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Mechanical Power  

 Today (1960) we have a fleet of 1.5 million tractors, trucks, cars, and  combines, plus many millions of electric motors on less than four million farms.  A recent estimate listed the mechanical power equipment of our farms at 115.6  million horsepower, all factories at 28.2 million horsepower and a11 railroads at  88.7 million horsepower. The result is a gigantic increase in all transportation on  the farm while transportation off the farm has mostly been taken over by others.  With oxen, horses, and mules practically gone, there is more speed, more power,  more versatility for the manpower on farms, having set free so much of it that,  for decades to come, less will be needed to feed a rapidly growing population. 

The value of the equipment of our farms including machinery and motor  vehicles has increased in the last 20 years from $3 billion to over $18 billion  current dollars, but in terms of work capacity and actual performance, immeasurably more. Of course, farmers buy more new machinery, not because they are  new gadgets or do more fancy stunts, but only and exclusively if, and when, all  costs per unit of work leave a clear net gain over the costs replaced.   

Improved Production Methods   

Simultaneous with the vigorous mechanization, the production per plant and  per acre of crops and per animal unit has been increased. Crop yields were  boosted by better cultural practices, improved seed, more efficient protection of  plants against weeds, rodents, insects, worms, bacteria, and fungi, but first and  last of all, by better feeding of the plants with more nutrients. Among the  nutrients, the key factor turned out to be nitrogen. This vital element in the  life-bearing proteins is mined with energy from the air by the world’s biggest  nitrogen producing industry in this country, where it serves as fertilizer, rocket  propellant, and base for chemicals. And since plants fed with more nitrogen have  rapidly increasing moisture requirements and burn up if they run short of it,  farmers applied more supplementary irrigation to break this bottleneck. According to European experience, one ton of nitrogen produces 1.5 to 20 tons of grain  equivalent. Our farm application of nitrogen has increased from next to zero in  prewar years to over two million tons, while simultaneously sprinkler irrigation  has spread into all states of the Union including the humid ones up to Maine .  This was due to the decline in the price of aluminum pipe and motor pump units.  The economic force that pushed this acceptance of better technology was again  the increasing spread between the costs per unit of nutrient of water applied to the  crop and the price per unit of product produced with it. 

For animal husbandry the same has happened. Animals are only converters of  feed. If one could produce cheaper feed by putting nitrogen in irrigated pastures,  he could produce milk or beef at lower cost, and with more profit if the price did  10 I The Farm Problem  not drop too much. But in addition, hybridization, antibiotics. better feed  mixtures, and other methods have helped to improve the input-output ratios. 

The aggregate impact of all this increased productivity is enormous and has  become the envy of the world. With their unique managerial talents, their  up-to-date equipment, and the unequaled services provided by the enterprises  and institutions of the rest of the economy, the American farmers have developed  their giant business to the greatest chemical industry in the world, that of  converting annually 280 million tons of roughage, succulent feed, and concentrates, plus a million acres of grazing forage, to animal products. This is  capitalism at its best, with the able capitalists in overalls on the tractors, or  hay-balers, or in the mechanical milking parlor. Many people do not know it, but  if government payments and surplus purchases are excluded, U. S. farms (1960)  earn $19 billion, or way over 60 per cent of their cash receipts, from sales of  livestock products. This is done with over 170 million grain-consuming animal  units and close to 100 million roughage-consuming animal units, or as much  “capital on the hoof” in live inventories as there is in machinery inventory,  namely, $18 billion in each. This is one of the secrets of success of U. S.  agriculture’s productivity: it has the capital, which it can depreciate, maintain, or  expand. In the Soviet orbit and many other countries of the world the rulers  squeeze every penny of capital out of agriculture in order to invest it in  publicly-owned industries, to the consequence of low productivity and waste of  natural resources. The greatest farm income support is rapid depreciation  allowance for farm machinery and breeding stock under the revenue code.   

