Diverting Factory Farm Funding to Resuscitate the World Food Economy

According to the International Monetary Fund’s most recent report for 2018, America is the world’s second-largest economy based on gross domestic product (GDP) using purchasing power parity (PPP), or the ability of consumers to purchase goods and services with a unit of domestic currency. America is a production powerhouse – the U.S. food export industry alone is currently worth $144.5 billion. The largest end-use food exports are soybeans, meat and poultry. America’s enormous production and export of agricultural commodities has beneficially changed the world food economy: diets higher in animal-sourced foods tend to be higher in micronutrients than their plant-heavy counterparts. But, the gigantic U.S. economy for agricultural commodities (such as cattle, corn, soybeans, wheat and cotton) and the legislation that makes it possible have also created problematic factory farms, concentrated animal feeding operations (CAFOs), and a diet for American consumers laden with cheap meat and highly processed foods. Now, facing explosive world population growth dependent on increasingly fewer natural resources and learning to adapt to the economic disruptions from a global pandemic, we must look at how American regulation of agricultural commodities has helped create, insulate and normalize the factory farming industry, and how regulatory reform can reform farming to healthfully and sustainably feed a growing population.

Farm bills, or legislation managing agricultural production, have shaped the American agricultural economy for the past century. They have helped our country stabilize its domestic food production and competitiveness in the international market. Responsive farm bills are crucial to the stability of both the American and world food economies, but legislating farm bills to be adaptive to the changing needs of the American consumer will require more time and money spent on research and development of programs tailored to each state’s unique ecosystem and land use needs. However, Congress has been reluctant to reallocate farm bill funding from the larger monoculture programs that have prospered in economically stable times. The result is a dearth of funding for locally-oriented programs.

In a stable national economy, subsidizing monoculture programs (cultivation of just one crop in a given area or on a given farm) can reduce the cost of processed food and meat, because low-cost production of commodity crops can make more of these crops available to become processed food and livestock feed. But market disruptions like the complete economic collapse of the Great Depression can drastically change what food Americans choose and are able to buy. Until COVID-19, America had not faced a Great Depression-caliber economic disruption in nearly a century. The COVID-19 pandemic is only beginning to shed light on which of our farm bill programs work for a growing population in an unstable food economy, and which programs do not. It can also inform how we make farm bill programs adaptable and prosperous going forward.

The First Farm Bills

Initially, farming legislation saved the American agricultural economy from complete collapse in severe market fluctuations caused by events like the Dust Bowls of the 1930s. As amended, farm bills have established and maintained programs to provide nutritional assistance to American consumers in need, and they have created research and extension programs in conservation of natural resources on farmland tailored to the land and natural resource needs of each state. The evolution of federal agriculture-related farm bills provides insight on corresponding changes in the U.S. agricultural industry, from small farms to super-sized factories.

The Agricultural Adjustment Act of 1933 (“1933 AAA”), Public Act No. 10-73, H.R. 3835 (1933), was the first federal act that bolstered the American agricultural economy. The 1933 AAA was enacted as part of the New Deal legislation pursuant to Congress’s power to declare an emergency amidst the national economic crisis of the Great Depression. It gave Congress the power to control market supply, price and standards for agricultural commodities through adjustment agreements with farmers to suppress production by limiting planting acreage, mandating the sale of cotton to the government, and levying taxes on agricultural processors to fund subsidies to value crops at pre-World War I prices. [Public Act No. 10-73, H.R. 3835 (1933), Sections 2, 3, 8 and 9]. Congress promoted the legislation in order to balance the production and sale of basic agricultural commodities such as wheat, corn and rice in a time of economic collapse and food insecurity for most Americans. In 1935, Congress enacted the Soil Conservation and Domestic Allotment Act (“1935 Soil Act”), Public Act No. 46-74, H.R. 7054 (1935), to provide for improvements to, and preservation of, soil to prevent erosion. [Public Act No. 46-74, H.R. 7054 (1935)]. The 1935 Soil Act authorized the Soil Conservation Service (now the Natural Resources Conservation Service (NRCS)) to direct land use, cultivation methods and acquire lands for soil protection purposes. [Public Act No. 46-74, H.R. 7054 (1935), Section 1.]

Three years later, the U.S. Supreme Court held the 1933 AAA was invalid in that its purpose of regulating agricultural production is a power reserved to the states, stating the 1933 AAA was “a statutory plan to regulate and control agricultural production, a matter beyond the powers delegated to the federal government.” [U.S. v. Butler, 297 U.S. 1, 68 (1936)]. The Court found the 1933 AAA did not survive scrutiny and analyzed it as consisting of two parts: government taxation of agricultural processors, and appropriation of funds for public welfare. According to the Court, the purpose of the taxation portion of the legislation was to regulate and control agricultural production rather than for general governmental purposes and, therefore, a “means to an unconstitutional end,” beyond the authority of Congress. [U.S. v. Butler at 68.]

