The Economics of Farming
To the Editor:
I regret that Asher Brynes’ “Economics of the Farm Problem” appeared in your August issue, for it is a poor month for a farmer to take the time to answer each of his provocative statements. But his use of the Conger dairy farm as “a splendid example” of the farmer unjustly bleeding the taxpayer is a blatant distortion. . . .
The facts which appear in Mrs. Conger’s article concerning the Congers’ income and net worth are as follows: the farm contains 720 acres, produces 1,000 quarts of milk per day, and receives an average price of 8.1 cents per quart. The herd consists of 100 head of registered Holstein milking cows and 100 young stock. The Congers grow 61 acres of wheat, and received in 1959 the loan price of $1.98 per bushel. Their sale of wheat was less than 9 per cent of their gross income. The farm is located in Southeastern Kansas, an area which has “poorer soil” than other sections of the state. Aside from an aerial photo of the farm there is no other “fact” presented. . . .
From the above Mr. Brynes assumes that the Holsteins are worth $600 apiece. As an owner of registered Holsteins, I would suggest that Mr. Brynes should be able to buy the Conger herd at an average price of no more than $300, perhaps less in Southeastern Kansas where the milk price appears to be quite low.
“Farmland,” writes Mr. Brynes, “averages $111 per acre. Since this is an unusually well run farm, the land is easily worth $125 an acre or $90,000.” He then assumes the buildings are worth $50,000 for a farm value of $140,000. The fly in the ointment is that the figure of $111 per acre for farmland includes improvements. . . . I suspect that if Mr. Brynes made a firm offer of $140,000 he might find himself the owner of the Conger dairy farm including stock and equipment and a radically changed point of view.
Mr. Brynes estimates a mortgage at $30,000 so “the Congers could sell out if they chose, for a quarter of a million dollars. . . . Thus in two thirds of the time it takes salaried persons employed by the government or industry to accumulate a retirement fund, the Congers have arrived. . .” Even assuming the validity of these figures, how can one compare a man who invests his savings in his own enterprise with a salaried employee? Would not a comparison with those who started their own manufacturing or retail firms in 1939 be more appropriate?
Using simple arithmetic, Mr. Brynes calculated the gross income of the Conger farm at $32,000, but objects to Mrs. Conger’s system of bookkeeping which involves deducting a fair investment return of 6 per cent on net working capital and 4 per cent on net fixed capital before figuring profit. According to Mrs. Conger, the farm made little if any profit since 1952. But if a more conventional accounting system were used, it is hard to believe that the farm made any profit at all on a gross income of $32,000.
The Congers must employ at least two full-time men plus part-time help at harvest. Using conservative estimates for wages, taxes, equipment, livestock and plant depreciation, feed concentrates, seed . . . etc., there is hardly room for profit.
The above assumptions are based on the same questionable premises that are used by Mr. Brynes. . . . My point is that an armchair analysis of a single dairy farm is a poor thing from which to generalize. . . .
The following is presented in more general rebuttal of Mr. Brynes’ thesis:
- National personal income rose 6 per cent in 1959 over 1958; agricultural income dropped 13 per cent—Commerce Department release of August 14.
- According to Washington statistics, the American family spends a smaller proportion of its income (including taxes for farm subsidies) for food—excluding processing and packaging—than before the current programs were inaugurated.
- “Every industrial nation in the world—that is, every rich society in the Western world—pays subsidies of one kind or another to agriculture. This does not make such subsidies ‘right,’ but it is strong presumptive evidence that agriculture cannot operate as an atomistic, free-market industry in a world of controls and administrative wage and price setting for other industries.”—Concluding paragraph of “Farm Policy: A Look Backward and Forward” by Lauren Soth in July 1960 issue of Social Research.
Ralph O. Samuel
To the Editor:
Mr. Brynes uses facts and figures to suit his purpose. For example, he claims that current annual expenditures for the support and subsidizing of agriculture are $6 billion. He disregards the fact that farmers are not the sole recipients of this money. The $6 billion includes sums spent for feeding school children, for emergency famine relief, for the delivery of food to friendly nations in exchange for local currencies, for food bartered for stockpile materials, etc.