American vs. Russian Output   

Let me sum up what this huge business of agriculture amounts to in terms of  output (1960). It produces in a year with no more than 8.5 per cent of the national  labor force, or 7.4 million workers, over 200 million tons of grain, 3 million tons  of sugar, over 20 million tons of meat and eggs, over 60 million tons of milk, 35  million tons of fruit and vegetables, or 315 million tom of edible products, plus  3.5 million tons of cotton, and nearly 1 million tom of tobacco. In order to  measure the magnitude of these figures I mention that after 40 years of a brutal  experiment of collectivization, Soviet Russia produces with 41/2 times the  number of farm workers (33 million) one-third as much meat (7 million tons) as  do our farmers; and even of grain, most of which they eat rather than feed to  livestock, they produce only 60 per cent as much as our output. This in spite of  an abundance of natural resources in Europe and Asia . One American farmer  produces food for himself and 24 others. A Soviet farmer produces enough for  himself and 4 others.   

Interference With the Markets  

Where then lies the hard core of our farm problem? What I have shown is that  while the urban people left behind what in retrospect sometimes looks like a lost  paradise, but was in reality an enormous amount of sweat and toil, o f drudgery  and disease, our agriculture of today is an extremely dynamic business world of  its own. The government has called it into action in two world wars and then for  the first war of the UN, that in Korea . In the three instances an assignment of  all-out production was achieved with guaranteed high prices, But when the  aftermath of World War I led to deflation and later the great industrial  depression, the Congress adopted a policy of farm income support in which fixed  prices were maintained by government purchase and disposal at a loss, combined  with acreage allotments and, in some cases, marketing quotas.

Since the support prices were deliberately set above the equilibrium level at  which demand would equal supply and since the government made an open-end  commitment to buy all that the market would not absorb, the farmers responded  generously to the incentive. The allotment control was defeated by intensification, i.e., by higher input. The marketing quotas were defeated as control  measures by shifting the surplus to other commodities. Our farm legislation has  about the same effect as if someone had jimmied the voting machine on which  the consumers could vote for what farm products they wanted, and how much of  them. In other words, the price signals are out of commission. 

Of the four million farms (1 960), roughly two million full-fledged commercial  units produce some 93 per cent of the marketed product. They have some  adjustment problems for a few commodities, particularly wheat, but are not in  any financial or income calamity. In fact, their business is by any standard  relatively satisfactory, especially if we look at the regular and substantial gain  accruing in their equity. These farms are one of the greatest assets this nation has  and its technology is the greatest asset of the West.  But we have serious problems among certain groups of the remaining two  million small, so-called low income farms, particularly in some retarded areas  like the Appalachians , the Piedmont , the Ozarks, and in the reforestation areas  of the upper Lake States. In general the two million small farms need outside  employment, mixing nonfarm and farm incomes. No one suggests their  abandonment as living quarters. It would be a serious mistake, however, to lump  the two million heterogeneous units as suffering alike from too-small incomes.  A large part of these are retirement and part-time farms which offer a most  desirable form of rural existence for people who have a security insured by  pensions, tax benefits, and a flow of part-time work income. The number of this  type of farm will grow in the future. They constitute no social or economic  problem.   

Jobs in Town  

 There are other farms where the people must avail themselves of the nearby  educational and training facilities to find better employment for their young  people. It still remains true that only the people themselves can make the  decision to move, to change to other occupations, or to undertake better farming  practices. Indeed, they are on their way. While farm operators earned $11.8  billion net income from farming last year (1959), the total farm population  earned an additional $8.5 million net income from farm work off the farm and  from nonagricultural sources. 

There is a serious legislative farm problem, definitely not an administrative  one. Our farms are by and large in fairly good health, ready to feed 200-, 250-,  or 300 million Americans in the future, and better than ever. The real farm  problem concerns the question as to how one can liberate the Treasury from the  burden of an impossible open-end commitment and a continuous misinvestment  in more and more grain without doing harm to the farm community and all those  who serve it. This disengagement from faulty legislation requires common sense,  a warm heart, and a cool head. It requires an honest businesslike approach and  due respect for the basic institutions on which the American economy stands or  falls and for the true stature of the farm business with its more than $200 billion  productive assets (1960). 

