Congress is patting itself on the back for cutting the new agriculture bill down to about one trillion dollars over 10 years, but one can only wonder -- in a time of austerity -- why we are pumping more money into agriculture when our government is sinking in red ink.
If there is one sector of the U.S. economy that does not need federal aid, it is agriculture. Last year, U.S. farm exports topped $136.3 billion -- a record. Farmers are flush with cash as their incomes have risen more than 20 percent two years running and will probably do even better this year. Companies that manufacture advanced agricultural equipment are having trouble keeping up with demand. Not surprisingly a growing number of institutional investors are putting money into farmland, and many acres that had been idled are being brought back into use.
There are two major reasons for this boom. The first and most obvious is the growing worldwide demand as hundreds of millions of people around the world are making their way into the middle class and demanding a more sophisticated diet. Even people on the bottom rungs of the economic ladder, who cannot yet afford fancy cars and nice apartments, can afford to improve their eating habits.
The second reason is the extraordinary productivity of U.S. agriculture. We have devised ingenious techniques and machinery that enable us to get the most out of the land. Before World War II, it took 100 hours of human labor to product 100 bushels of corn; today it takes less than two hours. Agriculture Secretary Tom Vilsack said that in his lifetime, corn production has increased 400 percent, soybeans 1000 percent and wheat 100 percent.
Today's farmer rides around his property in a huge computerized combine that provides a steady stream of information to the farmer even as he harvests his crops - how many bushels an acre he is getting, how much moisture is involved, and how much he is leaving behind. The machine automatically adjusts its speed to accommodate the size of the crop. It has a GPS system to assure it is moving with the curvature of the land to maximize production.
The modern farmers is much more sophisticated than previous generations. He has studied chemistry and agronomy to take advantage of scientific breakthroughs that enable him to expand his production and protect the land. He keeps abreast of futures markets so he knows which crops are getting the best prices. And he is probably working on a family farm, too. Of all the farms in the U.S. in 2010 with more than $1 million in revenue, 88 percent were family farms, and they accounted for 79 percent of total production. He does not need federal aid.
Our hyper-productive farmers are producing unprecedented volumes of food. What they are not producing is jobs. A century ago, more than half the population worked on farms. Today, U.S. farms directly employ only about one million people, and probably half of them are low paid undocumented aliens. Modern farming simply does not need much human labor, and it doesn't need another trillion dollars from the government either. Anyone who wonders how we got into our current fiscal mess need look no further than this farm bill.
Jerry Jasinowski, an economist and author, served as President of the National Association of Manufacturers for 14 years and later The Manufacturing Institute. Jerry is available for speaking engagements.