Also misleading is the example of the net income of a prosperous dairy farmer in Kansas. Mr. Brynes uses this example because, being based on an article in the Saturday Evening Post, he found it convenient to do so. But it might have been even simpler to use official government figures. These show that dairy farmers are far from prosperous. Their yearly net incomes in 1958 ranged from $3,341 in Western Wisconsin to $4,810 in the Central Northeast.
Mr. Brynes found the basis for government assistance to farmers “in the place that farmers have traditionally occupied in the American scheme of things.” How would he explain the fact that most other Western nations subsidize their agricultural industries? He also overlooks the fact that subsidies, whether overt or hidden, are a characteristic of other segments of American economic life. . . .
Leon J. Steck
Washington, D. C.
To the Editor:
We were interested in Mr. Brynes’ use of the Conger material, particularly in the way he assumed that they could sell out for a quarter of a million dollars—and later moved the assumption into the status of fact. I don’t know what the Congers’ equity is worth, or what part of the equity comes from the rise in land values as compared to re-invested earnings, but I doubt it comes near this assumed figure. Also I doubt that non-milking heifers are worth the assumed value of $600. Also, the bookkeeping methods, which Mr. Brynes questioned, happen to be those developed and recommended by the farm management specialists of the Extension Service.
In any case, we think the article made Mrs. Conger’s case that even large, efficient farms of this type haven’t exactly prospered in recent times.
The Saturday Evening Post
Mr. Brynes writes:
The farm problem does have a way of getting wrapped up and hidden away from the scrutiny of city people by an all but impenetrable camouflage of complication. Here we have three responses to an effort to analyze it as a national issue. Let me remind readers of COMMENTARY that I said current farm legislation dates from the 30′s when a fourth of the population lived on farms. Today agriculture is a much larger industry than it was at that time, yet the farm population has fallen to less than a tenth, and the commercial farmers and their families who grow and market 85 per cent of our food and fiber number scarcely more than 3 per cent of the nation. There has been, obviously, a tremendous concentration of agricultural resources. And because the laws of the 30′s still prevail, there is a shameful neglect of the needs of low-income farmers, who vastly outnumber the commercial farm group.
I agree with Mr. Samuel and Mr. Bird that the analysis of a single dairy farm is a poor thing from which to generalize about farming. However, my valuation of the Conger farm was based on estimates of the various details made for me by the U.S.D.A. specialists here in Washington, D. C. I would enjoy setting them forth in full, but perhaps it will suffice to note that Mr. Samuel’s evaluation of the Conger farm is about two-thirds of my estimate, and Mrs. Conger’s own figure (in a separate communication forwarded to me by Mr. Bird) is two-thirds of Mr. Samuel’s.
It is more difficult to answer Mr. Steck because every statement he makes is questionable as to fact or inference. He does not even have the dollar figures on the “average” net incomes of two (out of five) types of dairy farmers straight. But anyway, as I indicated, averages such as these merely prove that some farmers should be in another business, and many need public aid.
My point, to put it plainly, is that capitalists have no right to relief at the public expense; and that the poorer farmers—our American peasantry who live in unbelievable squalor—most certainly do. If I may be permitted an expression of personal feeling, I don’t like to see the commercial farmers hogging practically all the public funds available for agriculture.
The way in which they have been able to accomplish this miracle of political juggling in our laboristic society is through their customary identification of labor income, wages, with entrepreneurial income, or profit. This mix-up enables commercial farmers to sit on assets worth many thousands of dollars, pay themselves interest on these assets, as investors, pay the family labor they use, as employers, and cry that their own “wages” are 75 cents an hour or some such figure. This is, of course, a good deal less than industrial or city workers receive, but they have no investment income and can’t hand out jobs to their dependents. So I still say it’s a political argument dressed up in bookkeeping terminology.