Sherwin Yuki Hikida

Thomas Forster
Making Sausage: Food Policy Systems
12/16/2016
The Farming Dilemma
With the decline of the small American family farm over the past few decades, it is clear
that larger farming corporations are beginning to dominate the industry by driving other
competitors out of business. The margin of profitability between the cost of production and total
revenue is extremely low for small farms and can be attributed to several factors - inefficient
farming methods, monopolized markets make for less profit, and local markets are simply not
large enough to facilitate everyone. The capitalistic system that helped bring America much of its
success is the very system that is now shafting its people struggling to make ends meet. Is it
possible for small farmers to continue existing? Government aid can only do so much to alleviate
financial pressures within such a dynamic farm system.
Small, diversified farms are typically less efficient than large ones. Food grown on them
is more expensive due to a greater percent of labor and material costs. As farms get larger, it is
easier to invest in labor-saving machinery, technology, and specialized management, thus
production cost per unit goes down. With hectares of farmland, buying in bulk will ultimately
yield lower material costs when planting, caring for, and managing any farmland. Conventional
farming methods will call for different herbicides, fungicides, and pesticides to purchase while
unconventional/organic farmers will require additional labor. Small farmers have little chance
when it comes to competing and with large farms and with such difference in product pricing,
farmers market produce can be considered a luxury good. The idea that small farms ought to feed
the world is wishful thinking in that it would take many farms to make that happen and food
would become more expensive. Food by region would vary significantly; densely populated
areas where land is expensive or has poor weather conditions would inevitably have higher
prices.
Farmers are moreso price takers than makers as the market is what decides how much of
their yield they will be able to sell. With the current market dominated by the industry standard
created by large farms, the only variable to set smaller farms apart is the quality of their goods.
The issue here stems from the question, how much more should a consumer pay for a quality
product? Quantifying this value impossible as both the consumer and producer will have
different opinions. With such a huge disconnect between the consumer and the efforts to farm, it
makes it difficult to convince the price fairness of quality commodity goods.
Locals market share is extremely small at just under two percent and the farmers market
share is just a fraction of that. Although farmers direct sales through markets, farm stands, and
CSAs tripled from 1992 to 2007, from $404 million to $1.2 billion, they leveled off afterward
growing to only $1.3 billion in the following five years despite a large increase in farmers market
at the time, from 4,685 to 7,864. Expand local to include sales that go through channels to
local restaurants and markets, and the figure is larger at $4.8 billion in 2007 which is just over 1

percent of total farm sales. These direct sales are the main avenue by which small farmers are
generating their income. In 2015, the household median off-farm income was $67,500 and the
total median income was $76,735; that is 88 percent of farmer income coming off-farm. With the
low prices packaging and distribution companies pay for bulk produce from farmers, and how
much of the packaging process is automated via mechanized cleaning, preservation, and sorting,
it is a clear indication that they are the ones profiting the most from the food system. To combat
this, one possibility to balance the system is to have the government set fixed pricing on every
commodity purchasable by a direct distributor/processing plant. Doing so would allow farmers to
obtain more controlled profits but result in greater risks for industries down the line influenced
by market sales.
The issue when trying to cater to small farmers is the capitalistic ventures that America is
built upon. Every single aspect of the food chain, from farm to processing to distribution and to
market is a separate business entity where the main goal of each of these entities is to function at
a profit. This means that all of the revenue that would be generated by this system comes from
how efficiently resources can be pulled from the environment and how quickly they can be made
into a product. Therefore it would naturally make sense for farmers to pull a majority of the
profit as they are primarily responsible for the systems supply. However if this becomes the
case, then every single following institution suffers and the brunt of the costs ends with the
consumer.
To both alleviate consumer costs, which is the driving force for the food system, and
assist farm income, the roots of the problem need to be addressed - food waste and the
psychology behind aesthetic demands. We as consumers buy with our eyes; if a certain apple or
broccoli does not look a certain way, we will dig through the pile until we find one that pleases
us. This is also true in the restaurant business where customers demand a level of consistency,
uniformity, and quality among all of the dishes they order. As a result, chefs responsible for
inventory management will frequently return or decline produce and meats that do not meet their
standard. The glorification of food in mass media has led the greater portion of America to
believe that the food we buy must be perfect. If the food we buy does not match the image we
have in our heads, it becomes a reject of the system.
Because of this demand for quality by the consumer, farmers and food processors must
meet a strict industry standard. It is estimated that almost 40 percent of all fruits and vegetables
are lost between production, postharvest, processing, and distribution chains. In cases where
harvested produce does not make it to market, some foods are recycled and made into livestock
feed while a majority are dumped into landfills. Without a strong financial incentive to bring
defective foods to food banks and other avenues of recyclable use, farmers and industries alike
are unwilling to take the initiative and provide food relief. Because of this, equally nutritious and
perfectly edible produce can sometimes be left unharvested and plowed over due to the markets
inability to accommodate for such goods. A tint of yellow on a cauliflower head or just an inch
too large and it will be left to sit on the farm as wasted opportunity. Current policy systems allow
for tax breaks as incentives for industries to manage and donate unwanted produce, however

unless there is a direct involvement by the government to fund both the labor and distribution
aspects of excess food management, most industries will continue to depend on landfills.
Imperfect Produce is a business that operates in California that collects ugly produce
from locally grown farmers and ships boxes directly to customers homes at anywhere from 30 to
50 percent of the cost the one would expect from a grocery store. Promoting such a program like
this across America while raising public awareness of food waste and growing farm concerns is
another way governments at local levels can help farmers make use of their entire harvest while
keeping prices low for consumers. By including a food waste prevention campaign as part of
existing composting programs, governments will be able to encourage local businesses to adopt
better food practices through their existing business networks.
Small scale farmers have it extremely rough with the current food system. Politicians
claim to support small farmers, yet most farm subsidies go to the largest farms. Economist
Vincent Smith found that the largest 15 percent of farm businesses receive more than 85 percent
of all farm subsidies. With labor accounting to more than 70 percent of total costs to small
farmers, there is very little room for improvement in their profit margins. Material costs are a
price set by other industries, labor costs are dependent on state laws and in a time where the
allure of working in a city is greater than that of a farm, wages may be the only thing keeping
people from moving out of rural areas. Government subsidies are already in place to assist
farmers in the acquisition of land at little to no interest. In addition, crop insurance, agricultural
risk coverage, price loss coverage, disaster aid, and marketing loans are all other existing
subsidies that are in place and hope to eventually encompass all crops grown in the U.S. Fuel
costs are already at an all time low, and with the cost of alternative renewable energies dropping
every year, soon farmers may be able to eliminate fuel costs from their budget. With how offfarm avenues such as farmers markets and restaurant purchases account for a majority of their
income, until consumers can greatly shift the market to allow for large scale processors that
purchase directly from farmers to pay more dollars per truck/ton of produce, the future of small
farmers will continue to look grim.

Sources
https://www.agcensus.usda.gov/Publications/2012/Preliminary_Report/Highlights.pdf

http://www.npr.org/sections/thesalt/2015/06/17/414986650/to-tackle-food-waste-big-grocerychain-will-sell-produce-rejects
https://www.downsizinggovernment.org/agriculture/subsidies
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https://www.bloomberg.com/news/articles/2016-12-15/world-energy-hits-a-turning-point-solarthat-s-cheaper-than-wind
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http://www.usda.gov/wps/portal/usda/usdahome?contentidonly=true&contentid=organicresources-farmers.xml
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