Organic and Small Farms Are Beautiful, but That Does Not Excuse Federal Policy Favors

Key Points

• Growing political pressures for federal subsidies and regulations to shift food-supply incentives toward favored farms and farm practices may divert food producers from meeting the needs of the vast majority of families.
• Organic and small local farms produce foods with costly attributes that increasingly appeal to wealthy consumers, who can access and afford these products without subsidies or regulations that benefit the producers.
• Government’s role in food policy should be promoting public goods such as improved environmental outcomes, nutrition, and food security for the most vulnerable adults and children. Farm- and food-policy mission creep is problematic when the products being subsidized are only affordable to some.

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Introduction

Nine decades after the passage of the New Deal, many farm-subsidy and regulatory programs continue to search for a sound public policy rationale.¹ It seems income transfer from taxpayers and consumers to farm operators and asset owners, roughly in proportion to the farms’ production of favored commodities, no longer commands the support it once did. However, as the United States transitions from traditional price and income-support programs, new interest groups seek to divert federal resources from public goods such as improving environmental outcomes, reducing food fraud, promoting nutrition and food safety, and offering income assistance and access to healthy diets to those families most vulnerable to food insecurity.

To be clear, this report does not object to policies that cost-effectively improve farm animal treatment, food safety, and food quality; mitigate climate change; or advance other worthy public goals. Those policy objectives have broad support. The problem is special government favors for farm practices or farms that produce a tiny amount of the nation’s farm output and food supply that generally costs much more than conventional farm produce, with no evidence that the favored farms and practices contribute to accepted public-good objectives.

Likewise, there is no issue with allowing vigorous market competition to deliver farm products with attributes for which consumers are willing to pay. However, government should avoid tilting the scales of competition toward product attributes that politicians and influential activists favor instead of letting suppliers respond directly and effectively to consumers.

Similar concerns relate to many favored farm characteristics, farm practices, and food attributes. Specifically, this report discusses organic agriculture and small farms, for which many policies, proposals, and relatively reliable and publicly available data exist.

This report expresses no expert views on specific contributions of small farms and organic practices to environmental outcomes or other external costs and benefits. Organic farms may or may not help the environment, just as small farms may or may not contribute to community cohesion. But government should focus on legitimate public interests, not allocate public resources to specific products and practices that should win or lose based on their ability to compete in the marketplace.

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Notes

1. See, for example, D. Gale Johnson, “Government and Agriculture: Is Agriculture a Special Case?,” Journal of Law and Economics 1 (October 1958): 122–36, https://www.journals.uchicago.edu/doi/10.1086/466546; and Joseph W. Glauber, Daniel A. Sumner, and Parke E. Wilde, Poverty, Hunger, and US Agricultural Policy: Do Farm Programs Affect the Nutrition of Poor Americans?, American Enterprise Institute, January 9, 2017, https://www.aei.org/research-products/report/poverty-hunger-and-us-agricultural-policy-do-farm-programs-affect-the-nutrition-of-poor-americans.
2. The 1990 Farm Bill is formally titled Food, Agriculture, Conservation, and Trade Act of 1990, Pub. L. No. 101-624.