We have out-produced the Soviets many times over and have all the benefits  of our productivity, but we cannot borrow from them a compulsory production  control system which involves the cartelization of agriculture and all farm supply  industries without ruining our prosperous farming system. There are two ways of  becoming Sovietized: by conquest or subversion is one, by voluntary assimilation of their institutions is the other. 

Unfortunately, we have in our midst too many self-styled friends of the  farmers who know exactly what is good for other people and are yearning to  wield just enough power to prescribe from some office desk the recipe for the  social medicine the people have to swallow and the orders as to what they have  to do or not do. For my taste there is too much affluency in telling the farmers  and their suppliers what to do and telling the customers what not to spend their  money on.

 If we fall for giving these people too much leeway, they will go at it and try  to take the competitiveness out of our agriculture and with it its creative dynamic  quality. If I were farming right now, I would be tempted to say in these coming  weeks every now and then a silent prayer: Good Lord, protect me from my  friends; against my enemies I can defend myself.   

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Part Two

The Trouble With Farming

by Clarence B. Carson  

Dr. Clarence Carson’s roots lead back to his boyhood on a farm in Alabama , a  countryside then dotted with houses of small landowners, tenants, and dwellings  for hired laborers. Now those relics of a simpler life are gone. And as a skilled  student and teacher of American history, in all its aspects, Dr. Carson examines  this change with special reference to cotton growing in the Mississippi Delta and  the consequences of price supports, loan programs, and other aspects of our age  of inflation.  Dr. Carson has written extensively for The Freeman, this article having  appeared in May 1983. The most recent in his long list of books is the  five-volume series, A Basic History of the United States

This past December, I traveled with my family through north central  Mississippi and across the river northwestward into south central  Arkansas . The portion of the trip that made the deepest impression on  me was that which took us through what is called the Mississippi Delta.  The Delta stretches for the better part of 100 miles inland on either side of the  Mississippi river in this area, though somewhat wider on the Mississippi than the  Arkansas side. The land is table flat, and the road we were on was arrow straight,  bending only so much as was necessary to put it through the next town. The road  was raised three or four feet above the surrounding countryside, which was  fortunate for us. The countryside was flooded by unusually heavy winter rains,  and the flooding was enhanced by a blinding rain squall as we drove through one  of the more remote regions. When the ground is too full to soak up the water,  there is no place handy for it to go. 

This is farming country, though it was dormant at this season. More, it is  row-crop farming country. Few, if any, cattle or hogs were to be seen, and  woodland was rare. Twenty-five or thirty years ago, it was predominantly cotton  country. Cotton is still grown extensively-many stalks were still standing, with traces of lint hanging from the empty bolls-but the growing of grains,  especially soybeans, has widely supplanted cotton. 

The Mississippi Delta belongs geographically to a much vaster farming  region, extending from Minnesota in the north to Louisiana in the south and from  western Ohio in the east to eastern Colorado in the west. It is a vast fertile region,  much of it low lying to flat country with deep soil, well-suited in this age to  commercial farming.

It is the Mississippi valley, the low lying area through which the waters which  begin in the western Appalachians and the eastern Rockies flow into the  Mississippi , and thence to the sea. The region of the valley narrows from north  to south as the mountains recede in height and fan out into foothills which  channel the water along other courses to the Gulf of Mexico . The Mississippi   valley is sometimes called the heartland of America . It is certainly the  breadbasket, for most of the grain that feeds America is grown there.  The Mississippi Delta through which I traveled has undergone a major change  in the past two or three decades, a change that was very nearly completed by  1970, say. Although vast acreages of land are under cultivation now, the country  is sparsely inhabited. Houses are usually located a considerable distance from  one another; often, they are separated by a mile, or more, of farmland. Usually,  a single family dwelling sits alone, with the mechanical equipment for farming  nearby.   

