Hypocritical Critics Flip Flop on Crop Prices

December 20, 2007

U.S. farm programs were recently being attacked by big-city editorial boards and farm policy critics for keeping commodity prices too low and, thus, harming developing countries. Now, with many agricultural commodity prices on an upswing, these same groups are complaining that prices are too high and, thus, harming developing countries.

Oxfam—the group that dropped $225,000 in an anti-farm bill advertising campaign—for years claimed that U.S. policies and resulting low crop prices were threatening the future of farmers from South America to South Africa.

In its 2003 briefing paper, Dumping Without Borders: How US Agricultural Policies are Destroying the Livelihoods of Mexican Corn Farmers, Oxfam painted this dire picture:

“Mexico has been growing corn for 10,000 years. But today the corn sector is in a state of acute crisis…For the 15 million Mexicans who depend on the crop, declining prices translate into declining incomes and increased hardship. Many people can no longer afford health care. Women have suffered disproportionately.”

New York Times had this to say:

“When Mexican corn farmers tramp through their fields behind donkey-drawn plows, they have one goal: to eke out a living. Increasingly, however, they find themselves saddled with mountains of unsold produce because farmers in Kansas and Nebraska sell their own corn in Mexico at prices well below those of the Mexicans. This is not primarily due to higher efficiency [editor’s note: U.S. farmers are much more efficient than Mexican farmers]. The Americans real advantage comes from huge taxpayer-provided subsidies that allow them to sell overseas at 20 percent below the actual cost of production. In other words, we subsidize our farmers so heavily that they can undersell poor competitors abroad.”

One would believe that Oxfam and the New York Times would be pleased that corn prices have been on the rise for the past couple of years. Wrong. The opposite is true as critics of farm policy have flip-flopped their position.

In November of last year, Oxfam put out another briefing paper, Bio-fueling Poverty, that claims ethanol production has led to an increase in commodity and food prices and is therefore harming the world’s poor:

“Perhaps more of a threat than rising food prices is increasing price volatility, as poor people, who spend upwards of 50 percent of their income on food, are able to adapt to shocks…biofuel consumption mandates, such as the 10 percent target of the EU, will only exacerbate volatility by making demand less responsive to price shocks.”

And just last week, the same New York Times that for years bashed American corn and wheat farmers for their low prices did an about face in a March 3 editorial:

“The world’s food situation is bleak, and shortsighted policies in the United States and other wealthy countries—which are diverting crops to environmentally dubious biofuels—bear much of the blame.“According to the United Nations Food and Agriculture Organization, the price of wheat is more than 80 percent higher than a year ago, and corn prices are up by a quarter…As usual, the brunt is falling disproportionately on the poor.”

Seems the critics of farm policy are just that—professional critics who can complain about anything and are impossible to please. First they want crop prices to rise, then they want prices to return to rock-bottom levels.

These groups need a serious lesson in economics. When commodity supplies are abundant, prices are lower; and when supplies are scarcer, prices rise. We wouldn’t expect Oxfam to be experts on economic principle, but we expect a little more from the hometown newspaper of Wall Street.