“I think Cargill’s view is much like the European view, or the Japanese view. They generally regard the United States as a grain colony.”
– Bob Bergland, former US Secretary of Agriculture (quoted from Ralph Nader’s The Big Boys)
It was no accident that Franklin Roosevelt’s proposed “second bill of rights” contained within it’s short list of particulars:
- The right to a useful and remunerative job in the industries or shops or farms or mines of the nation;
- The right of every farmer to raise and sell his products at a return which will give him and his family a decent living; and
- The right of every businessman, large and small, to trade in an atmosphere of freedom from unfair competition and domination by monopolies at home or abroad.
A key component of the transition from pre-war depression to post-war prosperity had nothing to do with the war, but with the now little-known “Steagall Amendment” attached to a 1941 defense act.
The amendment established the first “parity price” for basic agricultural commodities. In effect, this meant that the price a farmer received for his produce was based not on the going market price, but the cost of production. For the first time in decades, parity gave farmers the stability to plan next years’ harvest, and the profitability to pay off debts and invest in the future.
Carl Wilken, whose work is explored in depth in the late Acres, USA editor Charles Walters’ Unforgiven, showed with historical data that farm income has a natural price relationship (~1:7) with earned national income. When farmers receive their due, as in the period of 1946-1950, they invest in machinery, labor and efficiency. Every dollar of farm income circulates through the economy as the credit that provides seven dollars of wages, profits and capital investment. When farmers are underpaid, the real economy contracts accordingly, and debt takes its place.
*All data from Unforgiven by Charles Walters
Various parity rates, all near 100%, were enacted throughout the 1940s, and officially ended in 1953 under Eisenhower. Data on farm income, national income and debt shows the 1950s and 60s in America not as a true boom time for earned income, but a hangover from the protectionist 1940s, beneath an ever-expanding debt bubble that finally burst in the 1970s, giving way to financial speculation, free trade and globalization.
The Agricultural Cartel
The “amber waves of grain” sweeping across America’s oceanic plains account for nearly half the world’s grain exports, much of the world’s livestock feed, a huge domestic market and a growing bioethanol industry. Atop this harvest sits a small cartel of grain traders, dominated by Minneapolis-based Cargill.
Cargill is America’s largest private corporation, dominates global grain trading, and is a key player in shipping, milling and other integrated services. The company and its activities are notoriously opaque. It was profiled in some depth in Dan Morgan’s excellent Merchants of Grain and has been connected by Executive Intelligence Review to the British oligarchy’s larger network of natural resource cartels.
Cargill’s business model is typical of the “free market,” and can be seen in the oil and mineral cartels. The company does not produce grain, but purchases it from “independent” farmers through futures contracts. By dominating on-the-ground intelligence (which is protected by its status as a private corporation) about global grain planting, harvest and logistics, it profits by keeping purchase prices low, bidding up the value of its purchase or betting against itself in the futures markets, and skimming off currency exchange rates as it flash-trades the harvest among a network of front companies located in offshore tax havens.
The effect of Cargill on the economy is to keep the farmer uncertain, on the edge of bankruptcy, and dependent on cash payments from the US farm bill, which should be seen not as a bailout of farmers, but of the grain cartel.
This cartel model in agriculture was set back during the decade of parity, and regained strength as “free trade” grew to dominate nations during the second half of the 20th century.
How to kill the grain cartel and Monsanto, put 2 million farmers back on the land and stabilize the national economy with a one-page law
The basic model of the Steagall amendment can be reinstated immediately, using interest-free credit from either a new national bank, or from the politically weakened Federal Reserve, as Roosevelt had done. It should be stressed that none of this is possible in a deflationary system like the gold standard.
1. Calculate average production costs (parity) for key commodities like corn, wheat, potatoes, oils, etc.
As I have found myself, searching the USDA and IRS figures for production and price is no small task or great help. Unforgiven chronicles the efforts of Carl Wilken and others over many decades just to assemble good data. Former federal agencies like the customs bureau and USDA have long been turned into rubber stamps for corporate interest.
2. Guarantee the purchase of those commodities at rates at or above 100% of parity.
3. Purchase, as needed, and re-market, with any needed subsidies, those commodities.
These commodities would be re-sold into market auctions, stored as much-needed grain reserves, issued as direct foreign aid to places like subsaharan Africa, and/or used to balance foreign trade with nations like China.
I have not found or assembled data to suggest how the price-to-consumer would change before and after parity. Because food prices are so heavily affected by market manipulation, a new parity law would have to err on the side of caution (ie 110% of cost estimates) and settle in over the course of several years. I assume that selling (for example) fairly-priced organic potatoes through a nationalized grain marketing facility would require some initial subsidy to prevent McDonald’s fries from increasing in price. The added national debt would eventually be canceled by the increased economic activity and tax income from adding more and less-concentrated farms to provide this production.
A parity law could:
- Kill GMOs. Simply add standards that will only purchase non-GMO grain. This will in fact be necessary to use these subsidized commodities for trade with nations that ban or label GMO food.
- Restore family-scale farms. Under the parity period of the 1940s, midwestern farms averaged about 40 acres, typically with a grain cash crop, and integrated hay, meat and/or produce sales. Today, 2,000 acre industrial-scale operations proliferate – with such low prices, this is the only scale able to produce cheaply enough for the market. Imagine the impact of having 50 independent farm families tomorrow for every one today.
- Promote sustainable agriculture. Any sane agronomist, ecologist or farmer will admit that organic methods are better for the farm, the farmer and the consumer, and that we have long passed the point of diminishing returns for scale and efficiency. But beyond a small, privileged class of consumers, the market demand for organic food is not high enough to grow the farm economy. Organic food will never be widely grown or consumed by the general public until it is subsidized. Simply set parity accordingly higher for organic grain, and preferably reinstate a program like FDR’s Civilian Conservation Corps to help bring state-of-the-art agronomic methods to America’s countryside. We need to bring the cost of organic production down and create more opportunities for the virtual slave labor farmworkers, even in organics, to start their own family farms.
- Return investment capital to the real economy. Parity will fatally weaken the grain cartel and commodities futures markets, which is why it has been effectively swept under the rug of history. Imagine putting $tens of billions back into the hands of farmers who will establish local credit unions, small-town economies, privately owned commodity storage and processing facilities, and who will create an explosion of demand for small tractors, pumps, fencing and other capital equipment.
Parity today, prosperity tomorrow
It’s admittedly difficult to imagine many of our current elected officials voting for a law to take power from a global cartel and give it to family farmers. But what are the grounds for opposing parity for farms and other areas of the economy? It doesn’t raise costs to the consumer, it liquidates its own debt, creates millions of jobs, improves food quality and grows the economy. Parity price is not based on technocratic projections, but on a simple yearly balance sheet. As efficiency improves, prices drop. Parity is a “free market” within a protected price. The only losers are Cargill, Monsanto and commodity speculators, all of whom are parasites on the real economy.
To quote Benjamin Franklin:
“There seem to be but three ways for a nation to acquire wealth. The first is by war, as the Romans did, in plundering their conquered neighbors. This is robbery. The second by commerce, which is generally cheating. The third by agriculture, the only honest way, wherein man receives a real increase of the seed thrown into the ground, in a kind of continual miracle, wrought by the hand of God in his favor, as a reward for his innocent life and his virtuous industry.”