An Agricultural Revolution   

Twenty-five or thirty years ago it would not have been possible for such a  small number of farmers to till these great acreages. This Mississippi Delta was  one of the major centers of cotton growing in the United States . Cotton required  intensive cultivation-it had to be hoed several times by hand-and many human  hands to harvest any considerable amount of it. Two major developments altered  these requirements. One was the development of herbicides to get rid of  unwanted weeds and grass. The other was the development of a mechanical  cotton picker. Along with this, there was increasing use of mechanical planters  and fertilizer distributors which could be extended across a wide carrying frame  to plant many rows. There also were larger cultivators. The reduction of hands  used was further accelerated in the 1960s by the extension of the minimum wage  to cover farm laborers. 

So it is that a countryside once dotted with houses of small landowners,  tenants, and dwellings for hired laborers is now sparsely settled by farmers who  rely almost exclusively upon heavy equipment to do the work. I looked in vain  for relics of these buildings. I noted none. There were reports in the 1960s that  they were burned to be rid of them. 

A similar change or transformation has occurred in farming throughout the  United States , though less dramatic than in cotton farming in most instances.  Here and there are still enclaves of farming which require intensive human care  and human hands and decisions in harvesting, such as in tobacco growing or in  the production and harvesting of some fruits and vegetables. By and large,  though, the extensive use of machines, the shift away from intensive use of  labor, and the cultivation of large acreages by single farm families has been the  trend throughout most of American agriculture.   

Fewer Farms-and Farmers  

  Statistics tell much of the story in abstract terms. According to census figures,  the total number of farms in the United States has declined from 6,102,000 in  1940 to 2,808,000 in 1980. The most drastic decline for any decade was in the  1950s, when the number of farms dropped from 5,388,000 in 1950 to 3,962,000  in 1960. The number of farms appears to have stabilized over the past decade or so.

The total farm population declined from 30,547,000 in 1940 to 8,864,000 in  1980. Again, the largest drop in farm population occurred in the 1950s, when it  declined from 23,048,000 in 1950 to 15,635,000 in 1960. The number of hired  farm workers (average) in 1920 was 3,391,000; in 1940, 2,679,000; in 1980,  1,303,000. The largest drop in hired farm workers occurred in the 1960s, which  coincides with the application of the minimum wage to them. Farms have been  increasing in size over the same period, of course, and it might go without saying  that they have generally been increasing precipitately in value. 

The main conclusion to be drawn from these facts is that fewer and fewer  people are farming more and more land (per farmer) by the use of more and more  equipment. Or, in formal economic terms, there has been a dramatic shift away  from labor in the economic mix to land and capital, especially capital. 

Moreover, not only are fewer people farming more land with more equipment,  but also they are producing more of many commodities than ever before. For  example, here is a description of production in 1981:  so.   

The corn crop of 8,080,000,000 bushels, or 205 million metric tons (t),  was the largest on record and 22% greater than the 1980 crop. All feed  grain production . . ~ was 240 million t, up 21% from . . . 1980. Also the  soybean crop of 2,110,000,000 bushels was the second largest crop on  record and . . . 18% larger than the 1980 crop. The U. S. wheat crop was  a record 2,750,000,000 bushels . . . , 377 million bushels more than in  1980. Cotton production of 14.8 million bales was 33% greater than in  1980. Hay production increased 5% over 1980, while pasture and range  conditions were 22% better than in 1980. Due to lower livestock prices  during the first half of 1980, the number of hogs raised, the number of  16 I The Farm Problem  cattle fed for beef, and the number of chickens raised were down slightly  (American Annual [Grolier, 1982], p. 78)  

  The production achieved by American farmers by way of this heady shift to  capital is surely little short of being one of the wonders of the modem world.  Moreover, the prices of farm products to consumers should generally be  reckoned as a bargain, compared to the prices of many other goods in an era of  rising prices.  

Signs of Distress  

  But there is a rather large worm in the apple of this farming Eden , which  brings us to the subject of this essay, the trouble with farming. Discontent among  farmers has been widespread and, perhaps, increasingly strident in recent years.  There have been tractorcades to some state capitals and to the national capital, confrontations with sheriffs at foreclosure sales, and dark threats of violence if something is not done to help farmers. 

