Although Indian policymakers and economists have learned no lesson from the failure of market reforms in American agriculture, and even after the repeal of the three controversial farm bills, they still reiterate that the supply- demand leads to price discovery. Market dynamics have once again prevented American farmers from earning a decent living.
This time, it is the breeders’ turn.
Even US President Joe Biden acknowledges the fiasco. In a statement, he said: “Fifty years ago ranchers got 60 cents of every dollar families spent on beef. Today they receive about 39 cents. Fifty years ago, hog producers received 48 to 50 cents for every dollar spent by the consumer. Today it is around 19 cents. And big companies are making huge profits. This comes at a time when the United States Department of Agriculture (USDA) estimates that beef prices have climbed 21%, pork prices 17% and chicken prices 8% over the year. .
President Biden added, “As their profits go up, the prices at the grocery stores go up tremendously; the prices that farmers receive for the product they bring to market go down. To explain, US Secretary of Agriculture Tom Vilsack responded in a tweet, saying, “This summer I met a farmer in Iowa who told me he lost $150 per head by selling cattle to a processor who would end up earning $1,800 per head.” Imagine the kind of profits meat processing companies make while reducing farmers’ incomes.
In India, the arhtiyas (commissioners) and profiteering traders can certainly be blamed for exploiting farmers; the four meat processing giants controlling 85% of the US meat industry are actually the biggest middlemen, no less than the big sharks. In India, there is a concerted campaign to discredit the arhtiya, in turn advocating to bring in agribusiness companies. It is certainly necessary to regulate intermediaries, but the American experience shows how the consolidation of the meat industry, leading to the concentration of the market over the years in the hands of one
a few large companies, the fact
difficult for breeders
to survive. With prices falling over the years, generations of families who raised cattle, pigs and chicken are broke and facing exodus. As rural communities were wiped out, the “farm to fork” experiment only further developed industrial agriculture.
The collapse of American agriculture is living testimony to the destruction wrought by free markets in agriculture, and even worse the denial of the failure of the supply-demand balance to ensure fair prices for farmers. This happened earlier with agricultural products, with the dairy industry and now with animal husbandry. Consolidation occurs throughout the supply chain, from agricultural inputs to the retail market. In fact, concentration leads to monopolization and power, and the cartels these conglomerates form end up ruthlessly exploiting both producer and consumer. Faced with multinational corporations extracting their pound of flesh, the National Farmers Union of the United States is waging a nationwide campaign, “Fairness for Farmers,” to break up corporate monopolies and ensure tougher enforcement of anti-trust laws. .
The US government reacted. President Biden has called for a crackdown on what some major players in the economy are doing that are keeping prices high. To start with, the government has allocated $1 billion for investments in small meat processing units to enable ranchers to compete with industry giants. Not a perfect solution, but at least an acknowledgment of the devastation that corporate monopolies inflict on both ends of the supply chain – producers as well as consumers. The best way, however, would have been to guarantee prices to producers of agricultural products and livestock. Seeking income parity was also demanded by the massive tractor demonstration that took place in Washington DC in 1979.
Indian farmers are also demanding a guaranteed price as part of a legal sanctity of the minimum support price (MSP), ensuring that no trade is allowed below benchmark prices. Ditto in Europe, where farmers have repeatedly demonstrated for a guaranteed fair price to get them out of the lingering crisis.
The decline in agricultural income over the past decades has been the main reason that led to the global agricultural crisis. For example, in 2005, the National Farmers Union of Canada, in a detailed brief on The Farm Crisis: Its Causes and Solutions, explained the reasons for the unprecedented farm income crisis the world was witnessing for 20 years. Between 1985 and 2005, agricultural income remained in the negative zone. This is exactly what UNCTAD had also highlighted in one of its studies acknowledging that farm gate prices, once adjusted for inflation, remained static around the world during the 20 year.
Acknowledging that “the agricultural crisis landed with vengeance in the highly regulated agricultural economies of Europe and with equal ferocity in relatively unregulated Australia and Argentina,” the Canadian NFU lamented that the prices farmers were getting in 2005 were much lower than years. of the Great Depression in the 1930s. And that too at a time when the world was experiencing impressive economic growth, a booming stock market, growing trade and record grain production. Among the package of 16 plans he suggested as a solution to the growing crisis, securing farm incomes topped the list.
Canada’s NFU then called on the government to implement a farm income support program that would ensure that at least 95% of farmers recover their costs of production, including reasonable returns on labour, management and investment. But as in America, the Canadian government too has ignored farmers’ legitimate call for a guaranteed price. This is mainly because mainstream economic thinking around the world has failed to recognize the dire need to provide farmers with a decent income. As a result, farmers around the world bear the burden of food production at a loss.