It seems that legislation is proving to be ineffective in relieving smaller farmers from their plight because of market forces. The increase in operating cost takes its toll on farmers and no amount of subsidy is going to counteract or manage to dent market forces. But there is something into what Murphy points to as the entrepreneurial spirit. In an interview with George Simon, 52-year old CEO of a farming cooperative he relates the success story of like-minded farmers (Murphy 22).
The cooperative formed in 1988 and has devoted itself to growing organic, pesticide-free produce and has grown since. In 1997, the cooperative of 700 families nationwide posted $20 million in revenues and has managed to nudge this up to a whopping $208 million in 2004. Obviously, there is a demand for their products and the market, according to Murphy, has grown considerably for the past years. George Simeon relates that today’s farmers are college educated and swelling with entrepreneurial spirit.
The interview proceeds to relate that the cooperative’s business model makes it so that they have practically escaped and remain unscathed by the boom-and-bust cycle that plagues so many other farmers and make them susceptible and in need of government intervention. The business model further capitalizes on the want and need of consumers for naturally grown food, which they pay a premium to get. The business cycle is thrown out of the equation as the cooperative has power to control prices as compared to farmers who have to take whatever price the market can give them for run-of-the-mill produce.
The idea of growing organic food is catering to a niche and producing specialized food stuffs as compared to the typical model of making more of the same. In other studies, other business models were identified. Schilling et al study shows the viability of agro-tourism. In the study, it was found that 92% of farmers surveyed found that developing agro-tourism was very important insofar as revenue opportunities are concerned (Schilling 36).
The 2006 study further found that about 67% of farms derived 50% or more of their income from agro-tourism and that offering such a product is part of the diversification program that many farms are now focusing on. This stands to reason, as diversifying the sources of income reduces the risk of following, as George Simeon would call, the boom-and-bust cycle. The business model is not limited to offering guided informational and sight-seeing tours – the model also allows for the farm to peddle and market its “homegrown” products to visitors.
Moreover, with respect to the Right to Farm Act, agro-tourism affords farming communities the chance to re-introduce farming to individuals less familiar with its practices, i. e. a from of relationship building that minimizes friction with the urban sprawl sweeping across traditionally agricultural states (38). Farms develop such relationship building through planned fun activities for visitors – almost calling forth an image of having a backyard amusement park and very much similar to places such as Knott’s Berry Farm.
The two business models mentioned above have innovation in common. In man’s beginning’s, agriculture was a way of life for nearly all of the community. That majority was involved in the act of growing and supplying food is typified in the number of individuals engaged in farming the early part of the 20th century. In more recent times, technology has made farming much easier and more efficient and fewer individuals need devote their time to produce so much more. The modern economy, in some ways, is unforgiving.
So much so that legislation can only do so much – as with farmer Smith, a mere existence and solvency until the next harvest. But as doors are closing for the agricultural sector, new ones open in the form of more sophisticated business models. It appears that legislation is not at fault, or not entirely at fault, and perhaps President Bush’s move to cap subsidies is far shrewder than it seems, as eventually drying out subsidies brings out the entrepreneurial spirit. In the global markets, there is also a call to end the United State’s subsidies on agricultural products.
In the Doha Round talks held in Geneva, India pulled away from negotiations with the U. S. as the U. S. refused to lower farm subsidies and, further, asked that developing nations pull down trade barriers. But because the U. S. can supply crops so cheaply to world markets (particularly with the subsidies in place), many farmers from India are losing their market (Thakurta). What’s more is that Thakurta’s report details that some 16,000 farmers in rural India commit suicide each year because the E. U. and U. S. are distorting world prices with farm subsidies.
Even in Jamaica, the effect of farming subsidies is made apparent. While the U. S. seeks to promote free trade and developing nations lower tariffs and trade barriers, the subsidies flood the markets of developing nations with cheaper crops – crops heavily subsidized by the national government (Cassel). Welfare farming, thus far, shows that it is ineffective in combating the devastating effects of the boom-and-bust cycles that the agricultural sector faces, and that such subsidies perpetuate the cycle by being pro-big business.
Subsidies encourage over production which constitutes excessive supply and consequently further reduces market prices for subsidized crops while government is forced to dole out more to cover the guaranteed prices. The implications of the subsidies are not limited to the local context and affect individuals and communities as far as rural India and Jamaica. The research has put forth some business models as outlined by other studies and government programs should be more attuned to promoting such measures as opposed to direct monetary assistance. Cassel, Andrew. “Why U. S. Farm Subsidies are Bad for the World.
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