Title: What Are Commodity Crops and Why Do They Matter? | Hampden Park Food Cooperative | Saint Paul, MN
Headings: What Are Commodity Crops and Why Do They Matter?
What Are Commodity Crops and Why Do They Matter?
— by Lois Braun
How price supports work
Industrial ag gets involved
Politics and the Farm Bill
What's wrong with the system
A better way?
Resources
International Year of Cooperatives

Content: The result was overproduction and a 40% fall in prices. Commodity crop farmers called “Uncle!” and Congress bailed them out to the tune of $20 billion, largely in the form of counter-cyclical payments (the difference between market price and a target fair price) and direct payments (based on land base but decoupled from actual production). The 2002 and 2008 Farm Bills locked in this system, the cost of which is shouldered primarily by taxpayers, in contrast to the supply control systems it replaced, in which the cost was borne by the market. And that is the system we have today, as Congress starts to draft the 2012 Farm Bill. What's wrong with the system
There are many problems with this system, because subsidies are inherently market-distorting. 1) Because direct payments are tied to the land and not to production, they are often bid into land values, to the benefit of landowner, who are often absentee city dwellers, not farmers. High land prices are the primary reason it is so difficult for beginning farmers to get started. 2) They incentivize farmers to grow subsidized crops to the exclusion of non-subsidized crops, such as pasture, hay, vegetables, fruit, and nuts. That is why the Midwestern landscape is dominated by corn and soybeans, making it vulnerable to soil erosion, water contamination, and the pest problems that result from lack of diversity.