Congress revised the 1933 AAA and the 1935 Soil Act with the 1936 Soil Conservation and Domestic Allotment Act (“1936 Soil Act”) Public Act No. 461-74, S. 3780 (1936), and 1938 Agricultural Adjustment Act (“1938 AAA”), 7 U.S.C. § 1281 (2018). The 1936 Soil Act included provisions to support soil fertility enhancement and scientifically founded soil use, economic use and conservation of land, preservation of water quality from effects of soil erosion, and reestablishment of a balanced economy between farmers and consumers subsequent to the Dust Bowls of the 1930s. [7 U.S.C. § 1287(a) (2018)]. The 1936 Soil Act did not achieve its goals through federally subsidized crop suppression or production; it promoted states’ voluntary adoption of federally prescribed practices for “major soil depleting and major export crops” in exchange for payments to farmers on a yearly basis. [7 U.S.C. § 1287(b)-(g) (2018)]. Essentially, the 1936 Soil Act established the first conservation reserve program. Yet, it was the 1938 AAA, in part through further amendments to the 1936 Soil Act, that established the agricultural commodity subsidy policy existent today.

Under the Commerce Power, which gives Congress the authority to regulate the movement of goods between the U.S. and foreign nations, among the States and with Native American Tribes, the 1938 AAA enabled the Secretary of Agriculture to establish mandatory price support for corn, cotton and wheat in response to market demand. The 1938 AAA authorized the establishment of crop prices for farm owners and workers, and national supply quotas based on market demand with the purpose of steadily supplying crops to consumers at fair prices.

The U.S. Supreme Court evaluated the constitutionality of the 1938 AAA in its decision in Wickard v. Filburn, 317 U.S. 111 (1942). Wickard established that Congress has the power to regulate intrastate activities if, when viewed in the aggregate, those activities would have a substantial effect on interstate commerce. A unanimous Court held that “the power to regulate commerce includes the power to regulate the prices at which commodities in that commerce are dealt in and practices affecting such prices.” [Wickard v. Filburn, 317 U.S. 111, 127 (1942)]. For practical purposes, Wickard constitutionalized Congress’s direct control of the agricultural market by allowing price, supply and purchase requirements to be set for crops raised by any individual anywhere in the country while noting Congress’s duty to amend legislation to appropriately regulate interstate commerce under changing market conditions. The 1938 AAA has been amended through eighty years’ worth of farm bills in attempts to reflect these changes.

The 1938 AAA was amended to create a crop insurance program and remove the tax on processors, instead authorizing the Secretary of Agriculture to appropriate funding from the United States Department of Agriculture (USDA) budget from the U.S. Treasury. [7 U.S.C. § 1391 (2018)]. Since its enactment, the 1938 AAA has been expanded to include budget appropriations for production research, marketing research and development projects for some agricultural commodities. [See 7 U.S.C. § 1292 (2018) (one of the first amendments to the 1938 AAA that directs and authorizes the USDA to establish and manage research facilities throughout the U.S. to determine new uses and markets for commodities)].

Recent Farm Legislation

The 2018 farm bill primarily appropriated funding for farmers to support the following four major programs: nutrition, crop insurance, commodities and conservation. The largest portion of farm bill funding goes to nutrition programs like the Supplemental Nutrition Assistance Program (SNAP) that administer funds to supplement the food budgets of low-income families. According to the Congressional Budget Office’s April 2018 baseline report of the 2018 Farm Bill, nearly 77 percent of all farm bill funds are appropriated for nutrition programs like SNAP. Crop insurance, commodity and conservation programs account for $199 billion, or 23 percent, of farm bill funds. [John Newton, Reviewing the 2018 Farm Bill Baseline, American Farm Bureau Federation (December 17, 2018)].

Agricultural commodity programs that provide risk coverage to producers to increase net commodity production, which include the Agricultural Risk Coverage (ARC) program, the Price Loss Coverage (PLC) program, and the Marketing Assistance Loan (MAL) program, received approximately $205.4 billion in support between 1995-2017. The third highest-funded program for the same period was crop insurance subsidies, totaling $84.5 billion in support. Conservation programs received $48.1 billion in support during that time, and disaster relief programs even less. While the financial support given to each of these programs fluctuates yearly as determined by economic and environmental factors, crop insurance subsidies and commodity programs received on average 60 to 80 percent more funds than the other two programs each year.

