Washington: Farm Fossil

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Not long ago, scientists discovered a giant fungus in Michigan that extends underground for many miles. It is apparently one of the oldest organisms on the planet, and possibly the largest. Americans were properly amazed.

Though it hasn't attracted much media attention, an equally unlikely relic—not as ancient but even more overgrown—exists today entirely above ground and in plain sight. This amazing organism is rooted in Washington, D.C., but has branches in almost every single county in the United States. It is not a fungus; it is more like a fossil. Its scientific name is the U.S. Department of Agriculture.

To trace the growth of this entity, let's transport ourselves back to 1933. Prohibition still reigns. There is no Social Security Act. Stalin rules the Soviet Union and Hitler has just become the German chancellor. Margaret Mitchell is working on a manuscript she will publish under the title Gone with the Wind and talking pictures have recently caught on. The Empire State Building has been open for two years.

Emergency measures, including production controls and price supports, are being imposed on the U.S. economy by new government agencies with titles like the NRA and the PWA. One-quarter of the nation's population still lives on farms, and Henry Wallace (who will run for president in 1948 on a platform of major social reform and friendship with Stalin's Russia) is setting up a radical new system of state-managed production in the agricultural sector. The New Deal farm programs are without precedent in the economic history of this country, and they produce constitutional as well as economic and political opposition.

Now fast forward to the early 1990s. The NRA and PWA have disappeared without a trace. The Works Progress Administration and Civilian Conservation Corp are long gone. And the agricultural sector has shrunk from a quarter of our population to just 2 percent.

Henry Wallace's U.S. Department of Agriculture, however, has changed remarkably little. The cropping and marketing controls are still in place. Prices are still set in government offices located on Independence Avenue in D.C. The bureaucracy is continuing to push a bulk-commodities production strategy even though global trade has long since shifted toward consumer-oriented and processed goods. "The department's structure and management practices have remained largely unchanged since the 1930s," concludes a 1991 study by the U.S. General Accounting Office.

Now that the GATT talkers have wandered miles from the original Reagan administration goal of free and unsubsidized international trade in agriculture (special credit to the French and Japanese farm-welfare queens for breaking up this rare chance to unsnare 60 years of worldwide bungling), here is one confident prediction about the Clinton administration: Agriculture Secretary Mike Espy, the Rhodes gang, and the Changemeister himself will achieve relatively little change in the federal agricultural apparatus.

Everyone knows that bureaucracies, especially bureaucracies that give away money, have a tendency to stay in place no matter what. And this one is really special. Reformers have been ricocheting uselessly off of U.S. farm programs under 11 different presidents now. Chances that the Clintonites—with their enthusiasm for industrial policies, national planning, environmentalist orchestration, and protection of industries "important to national security"—will be the ones to turn off the farm-regulation-and-subsidy tap would seem to be slim.

Interestingly enough, the private economic terrain that is overbossed by the Department of Agriculture has been utterly transformed in recent decades—changing more than almost any other major industry. The department, however, plods along in the same familiar rut. The major change in the department over the last 60 years is simply that it has gotten much bigger. It hasn't given up much of anything it used to do, but "USDA has added agencies and functions over time, making it larger," says the GAO.

The result: Big chunks within our agriculture department are now superfluous. There are hundreds of missions that ought to be dropped altogether. There are a thousand or more field offices that outside observers agree should be closed. (Unfortunately, Espy has suspended the Bush administration's plans to close 1,200 offices.) There are myriad responsibilities that could be spun off to the private sector.If there are any incoming congressional freshmen out there looking for useful work, here's a tip: The number of persons working on farms in this country fell 70 percent from 1950 to 1990. By rights, the ranks of federal agriculture department overseers should have fallen too. Instead, USDA staffing rose 53 percent. Would somebody please do something?

One reason the USDA is bulging even as its clientele is disappearing is that the department is being transformed into a multi-purpose agency of intervention, the way many Washington offices are these days: It's taking on new regulation-policing duties (inspecting occupational conditions and consumer products, enforcing a fast-growing list of environmental rules), plus ever-wider social-welfare responsibilities (disbursing food stamps, WIC subsidies to mothers, free meals to senior citizens and schoolchildren), while also serving as a handy porkbarrel conduit (through its management of "disaster relief" payments, Forest Service contracts, the credit slush funds of the Farmers Home Administration, and some research and extension services).

But even in its traditional farm programs, the USDA bureaucracy is continuing to grow in improbable ways. The number of full-time employees at the front-line agency that administers the big farm subsidies (the so-called ASCS, or Agricultural Stabilization and Conservation Service) increased by 24 percent from 1980 to 1990, despite the fact that the U.S. farm population fell by 24 percent over those same years. In all, the agriculture department now has one bureaucrat for every six full-time farmers.

The latest revelation to catch the attention of the small body of legislators working against USDA pork is the fact that the four agencies in charge of our major farm programs maintain a total of 11,042 different field offices across the country, requiring more than 63,000 person years and several billion dollars annually just in staffing expenses.

Our farm-support apparatus has offices in almost every one of the 3,150 U.S. counties at present, and in many cities too. "These elaborate field organizations," comments the GAO, "are primarily creations of the 1930s New Deal legislation, particularly of the philosophy that the federal government has a responsibility for the economy's performance." Almost 90 percent of the 127,000 persons who work full-time for the USDA, plus many part-time employees as well, micromanage from these local offices.

