The Effect of Agricultural Practices on Society

Introduction

Governmental policies regarding agriculture have a strong effect on American society as these policies may affect what farmers grow, how crops are harvested, and what consumers eat. Every American depends on agriculture, therefore, policy regarding its practices will have widespread economic effects. Governmental policies regarding agriculture can economically affect society by subsidizing improper land utilization and obesity. Policy regarding the agricultural practice of using cheaper migrant labor may affect American society by lowering food prices and by introducing new participants to the American economy.

Subsidies

Agricultural subsidies such as the Farm Bill are a form of government policy that affect agricultural practices by determining production quantity, crop selection, and determining the local and global marketplace. Before 1973, subsidies were based on a loan system that controlled crop production. The current production system incentivizes over-production which violates World Trade Organization (WTO) trade rules. The current scheme is exemplary of the fourth principle of economics which is people respond to incentives as farmers are incentivized to overproduce in certain cases. By distorting trade, the policy cannot fulfill the fifth principle of economics which is that trade can make everyone better off. If the international market suffers, then the WTO could leverage sanctions against the United States. Distorted trade and sanctions are two externalities of the current system which may critically affect American society. Sections of the Farm Bill incentivize the production of unhealthy crops which negatively affects Americans by contributing to obesity and lung cancer. High fructose corn syrup (HFCS) has been identified as an ingredient in sweetened food and drinks that is higher in calories than costlier cane sugar. HFCS is a sweetener formed in the harvesting and production process of corn, which is heavily subsidized by the Farm Bill. Also, Tariff Quota Restrictions (TQR) on corn sweeteners make it so foreign sweeteners are harder to import, making HFCS cheaper and more accessible. If corn subsidies were eliminated, subsidies could be redirected toward healthier foods. Kammer (2011) stated the Farm Bill, “. . . exacerbates America’s epidemic of diabetes, obesity, and coronary diseases, contributes massively to healthcare costs…” A subsidy program also exists for tobacco farmers. 1982 legislation allows the tobacco industry to tax themselves to support others in the industry that might be struggling. However, Altman, Levine, Howard, and Hamilton (1997) state, “. . . the tobacco price support program be of no-net-cost to taxpayers. ”

Tobacco subsidies are no cost to individual taxpayers like other subsidies. Subsidies possess the latent function of land misuse and crop overproduction. Lobbying by the corn industry has allowed the flow of almost five billion dollars from taxpayers into the corn market which incentivizes farmers to plant more corn. A large share went to megafarms which grow corn to make ethanol, HFCS, and concentrated animal feed products. Several threatening externalities comes from these corn byproducts such as environmental harm from the ethanol fuel pollution to antibiotic resistant bacteria found on farms using concentrated corn grain animal feed. Recently, Congress cut the ethanol maize subsidy by 12%. It did so as ethanol is linked to deforestation and rising food prices. It also takes funding away from subsidies for nutritious crops. Due to the nature of the billion-dollar, comprehensive Farm Bill this cut on ethanol may never be enforced.

Subsidies may encourage land misuse through insurance programs covered by the Farm Bill such as “Price Loss Coverage (PLC). . . PLC pays when farm prices during the first five months of the crop year are below the reference price”. The Supplemental Coverage Operation (SCO) covers the insurance premiums of farmers by up to 65%. This system could be abused by reportedly selling below price to claim PLC and taking out an insurance claim against underperforming land in which most of the deductible is paid by SCO. A farmer could make as much money from coverage than actual crop yield, and they can insure up to 85% of their expected yield. Migrant LaborPolicies regarding the agricultural practice of using a migrant labor workforce have pros and cons. The primary government policy regarding agricultural labor practices is the H-2A visa. The H-2A visa grants foreign nonimmigrants the ability to work in agriculture as needed.

In recent years H-2A usage has been low due to the short work contract combined with the mandatory need to house the laborers. In fact, Guthman (2016) found, “As one grower noted, using H-2A would effectively make him a landlord as well as a grower. ” H-2A usage has rapidly increased in California from 2013 to 2015, and this rise may be attributed to the types of crops harvested or even hourly wages. With increases in wages and the number of H-2A workers, there is more money for migrants to spend in America. This system creates effective capital flow by introducing new market participants. The effort needed to utilize the H-2A program acts as a deterrent to utilizing H-2A labor. The H-2A labor force frequently clashes with domestic workers. Also, farmers are prohibited from being able to move H-2A workers between ranches. This results in a loss of productivity which is economically corrected by modifying planting strategy to improve worker happiness and crop yield.

Policy restricting dairies from using H-2A labor has not been reversed, therefore, dairies continue to utilize undocumented workers. As the federal government clamps down on the use of illegal workers, the inability of dairies to capitalize on the legal use of H-2A labor will result in economic downturn. This will negatively impact the industries dependent on dairy, increase consumer spending, and decrease tax revenue. Another downfall as Bent (2011) notes is, “…as farmers struggle to make ends meet…more are forced to abandon or sell a long-standing family tradition…”In relation to wages, Temel (2000) states, “Region-specific policies and/or regulations appear to play significant role in improving labor productivity in low-wage counties. ” This is instrumental to creating wage convergence which increases efficiency of US agricultural labor markets and causes convergence. Wage convergence is happening faster in places where labor is more available such as the South where more competition for labor exists. Policy regarding migrant labor such as the restrictive 1986 policy, the Immigration Reform and Control Act may increase labor costs as cheaper undocumented seasonal workers would now have to be replaced with unionized farm labor at higher wages. Economic models predict that convergence as a nation will happen as expensive products produced by skilled laborers are exported to the South and inexpensive products produced by unskilled laborers are exported to the North. Conversely, wage divergence is likely caused by new technology introduced in agriculture. Theoretically, agricultural prices and worker wages are more likely to stabilize as proper policy regarding agricultural practices normalizes agricultural costs forming a predictable market economy and equality among worker pay.

Conclusion

Government policies regarding agricultural practices have a negative effect on American society by incentivizing unhealthy crops and land misuse. Although market prices of subsidized crops may be cheaper, the long-term cost of dealing with health issues will have a profound effect on society. In respect to the H-2A program, the use of migrant workers lowers food prices and equalizes wages, but issues persist. A tangible economic connection exists between government policies and agricultural practices negatively affecting society. Subsidies that are harmful must be amended to reduce their impact, without inadvertently causing food insecurity. Legislation must make H-2A labor less restrictive to discourage illegal migration and reduce food prices. This action must be done with respect to not only the consumers and workers, but to the producers as any decision could trickle down to them. The conversation does not end at subsidies nor labor as policies that cause micro and macro higher order externalities such as those regarding distribution and utility usage could be analyzed henceforth.