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Down on the Farm

The more John Kerry talks about farm policy, the less America's farmers like him.

8:45 AM, Oct 13, 2004 • By DAVE JUDAY
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FARM POLICY usually peaks as an issue in the presidential campaign a year before the election, in the run-up to the Iowa caucuses. But with Minnesota, Wisconsin, Iowa, and Ohio among the most fiercely contested of the battleground states, this year could be an exception.

John Kerry has been stumping across the heartland all summer, offering broad proposals to give "rural Americans the chance to build a better life for themselves and their children." A curious thing has happened, however. The more Kerry has talked about rural policy and federal farm programs, the more support Bush has gained from the sector. And this trend started a good two months before Bush's GOP convention bounce.

Kerry made his first big farm tour in early July, with stops in Wisconsin, Minnesota, Missouri, and Ohio. By late August, it was Bush who had received special recognition awards from the National Pork Producers Council, the National Association of Corn Growers, and an outright endorsement--the first ever bestowed by the group--from the National Cattlemen's Beef Association, all three major farm organizations with significant political clout.

Part of Kerry's problem, no doubt, is his foppish pandering. "I learned my first cuss word sitting on a tractor with the guy who was driving it," Kerry told a group of farmers in Wisconsin. But alas, this anecdote lost its intended effect when the Kerry campaign staff later clarified that his tutorial occurred when 12-year-old John was home on vacation from his Swiss boarding school--something most third- and fourth-generation Midwestern farmers don't relate to.

Or, consider this jewel, told to the same group of farmers, about how visiting his relatives' farm had made such a deep and profound impression on him, yet, not remembering until halfway through his yarn, that, heck, yes, now that he thought back, he had lived on a farm too! "When I was a kid, this 'kid from the East' had an aunt and uncle who had a dairy farm, and one of my greatest joys in life--in fact, I lived on a farm as a young kid. My parents, when we lived in Massachusetts, we lived on a farm." Yeah, that's the ticket! The Kerry family farm! (Kerry didn't mention whether he ever spent Christmas eve there.)

Most of Kerry's lack of footing with farm groups, though, is substantive. It has to do with what his Republican Senate colleague from Kansas, Pat Roberts, refers to as Kerry's habit of "wearing his flip-flops in the barnyard." The most prominent example is his 1996 call for the abolition of the Department of Agriculture--a position he no longer holds, of course.

On his July farm tour, Kerry was in Wisconsin to showcase another flip-flop--on the price-fixing scheme known as the Northeast Interstate Dairy Compact. Back in 1996, Kerry supported the creation of this economic Rube Goldberg contraption that authorized a panel of bureaucrats from six New England states to set a price floor for milk. The idea was to subsidize Vermont's picturesque small dairy farms. More efficient dairy producers, like those in Wisconsin and Minnesota, were unable to offset the higher transportation costs with their lower priced milk, and thus were effectively locked out of the northeast market. Moreover, the artificially high prices mandated by the compact spurred a surfeit of milk from the Northeast, depressing the market elsewhere. Needless to say, though now expired, the compact is still an extremely sore subject with dairymen in the Upper Midwest--it cost them considerable income.

Kerry is keenly aware that Gore won Wisconsin by less than 6,000 votes, and that there are nearly 17,000 dairy farms in the state, so he tried to preempt Republican use of his Senate record against him: "I know that Republicans are going to try very hard to say, 'Oh, John Kerry voted for that dairy compact when he represented Massachusetts. I plead guilty. I did vote for it, because I represented Massachusetts as a United States senator." But, as Democratic nominee for president, Kerry explained, he would "stand up for farmers in Wisconsin and Minnesota and Iowa."

What's astonishing, however, is that as a senator from Massachusetts Kerry felt compelled to support the compact in the first place. Massachusetts had only 353 dairy farms at the time the compact was created according to the USDA. What's more, the compact was primarily designed to subsidize Vermont dairy farmers at the expense of Massachusetts and Connecticut consumers. Indeed, from July 1997 to December 2000 while the compact was in effect, Massachusetts consumers paid an extra $63.2 million for milk, and 85 percent of that went to farmers out of state, primarily in Vermont.

The week that Kerry voted to extend the compact beyond its original three-year sunset date, even the Boston Globe editorialized against it, calling it "a particularly regressive policy in that the burden fell most heavily on the poor." The Globe continued, "It is typical of today's liberalism that many adherents will in effect tax the poor to try to preserve a lifestyle enjoyed by few. . . . All of New England will be well rid of this bad law."

Kerry's support for the compact points up another reason why he is falling flat in farm country--his utter cluelessness about the agricultural economy. Consider this: During a campaign stop in Missouri, Kerry called for a big boost for ethanol, the motor fuel additive made from corn. To characterize ethanol as wildly popular among corn farmers is an understatement. In fact, part of the stalemate in Congress over Bush's comprehensive energy plan can be attributed to partisan wrangling over who will get political credit for delivering the plan's mandate for the use of five billion gallons a year of "renewable fuel"--i.e. ethanol. But even the most ardent ethanol proponents realize there is a limit to its use, hence the generally agreed upon level of five billion gallons.

