through no fault of their own.

 

Works Cited

Cooper, Joseph C. “Average Crop Revenue Election: A Revenue-Based Alternative to Price-Based Commodity Payment Programs.” American Journal of Agricultural Economics, vol. 92, no. 4, 2010, pp. 1214–1228. JSTOR, JSTOR, www.jstor.org/stable/40931076.

Marguiles , Jimmy. “Farming the Government .” Newsday, 2008.

Mersol-Barg, Amy E. “Urban Agriculture & the Modern Farm Bill: Cultivating Prosperity in America’s Rust Belt,” Duke Environmental Law & Policy Forum vol. 24, no. 1 (Fall 2013): p. 279-314.

Hyder, Joseph P. “Food, Conservation, and Energy Act of 2008.” Food: In Context, edited by Brenda Wilmoth Lerner and K. Lee Lerner, vol. 1, Gale, 2011, pp. 316-318. In Context Series. Science In Context, http://link.galegroup.com/apps/doc/CX1918600101/SCIC?u=txshracd2598&sid=SCIC&xid=380563ce. Accessed 15 Apr. 2018.

david

“And the Echo Answers: Where!”

The Agricultural Marketing Act of 1929 proved to be detrimental to the American agricultural industry. While the bill began with good intentions to help farmers, abuse soon became rampant and the U.S. Federal Government, specifically the Federal Farm Board, couldn’t keep up with increasing crop production. The 1929 law soon proved to be too much for the Government to handle when it came to subsidizing farmers across the United States.

This cartoon, titled “And Echo Answers: ‘Where!’”, by cartoonist John Knott, first appeared in the Dallas Morning Newson June 26, 1930. The cartoon, which was published during the early months of the infamous Great Depression, was in response to the Federal Farm Board. The Board, which was within the Herbert Hoover administration, was unable to rectify the declining markets for cotton and wheat. The two crops had fallen to a 7-year low just one year after enacting the Farm Bill. When Black Tuesday hit in 1929, the falling stock in cotton and wheat excelled at a rapid pace.

In the cartoon, we see a drowning farmer with “wheat” and “cotton” being “flooded” by low prices. It is raining heavily, signaling that the prices will seemingly decrease and the product demand will suffer even more. The farmer is asking where the relief for farms is because President Hoover, Congress and the Farm Board were largely unable to help them.

That is not to say, however, that President Hoover and Washington DC didn’t try. Several months before the market crashed, Hoover signed the “Agricultural Marketing Act of 1929.” The law was meant to address falling prices by allowing the Federal Government to purchase, sell and store excess crops from farmers and lend money to farmers in need. The revolving money allocated, approximately $150,000,000 , was intended to be loaned to farmers for buying seed, food and livestock to help maintain their livelihood should they fall on hard times (Joy).

Hoover didn’t necessarily intend to lend the money to farmers directly as he feared this would create dependence on the government. Instead, the Federal Farm Board lent money to co-operatives. Co-Operatives were established to be groups of farmers who pooled their resources together (Sibley 453).

The law, however, had a large loophole. When stocks were being dumped at alarming rates at the end of 1929 and beginning of 1930, the Federal Farm Board was unable to keep up with production (Sibley 454). Farmers were aware that the law never put in place a stipulation on how much the government would be forced to buy from them. Therefore, with no production limit, farmers overproduced to ensure that they would be paid. Farmers across the country, who still needed to provide for themselves, knew if they couldn’t see their crops privately, the government would still cut them a check. The law was designed specifically for a prosperous economy, not a failing one (Sibley 456).

Foreign trade was also declining across the globe due to the effects of the 1929 Stock Market crash. The government had to deal with the excess production issue domestically. While the government did have the right to sell the crops that they had bought, consumer spending in the United States was also in a steep decline. As well, wheat likely suffered due to Prohibition, the ban on manufacturing and sale of recreational alcohol. Eventually, the Farm Board ran out of money and the program had to be abolished.

One of the other contributing factors to economic decline was the Smoot-Hawley Tariff Act, enacted in 1930. The legislation put forward was an attempt to keep American farmers afloat and decrease foreign trade competitors during the agricultural issues during the end of the 1920’s (Riggs 1219). This tariff raised import taxes by approximately 20 percent and spiraled into an international trade war. This trade war was considered to be one of the leading factors that spiraled America into the Great Depression, all while decreasing trade by 66 percent within a five year period of its enactment (Riggs 1219).

Along with a declining import market, this also lead to declining export from the US agricultural industry. When Smoot-Hawley was actually signed into law, Great Britain, Canada and France – among others – immediately reduced exports. This subsequently negated anticipated gains, sales, revenues and in the end, profits (Beaudreau 300).

The Dust Bowl, which occurred during the mid-late 1930s, was also a problem that came later. It is believed to have been caused by years of low rainfall and unusually high temperatures (Schubert 1856). The combination of the poor farm conditions prior to the Agricultural Marketing Act, the onset of the great depression and the lack of trade caused by the Smoot-Hawley Tariff Act led to an unimaginable crisis. Farmers likely didn’t expect agricultural economy to get worse than it was in 1929, but it did within less than a decade (Schubert 1856).

The humor element in Knott’s cartoon is evoked using “Where’s farm relief?” which is asked by the farmer who is drowning. As well, the title draws attention for its use of an “echo answer.” An echo answer is when the verb in a question is restated, or echoed, in the response. The Depression era farmers were consistently asking “Where is farm relief?”. For most, there were no answer and the farmers echoed their anger as if to say “Yeah! WHERE is farm relief?”

While farmers were aware of the passage of the Agricultural Marketing Act of 1929, they were seemingly unaware at the massive failure occurring. As recently as 2008, agriculture continues to be a flaw in Government regulation due to overproduction and falling trade. The 16 farm bills that have been passed between 1929 and 2008 are a continued cyclical of an ongoing agricultural problem.

By: David Rubin

Works Cited

Beaudreau, B.C. Int Adv Econ Res (2017) 23: 295. https://doi.org/10.1007/s11294-017-9642-z

Joy, Mark S. “Agricultural Marketing Act of 1929.” The 1920s in America, edited by Carl Rollyson, Salem, 2012. Salem Online.

Knott, John. “And Echo Answers: ‘Where!”.” Dallas Morning News, 29 June 1930.

McElvaine, Robert S. Encyclopedia of the Great Depression. Gale, Cengage Learning, 2004. Gale Virtual Reference Library. EBSCOhost, ezproxy.lib.utexas.edu/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=nlebk&AN=100381&site=ehost-live.

Schubert, Siegfried D., et al. “On the Cause of the 1930s Dust Bowl.” Science, vol. 303, no. 5665, 2004, pp. 1855–1859. JSTOR, JSTOR, www.jstor.org/stable/3836515.

Sibley, Katherine A. S. “The Worsening of the Great Depression.” John Wiley & Sons, Inc, Hoboken, NJ, 2014.

“Smoot-Hawley Tariff Act (1930).” Gale Encyclopedia of U.S. Economic History, edited by Thomas Riggs, 2nd ed., vol. 3, Gale, 2015, p. 1219. Gale Virtual Reference Library, http://link.galegroup.com/apps/doc/CX3611000828/GVRL?u=txshracd2598&sid=GVRL&xid=117ab699. Accessed 16 Apr. 2018.