Certainly there is appeal in decentralization—in moving bureaucrats out closer to the people—and back in 1950 when 63 percent of all U.S. counties classified as farm counties a set-up like this may have made some sense. But today, when only 15 percent of all jurisdictions count as farm counties, this enormous field apparatus—which is one of the largest and most expensive in the entire federal government—is ludicrously wasteful.

Do 85 percent of our counties really need a branch of the bureau that makes crop-subsidy payments? Do 85 percent need an office of the Soil Conservation Service? Do 60 percent of our counties need a subsidized lending office of the Farmers Home Administration? When last calculated five fiscal years ago, the costs of keeping this administrative empire in place amounted to $1,100 for every farm in the nation (using the USDA's broad definition of a farm as any place having $1,000 or more of agricultural sales).

GAO investigators found that scores of local USDA branches actually spend more on overhead than they give out in program benefits. They calculated that 856 different ASCS county offices spent a total of $110 million in fiscal year 1989 in order to distribute $586 million in benefits—an average of 19 cents eaten up by bureaucratic expense for each dollar handed over to farmers.

They found that nearly all the farm program offices in New England are too inefficient to justify being kept open, as are three-quarters of the offices in North Carolina and Nevada, 90 percent of those in Virginia and West Virginia, two-thirds of those in Tennessee, Kentucky, and New Mexico, and so on. Consolidating these bureaus would net a quick, cool $100 million in reduced costs. Of course, the department is resisting the GAO hint.

And then there is the problem of these unpatronized bureaus creating work for themselves by dreaming up new places to channel public funds. The wealthiest county in the wealthiest state in the union—Fairfield, in Connecticut—has a USDA ASCS office that is desperate to give away money. Last year, not one county farmer enrolled land in a government crop-subsidy program, and county Executive Director Nancy Welsh is concerned lest Congress should close her office and consolidate it with some regional one nearby. "My personal goal is to sign up one farmer for the corn program," she recently told The Wall Street Journal.

Welsh also hopes to convince a few sheep farmers to enroll in the wool-subsidy program (which Congress set up to avoid a dangerous shortage of wool for military uniforms) and is trying to locate clients willing to have ASCS foot 75 percent of the bill for soil conservation and tree-thinning projects. "I see myself as a PR person," she relates. She did find one creative use for USDA funds last year: a $3,500 grant to the local horse-jumping club (where annual membership costs $20,000) to help defray one-quarter of the cost of a manure-loading dock.

There is no question that the USDA does lots of useful work—for instance, in its inspection services, much of its research and extension work, and some of its conservation efforts. But the agency also carries out lots of destructive market manipulation and is responsible for more regulatory intrusion every day. The department now has the third-largest civilian-agency budget in the federal government, and giant swatches of bureaus could be eliminated or spun off to private-sector providers to the benefit of taxpayers and agriculturalists alike.

Crops should be protected against natural disaster, for instance, via private insurance, not through ham-handed emergency appropriations by the secretary of agriculture or Congress. Likewise, the Farmers Home Administration's practice of forcing subsidized credit into hands that private lenders have turned down as bad risks is insane. There is almost nothing positive to be shown for this effort, and lots of competition distortions and lost money to argue for stopping it altogether.

Much agricultural research and extension could also be done on a more market-oriented basis, in the same way that technical progress is made in the joint corporate-academic research parks that surround many major universities today. Or, for a final example, forest management currently carried out clumsily by the Forest Service at a multibillion-dollar cost could be transferred instead to private corporations, without reducing recreational and other uses of the land.

Certainly most of the Agricultural Stabilization and Conservation Service, a central-planning relic that is not only outmoded but actually offensive in an era of educated producers and free markets, ought to be wiped out, along with the massive commodity-brokering agencies and producer cartels run by the feds to make their price-setting schemes work. To avoid sharp disruptions that would hurt farmers, crop subsidies and price-fixing mechanisms should be eliminated gradually—say over 10 years—and encouragement should be offered for more crop brokering, hedging, and price-stabilizing systems run by farmers themselves and other private entities.

Lots of private risk-spreading mechanisms already exist. Though you'd never know it from the popular farm-programs-or-bust rhetoric, only a minority of American agriculture is currently subsidized. Most sectors operate quite happily without benefit of government aid.

Many successful farmers now subscribe to electronic services that give them immediate information on prices, forecasts, foreign economic trends, and other factors that affect their business. They have access to private insurance schemes that didn't used to exist. Many have installed controlled-irrigation systems, indoor production facilities, and other equipment that reduce their vulnerability to the fates. I get lots of mailings these days from private companies that provide farmers with sophisticated software packages to monitor the milk output of their cows, or keep track of all fertilizer and pesticide use via tractor-mounted computers and receivers linked to the same Global Positioning System satellites that the Pentagon uses to send Tomahawk missiles down air vents. Farming today is not the miserable crap-shoot most Americans imagine.

And most farmers don't need the kind of help the USDA offers. Is there any possible justification for the fact that, in 1993 America, the price of milk is set by government employees working from an equation and set of rules that takes up three full volumes of the Code of Federal Regulations? Only one: This is the way things have been done for decades, and government agencies never make changes unless they have to.

As the GAO auditors put it delicately after their investigation of the agriculture department, "public organizations, whose funds derive from appropriations, do not have an objective indicator like sales or profits to compare resources used with results achieved….USDA agencies do not worry about competitors forcing them to downsize, close, or be taken over like the private sector." But legislators—and citizens—ought to.

Contributing Editor Karl Zinsmeister is an Ithaca, New York, writer and an adjunct scholar with the American Enterprise Institute. His REASON series on farm policy received the 1990 Oscar in Agriculture for excellence in agricultural reporting.

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