The most common complaint is that farm prices are so low that large numbers of farmers cannot make ends meet. Stories surface after each crop year of  farmers who lost large sums of money. Nor are the difficulties restricted to  farmers in any one section of the country or producers of particular farm goods.  They range from dairy farmers to chicken and egg producers to grain and fiber farmers to cattle growers. 

Farmers are not noted, of course, for boasting about their great profits. Who  is? Those who work and produce rarely complain that they are overpaid or admit  that they are adequately compensated for their efforts. It could be, too, that when  farmers gather in the winter, bragging rights sometimes belong to the farmer who  had the largest losses during the year. But there is naught of exaggeration or  humor in the inability of farmers to make payments on their debts or the ensuing  bankruptcies and foreclosures. These last are widespread and increasing by all  accounts. Moreover, precipitately mounting farmer indebtedness signifies some- thing of the extent of the difficulties. 

Total farm real estate debt outstanding stood at slightly over $7 billion in 1953. At the end of 198 1, it stood at over $92 billion. There was a steady, though  not particularly dramatic, rise in farm real estate debt during the 1950s and  1960s. It began taking off in the 1970s and almost doubled between 1975 and  1981. Closer analysis shows, too, that the least well secured-most precarious-  portion of the indebtedness was increasing even more rapidly. Indebtedness to  the Farmer’s Home Administration, the lender of last resort for farmers, almost  doubled in the period 1979-198 1. These figures do not include the indebtedness  for shorter terms secured by farm equipment or “rollover” debts, not completely retired from year to year because the proceeds from the sale of produce were  insufficient. These add substantially to the overall debt.   

Contributing Factors     

A good many contributory reasons can be enumerated for short-term difficulties of farmers in general and those of individual farmers here and there in particular. Most likely, some farmers who go bankrupt or have their farms  foreclosed are ineffective managers. Some are what economists call marginal, or  on their way to becoming sub-marginal, farmers. 

More broadly, there have been fluctuations and changes which had an impact  on farmers generally. One was the oil embargo of the Arab countries and the  subsequent steep rise in oil prices. This development not only drove fuel prices  up but also the prices of such things as fertilizer, pesticides, and herbicides.  Another development has been the sharp rise in interest rates in recent years.  Embargoes on grain shipments to communist countries have aggravated the  situation for grain growers also. It can be added that, of course, farming is a risky  business, and the vagaries of weather, of pests, and diseases contribute to the  fluctuations in farm production. 

These, and like, explanations might suffice if the trouble with farming were  temporary or episodic. But some of the signs, especially mounting indebtedness,  point to persistent and increasing difficulty. Moreover, if it were simply a market  phenomenon, we might expect that farmers would make the necessary adjustments of production to demand to get prices that would enable those who stayed  in the business to prosper. But it is not simply a market phenomenon, certainly  not of the free market anyway. None of the developments discussed above were  simply responses to the free market: not the dramatic shift from extensive labor  toward capital, not the enlargement of farms, not the buying of ever larger and  more expensive farm equipment, not the mounting indebtedness.

All these occurred in a framework of government tampering, intervention, restriction, subsidization, and tacit inducement. Farmers have been propelled, as  it were, in the direction they have taken, including producing more than could be  profitably sold, by government programs over the years. That is not to say that  some of the developments, such as the shift toward capital by the use of large and  specialized machines, would not have taken place, sooner or later, without the  intervention. But it is most unlikely that the changes would have occurred so  swiftly, so dramatically, or so extensively if the market had been the sole  prompter of them. That is a way of saying that it is most unlikely that farmers  would have been caught in their present bind by the workings of a free market.  At any rate, that is not the way it happened. 

Although there have been many government programs over the years which  affected farming more or less in a variety of ways, I want to focus on three  categories of programs which have the most direct bearing on the present  situation. They are price supports, crop and production restrictions, and easy  credit. While easy credit is at the heart o f the present farmer difficulties, other  programs provide an essential part of the background and highlight some of the  fallacies which underlie them.