While most of the commodity crops originally subsidized to benefit the poor – wheat, corn and soy – remain the most subsidized crops in the farm bill today, these subsidies have driven the development of farm-related policy that supports volume over nutritional quality, such as providing crop insurance for mass producers of commodity crops. The United States Department of Agriculture (USDA) Economic Research Service review of cash receipts by commodity for 2010-2019 estimated the following: wheat at $96,996,270, corn at $507,998,730 and soy at $372,126,520, adding up to $977,121,520 of $3,815,211,370 in total receipts cashed for commodity benefits in 2019. In other words, these three commodities account for nearly one-third of funding for all agricultural commodities covered by the Farm Bill.

Subsidizing the repeated growth of a single commodity crop rather than allowing fields to lay fallow between seasons or rotating crops on individual farms can increase market supply and availability of these crops for animal feed, but deviating from rotational planting and fallow periods is not ideal for soil health in the long term. Rotating crops each year helps maintain soil tilth and structure and improve nutrient cycling by varying the nutrients that are taken from and returned to the soil, and weed and pest control can be enhanced by varying the structure of root systems and above-ground growth. Those benefits are undermined by repeatedly using and replacing the same nutrients associated with repeat plantings of the same crop. Additionally, allowing fields to lay fallow similarly gives soil a chance to regenerate its nutrient content, improving its productivity for crop growth by increasing nutrient bioavailability.

The widespread availability of low-cost animal feed, in turn, makes running CAFOs where animals are kept and raised prior to processing at large regional facilities possible at a relatively low cost. Currently, there is no federal agency that collects or maps data on the number of CAFOs in the U.S.; however, using 2008 USDA data, it is estimated that there are several thousand. According to U.S. Environmental Protection Agency (EPA) regulations, large CAFOs contain at least 1000 beef cattle, 700 dairy cows, 2,500 swine above 55 pounds, 125,000 broiler chickens, or 82,000 laying hens confined onsite in small areas where feed is brought to them for more than 45 days a year. [40 CFR § 122.23 (b)(4) (2020)]. Increasing CAFO sizes can suggest increased efficiency in livestock raising, which is critical to the economic viability of most livestock production today.

Typically, economic metrics value goods prior to sale for processing and end-use by market. The USDA’s daily reports for livestock detail slaughtered animals’ value by type, cut and level of processing. CAFOs try to keep animals alive for as short as is financially profitable. This is most commonly achieved through genetic manipulation, feed enhancement and the use of equipment to promote faster growth. For instance, intentional genetic selection of broiler chickens over the last 60 years has increased the daily growth rate of chickens by over 300 percent. In addition, chickens today are slaughtered at about six weeks, compared to about thirteen weeks fifty years ago, though today’s younger chickens weigh about 60 percent more than their 1960s counterparts. [Cheryl L. Leahy, Large Scale Farmed Animal Abuse and Neglect: Law and Its Enforcement, 4 J. ANIMAL L. ETHICS 63, 67 (2011)]. Animals from CAFOs are slaughtered at massive regional meat processing facilities full of workers jammed into close quarters, after which the processed meat is sent to a select few national meat production companies. This practice almost completely eliminates local, independent livestock farmers and meatpackers from the economy, and replaces them with large national farm corporations. [In America, the virus threatens a meat industry that is too concentrated, The Economist (May 2, 2020 ed.)].

States can enact more stringent laws on issues such as groundwater pollution and air pollution-related to livestock animal waste. For example, the Illinois Livestock Management Facilities Act, 510 ILCS 77, sets livestock production standards for technology, local land use, animal waste treatment and storage pertaining to groundwater quality. However, pursuant to the Supremacy Clause of the U.S. Constitution, Art. VI, Cl. 2, federal laws that govern livestock transportation or processing facility management can preempt states’ attempts to enact laws requiring healthful lifetime management of slaughter-ready animals because livestock movement and processing is subject to federal jurisdiction. For example, the U.S. Supreme Court held in National Meat Assn. v. Harris, 565 U.S. 452 (2012) that a California law requiring slaughterhouses to immediately euthanize nonambulatory animals was preempted by the Federal Meat Inspection Act (FMIA), which authorizes such animals to be held without euthanization. The Court found that the FMIA’s preemption clause bars any state regulations that are additional to or different from FMIA regulations for handling and treatment of animals in slaughterhouses. [National Meat Assn. v. Harris at 466.]