Kerry's plan calls for 20 percent of all U.S. motor fuel to be renewable by the year 2020--a level about 10 times greater than the energy bill's renewable fuels provision. While his "20 percent by 2020" slogan may sound catchy on the stump, it is absolutely absurd. If all the renewable fuel under Kerry's plan were to be corn ethanol, that would require 18 billion bushels of corn a year just for fuel. But the total world production of corn for all uses is only about 23 billion bushels a year. If just half of Kerry's ethanol mandate were to come from corn (currently the lowest cost source of ethanol), a full 9 billion bushels of corn would be destined for the internal combustion engine, rather than livestock feed or human food use. Though the United States is by far the world's largest corn producer, this year's record crop will amount to only 11 billion bushels.

If Kerry's energy proposal did not wipe out the U.S. livestock and meat industry--by diverting the corn it depends on from livestock feed to fuel pumps--his embrace of animal rights would. Kerry has been endorsed by the Humane Society of the United States, which opposes virtually all standard commercial livestock production practices. To earn the group's backing he's promised to end the use of preventative antibiotics for livestock, and to deny federal funds to buy eggs and chicken meat for the school lunch and breakfast programs from farms that do not employ so-called "humane" practices--an open-ended standard designed to regulate mass poultry production out of existence.

According to Kerry's completed questionnaire for the group, "I have fought for and secured an increase in funding for existing animal protection laws, including the Animal Welfare Act and the Humane Slaughter Act in recent years. I have cosponsored almost every piece of animal protection legislation." What of the Agriculture Department he once wanted to dismantle? Kerry now "finds it disturbing that there are only about 100 [USDA] inspectors nationwide to enforce the Animal Welfare Act. . . . More resources are desperately needed and under a Kerry Administration, dedicating the necessary resources would be a priority."

Economic regulation would also be a priority. A Kerry administration USDA would "take seriously their need to investigate price discrimination"--i.e., siding with farmers against their primary customers, the meatpackers and grain and dairy processors. For example, Kerry wants to forbid meat packers from purchasing livestock any earlier than two weeks before slaughter. A state requirement to that effect in Iowa, which the Des Moines Register called a "misguided effort to legislate nostalgia," was struck down by the courts. So was a similar stricture in South Dakota. But that doesn't deter Kerry.

The ownership ban is intended to limit meat packers' market power over producers. However, it will almost certainly backfire, and end up imposing more restrictions on producers than packers. Its real effect will be to limit the opportunities producers have to sell. Ultimately, livestock farmers have no marketing outlet other than meat packers; the timing of when they sell is a key profit-management tool. Limiting to a two week window the chance farmers have to recoup their two- to three-year investment in a meat animal will cost producers. Terry Stokes, CEO of the National Cattlemen's Beef Association, placed a 2002 congressional proposal by South Dakota Senator Tim Johnson, on which the Kerry plan is modeled, "in the same category as the Nixon price freeze . . . as far as its impact on the beef industry."

Kerry also promises to implement country-of-origin labeling of meat and food products, a pet project of Senate Democratic leader Tom Daschle and other northern tier populists. Congress included this provision in the 2002 farm bill but has had enough second thoughts that it has delayed implementation until 2006. Daschle has called the labeling mandate the "patriotic" thing to do, but the way the record-keeping burden of the provision is structured, it will simply provide an incentive for countries like Canada to export meat, rather than live animals, to the U.S. market.

Kerry is handicapped in his effort to win farm country by his "tin ear" for the tone of the agriculture economy. The packer ownership ban and the country of origin labeling mandate, for example, were products of a commodity price deflation a few years ago. Now the markets are up; the rural economy is good. Bush surrogates, like USDA Secretary Ann Veneman, can recite a litany of stats: record net cash farm income in 2003, record beef prices, record milk prices, projected record gross sales of farm products at $215 billion for 2004, projected record agricultural exports at $61.5 billion for 2004, record levels of equity on farm balance sheets.

Much of Kerry's agriculture policy agenda lays bare a lack of knowledge of the modern commercial farm economy, not only on the part of the candidate, but also, one must conclude, of his entire team of advisers as well. Perhaps that is not surprising for a man who was once Michael Dukakis's lieutenant governor. Remember then-candidate Dukakis's remark in Iowa during the 1988 presidential campaign that corn growers there should do what Massachusetts farmers did to boost profits: produce Belgian endive? The entire U.S. demand for endive is satisfied by about 3,000 acres. Iowa has about 37 million acres of farm land. And right now, they are all pretty profitable.

Dave Juday is an agricultural commodity market analyst.