It started in 1933.
The AAA – Agricultural Adjustment Act.
Here’s how I described it in my 5th volume of our state’s history:
Headed by Secretary of Agriculture, Harry A. Wallace – whose own father had held the same position under President Harding – the AAA started the process where farmers were given subsidies, or cash, to not grow crops or raise livestock or produce certain commodities.
The main thing that the AAA did in Montana was pay farmers not to grow certain crops. The reason for this was to get rid of crop surpluses, thus causing a rise in prices on the market. It might sound counterproductive, but the idea was to give that farmer a favorable market for his crops once again.
Agriculture was a big part of this, as were rural electric cooperatives. Montana’s M.L. Wilson was a key player in forming the AAA and he knew what the state needed from his time at Bozeman. What’s more, Chester Davis, a local farm newspaper editor, directed the program at one point.
The initial round of subsidies covered “cotton, wheat, corn, hogs, rice, tobacco, and milk.” To pay for the subsidies, the government raised taxes on those that processed the agricultural products. The AAA was very controversial, and the reason for this is because it was such a huge amount of waste. Crops were in the ground and ready to harvest in many cases. This necessitated complete destruction of those crops. Cotton farmers plowed under 10 million acres and received $200 million for their efforts. The resulting decline in supply drove up demand for cotton, and thus the price as well.
Wheat prices had fallen through the floor with the Depression. In 1929 a farmer could expect $1.05 a bushel, but by 1932 they were only getting $0.32 a bushel. Corn had fallen from $0.81 to $0.33 a bushel and cotton had dropped from $0.17 to $0.06 a pound.
After 1933, cotton prices doubled. Wheat farmers were spared the indignity of destroying their work because nature had done that for them. Hogs were a different matter, and 6 million pigs were slaughtered. This rubbed many the wrong way, and Boardman points out why:
“The plowing under of cotton and the slaughtering of all pigs (some made into pork sausage and distributed to people on relief) again pointed up the paradox of food and clothing materials being destroyed when thousands were hungry and in need of clothes. On the other hand, no one complained louder than certain textile manufacturers when it was proposed to give surplus cotton to the needy to make their own mattresses.”
For many, these changes meant 1934 and subsequent years could have many farmers back on their feet, able to go it alone, and without government subsidies. That was the idea at least. In reality, government subsidies to farmers have continued ever since.
The AAA was giving millions of dollars a year to Montana farmers. A lot of that money that came from the feds was spent on projects that helped people. The problem with this plan was that now Montana farmers didn’t have to work for their money. Indeed, they had to do the exact opposite of work. All they really had to do was stick their hand out and wait for Uncle Sam to come along and fill it. And fill it he did. From 1933 to 1937 almost 140,000 Montana farmers took part in the program. The yearly direct stimulus to them was between $4.5 million and $10 million. The national debt rose as a result.
Over the course of the 1930s, the federal debt grew from $16 billion to $40 billion, or an increase of 250%. In 1933 federal debt was 28% of total GDP. That wasn’t all bad for Montana, however, as Bill Skidmore makes clear:
“The AAA made nearly 140,000 contracts with Montana farmers between 1933 and 1937, an action that brought millions into the state annually. Farm Credit Administration loans had reached nearly $78 million in Montana by the middle of 1938.”
The AAA – Agricultural Adjustment Act.
Here’s how I described it in my 5th volume of our state’s history:
Headed by Secretary of Agriculture, Harry A. Wallace – whose own father had held the same position under President Harding – the AAA started the process where farmers were given subsidies, or cash, to not grow crops or raise livestock or produce certain commodities.
The main thing that the AAA did in Montana was pay farmers not to grow certain crops. The reason for this was to get rid of crop surpluses, thus causing a rise in prices on the market. It might sound counterproductive, but the idea was to give that farmer a favorable market for his crops once again.
Agriculture was a big part of this, as were rural electric cooperatives. Montana’s M.L. Wilson was a key player in forming the AAA and he knew what the state needed from his time at Bozeman. What’s more, Chester Davis, a local farm newspaper editor, directed the program at one point.
The initial round of subsidies covered “cotton, wheat, corn, hogs, rice, tobacco, and milk.” To pay for the subsidies, the government raised taxes on those that processed the agricultural products. The AAA was very controversial, and the reason for this is because it was such a huge amount of waste. Crops were in the ground and ready to harvest in many cases. This necessitated complete destruction of those crops. Cotton farmers plowed under 10 million acres and received $200 million for their efforts. The resulting decline in supply drove up demand for cotton, and thus the price as well.
Wheat prices had fallen through the floor with the Depression. In 1929 a farmer could expect $1.05 a bushel, but by 1932 they were only getting $0.32 a bushel. Corn had fallen from $0.81 to $0.33 a bushel and cotton had dropped from $0.17 to $0.06 a pound.