Meat Production Challenges

Challenges in sustaining healthful meat production include animal welfare issues and infectious disease risk. Three federal laws govern agricultural animals in the United States:

• The Animal Welfare Act (AWA) 7 U.S.C. § 2131 (2018),
• The Twenty-Eight Hour Law (28 Hour Law), 49 U.S.C. § 80502 (2018), and
• The Humane Methods of Livestock Slaughter Act (HSA) 7 U.S.C. § 1901 (2018).

None provide for humane or sanitary living conditions for farmed animals. Livestock and poultry are specifically excluded from the AWA, [7 U.S.C. § 2132(g)(3) (2018)], and the 28 Hour Law only governs interstate agricultural animal transportation lasting more than 28 hours. [49 U.S.C. § 80502 (2018)] The HSA, which sets baseline standards for livestock slaughter, does not provide requirements for living conditions of livestock animals, nor does it set minimum standards for the slaughter of poultry. [7 U.S.C. § 1902(a) (2018)].

Animals raised in CAFO conditions without comprehensive federal standards for sanitary living and slaughter conditions could now exacerbate a new global issue for feeding a growing population: widespread infectious disease. COVID-19 has stung the American meat industry, particularly at the large regional processing plants. These plants, which provide most of America’s meat, get their meat from CAFOs where genetically near-identical animals overcrowded in tight spaces for a few corporations’ cost-effective national-scale production. [Laura Spinney, We Need to Rethink Our Food System to Prevent the Next Pandemic, Time, April 13, 2020]. About two-thirds of America’s beef production is controlled by one company and large corporations also control pork and poultry production. [In America, the virus threatens a meat industry that is too concentrated, The Economist (May 2, 2020 ed.)].

In late April, President Trump ordered meat processing plants to stay open, despite cases of COVID-19 infections rising in meat processing plants. Id. By May 5, 2020, more than half of America’s big corporation meat plant workers tested positive for COVID-19, where elbow-to-elbow line working conditions make social distancing impossible. [Mike Dorning, Meat Plant Virus Rates Topping 50% Are Behind Grocery Shortages, Bloomberg, May 5, 2020]. In turn, CAFOs and processing plants have had to ramp up production with many employees out sick and those remaining working in complete absence of any adaptive (or adequate baseline) safety measures to handle a virus readily transmitted from human-to-human contact. Id. While plant re-openings have been slow and staggered, shortages and price surges at grocery stores remain, and livestock farmers and CAFO operators alike have had to cull their herds in response to factories that cannot afford to take on and process these animals for food. [In America, the virus threatens a meat industry that is too concentrated, The Economist (May 2, 2020 ed.)].

Even as large meat processing plants return to production capacity, the shortages and virus rates seen in April 2020 forewarn that the CAFO model is unsustainable and the Farm Bill’s heavy focus on bolstering production of and insuring commodities by type (soy, corn, wheat, dairy) generates shortages and profit loss in times of economic crisis. American agriculture needs a more sustainable subsidy model that supports varied, localized conservation-focused crop farming and animal product processing.

A Path Forward

The World Resources Institute suggests the following three principles should guide how we adapt our world food economy with resilience in the wake of COVID-19, and under the mounting pressures of population growth, future pandemics and climate change: maintain open trade to keep the supply of food flowing across the world, especially in major food exporting nations like the U.S.; provide governmental and private philanthropic assistance to targeted food and nutrition programs; and ensure the food and land use sector has long term capital and incentives to take up sustainable crop growing and animal raising practices. [Edward Davey and Andrew Steer, After COVID-19: How We Can Improve the Global Food System, World Resources Institute, May 8, 2020]. Effective implementation of farm bill programs is crucial to ensuring the U.S. can be resilient in producing healthful food for a growing population. Two programs in particular, the Conservation Stewardship Program (CSP), 7 C.F.R. 1470 (2020), and the National Organic Program, part of the Organic Foods Production Act of 1990, 7 U.S.C. § 6501 (2018), can be used as launching points to improve farming practices and bolster the global food supply chain by engaging smaller-scale farmers in sustainable agricultural practices and helping them transition to organic farming.

The CSP keeps viable farmland on the market by encouraging and rewarding conservation practices through payments to those who undertake specified land management practices. [7 C.F.R. 1470 (2020)]. Meant to improve the productivity of land naturally, these practices include letting fields lie fallow, partaking in crop and grazing rotation, and utilizing crop and riparian buffer zones between land parcels of different uses to diversify the value of the land. [Farm Bill Myth Busting: The Conservation Stewardship Program, National Sustainable Agriculture Coalition, October 10, 2018]. The CSP also authorizes the NRCS to provide Field Office Technical Guides, localized ecologically minded management guidelines for changing environmental conditions and animal needs on farmland subject to each state’s individual regulations. [NRCS, National Conservation Practice Standards (2019)].

The CSP is also an example of how modern farm bill programs can build on past farming legislation like the conservation practices in the 1936 Soil Act. Continued and expanded investment in the CSP in future farm bills will help improve and provide guidance on sustainable regional farming practices in changing environmental conditions, rather than obliterating land with subsidized commodity crops planted too frequently or in ecologically inappropriate environments. Subsidizing localized conservation practices over large-scale commodity crop monoculture could raise the cost of meat, but it could keep meat accessible globally where a climate change- or pandemic-induced wipeout would decimate supply in current conditions.

The National Organic Program includes an Organic Certification Cost-Share Program (OCCSP) that provides financial reimbursements to farmers who incur costs in transitioning to organic farming practices. [Organics Fact Sheet, USDA Farm Service Agency (2017); referenced in 7 C.F.R. 1470.22 (2020)]. The 2018 Farm Bill increased the funding for OCCSP, as well as provided nearly $400 million in permanent funding for organic research and similar extension programs through 2028. [See “Notice of Funds Availability,” USDA Farm Service Agency (August 10, 2020)]. These programs provide bootstraps for farmers wanting to transition to organic farmland who could not otherwise maintain the expense of management practices and certification. Id. The increased availability of OCCSP funds for small- to mid-size farmers can help transition this sector of the U.S. agricultural economy to organic livestock raising and land management practices that take a holistic approach to evaluating the demands of farming on land and livestock populations. Over time, this could reduce the cost and increase the efficiency of organic practices, which would make sustainable livestock raising and land management practices feasible for more farmers in the U.S. agricultural economy.

While the USDA’s National Organic Certification Program is voluntary, it reflects the only federal legislation that takes a holistic approach to managing agricultural commodities and their production cycle. The Organic Foods Production Act of 1990 (“Organic Act”), 7 U.S.C. § 6501 (2018), includes provisions for the regulation of minimum humane treatment and natural raising standards for livestock animals that will become or provide organic commodities (like meat, milk or wool) throughout their life cycles. [7 U.S.C. § 6509 (2018), with implementing regulations at 7 C.F.R. 205.239 (2020)]. The Organic Act’s implementing regulations define “livestock” as “any cattle, sheep, goats, swine, poultry, or equine animals used for food or in the production of food, fiber, feed, or other agricultural-based consumer products; wild or domesticated game; or other nonplant life, except such term shall not include aquatic animals for the production of food, fiber, feed, or other agricultural-based consumer products.” [7 C.F.R. 205.2 (2020)].

The Organic Act’s livestock living condition standards address major holes in the federal regulation of the food production cycle. To be certified organic, the producer of a livestock operation must establish and maintain year-round livestock living conditions that accommodate the animals’ health and natural behavior, including year-round access to outdoor areas and direct sunlight, shade, fresh air, clean water and other factors suited to the animal’s species and life stage, enough room to be ambulatory without crowding, access to seasonally appropriate grazing pasture for ruminants, and shelters designed to allow for the natural maintenance and exercise habits of each species. [7 C.F.R. 205.239 (2020)].

Though organic certification is neither mandatory nor does it address the market practice in valuing animals as commodities, it does provide a framework for re-visioning the modern American farm to be ecologically minded, accounts for the natural physiology of the animals critical to its endured success, and makes sustainably raised food products accessible to consumers. Congress could expand this program’s availability in future farm bills, and leave room for farm worker-focused legislation to supplement farm bills, like the Farmer Driven Conservation Outcomes Act of 2020 (H.R. 6182, S.3429) to further improve existing conservation programs.

The Farmer Driven Conservation Outcomes Act of 2020 Act may help refine the effectiveness of farm bill program implementation at local levels to the benefit of small farmers. While as of August 2020, it has not yet been approved by either the House or Senate, the Act would evaluate and refine Farm Bill guidelines and funding for climate-resilient farming practices to increase support for the smaller farmers of the U.S. agricultural economy in cooperation with local non-governmental organizations and higher education institutions, as well as government agencies. Ideally, supplemental guiding legislation like the Farmer Driven Conservation Outcomes Act would help phase out subsidies and insurance for the commodity crops that enable national corporations and CAFOs to monopolize the American food economy.

In conclusion, American regulation of agricultural commodities, originally designed to stabilize the country’s domestic food production, has helped create, insulate and normalize the factory farming industry. Economic disruptions from a global pandemic combined with a movement toward conservation, sustainability and animal welfare could provide the impetus for regulatory reform that promotes responsible commerce that can healthfully feed a growing population.