After 1933, cotton prices doubled. Wheat farmers were spared the indignity of destroying their work because nature had done that for them. Hogs were a different matter, and 6 million pigs were slaughtered. This rubbed many the wrong way, and Boardman points out why:
“The plowing under of cotton and the slaughtering of all pigs (some made into pork sausage and distributed to people on relief) again pointed up the paradox of food and clothing materials being destroyed when thousands were hungry and in need of clothes. On the other hand, no one complained louder than certain textile manufacturers when it was proposed to give surplus cotton to the needy to make their own mattresses.”
For many, these changes meant 1934 and subsequent years could have many farmers back on their feet, able to go it alone, and without government subsidies. That was the idea at least. In reality, government subsidies to farmers have continued ever since.
The AAA was giving millions of dollars a year to Montana farmers. A lot of that money that came from the feds was spent on projects that helped people. The problem with this plan was that now Montana farmers didn’t have to work for their money. Indeed, they had to do the exact opposite of work. All they really had to do was stick their hand out and wait for Uncle Sam to come along and fill it. And fill it he did. From 1933 to 1937 almost 140,000 Montana farmers took part in the program. The yearly direct stimulus to them was between $4.5 million and $10 million. The national debt rose as a result.
Over the course of the 1930s, the federal debt grew from $16 billion to $40 billion, or an increase of 250%. In 1933 federal debt was 28% of total GDP. That wasn’t all bad for Montana, however, as Bill Skidmore makes clear:
“The AAA made nearly 140,000 contracts with Montana farmers between 1933 and 1937, an action that brought millions into the state annually. Farm Credit Administration loans had reached nearly $78 million in Montana by the middle of 1938.”
All that history jargon is great…but why’s it matter?
Today a bushel of wheat is selling for $4.33. Corn is $3.65 and cotton goes for 69 cents a pound. Agriculture in Montana is a $3 billion a year business.
Farmers are doing pretty good…right?
Well…yes and no.
- Our farmers have the price supports for wheat that the Farm Bill gives them when it’s passed every 5 years.
- Our farmers get money for leaving fields fallow or practicing other conservation methods.
- Our farmers have easier access to credit to remain a viable going concern, and they have insurance options that mitigate crop losses.
Despite these benefits, we know that 62% of American farmers don’t receive anything from the Farm Bill.
But by golly, many do. Many here in Montana do. They get those benefits in the form of a direct check from Uncle Sam based on prior-year yields and acreage.
What Montana farmers and ranchers want is a guarantee that they’ll continue to receive that check when the Farm Bill comes up again in 2019.
A major sticking-point has always been food stamps, so much so that the program changed it’s name to SNAP to help get the bill through in 2013…though it didn’t make it that year.
Food stamps were probably a major reason why George W. Bush vetoed the Farm Bill in 2008, though Congress overrode him on that. The latest Farm Bill cost nearly $1 trillion.
It’s about $80 billion a year for food stamps. Around $14 billion is given to farmers.
Quite the difference.
Here in Montana we know that 74% of farmers rely on the Price Loss Coverage (PLC) that the federal government comes up with.
47,000 Montana farms partake of the Farm Bill, though that’s 4,000 fewer than the last 5-year cycle. Base acreage has also changed over the past cycle, with wheat falling off by nearly 10 million acres…though corn did increase by 13 million acres.
Senator Tester knows these numbers well.
He was going around the state a year ago, listening to farmers and also warning them that subsidies might vanish in the future.
A big issues was the bad case of the slows that the government has. If you lose your crops this year, you might not get a check until next year. Kinda makes it hard to pay the bills.
On top of this, we have price troughs for commodities right now, which is hurting wheat growers and ranchers. Many times, direct payments to farmers are dependent upon crops selling for a loss.
Conservation is another issue, with the latest Farm Bill cutting 8 million acres off the lists. That means farmers won’t be paid to leave fields untouched, something that helps with soil erosion and water quality issues, while also providing habitat for wildlife.
I hope I’ve been able to give you an idea of the Farm Bill, its history, and its impact on Montana.
Many in Washington view the Farm Bill as a government excess and waste. Many in Montana depend on it to get by. And as we saw, it’s not just farmers and ranchers but low-income families that depend on food stamps.
Montana’s rich in many things, but not so much when it comes to the money in our pocket.
The Farm Bill was created to help address that problem, and it’s passed every 5 years to keep it at bay. It doesn’t address root issues, but it does provide temporary assistance when needed.
The Farm Bill is a winning issue for Senator Tester, and Gianforte is also riding its coattails. It’ll be interesting to see how informed our U.S. House candidates are about this issue as well.
