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(KNOXVILLE, Tenn.) - A report by agricultural economists with the University of Tennessee Agricultural Policy Analysis Center suggests that U.S. government farm policy is contributing to the growing crisis in the worldwide agricultural sector.

Dr. Daryll Ray, director of the UT Agricultural Policy Analysis Center, co-authored the paper with UT colleagues Dr. Daniel De La Torre Ugarte and Dr. Kelly Tiller. The paper “Rethinking U.S. Agricultural Policy” will be presented at the World Trade Organization’s Ministerial meeting in Cancun on September 11.

The study details how U.S. farm policy has abandoned market stabilization tools in favor of production and trade liberalization with disastrous results. Because crop agriculture does not quickly self-correct like other industries, the economists maintain that eliminating supply management tools in recent U.S. farm legislation has led to record-low farm prices and record-high government payments of nearly $20 billion per year to American crop farmers. This cheap-grain policy has benefited multinational agribusiness firms, large livestock operators, and importers—not crop farmers, who now sell grain below their cost of production.

Quoting from the paper’s executive summary: “Foreign competitors charge America with dumping excess U.S. production on world markets for less than the cost of production which, in turn, ratchets up the cost of competitors’ farm programs and damages the ag economies of developing countries. The outcome of this ‘race to the bottom’ is certain: all farmers around the world will lose.”

The report goes on to say that since 1996, when the Freedom to Farm legislation was enacted, world prices for America’s four chief farm exports (corn, wheat, soybeans and cotton) have plunged more than 40 percent. “Farmers from the U.S. to Peru, from Haiti to Burkina Faso have harvested poorer incomes, hunger, desperation and migration. Today, global agriculture faces a crisis.”

In the report the UT agricultural economists offer a strategy for improvement. They recommend that failed policies be replaced with legislation that includes a combination of three policies: (1) acreage diversion through short-term acreage set asides and longer-term acreage reserves; (2) a farmer-owned food security reserve; and (3) other price support mechanisms.

If this strategy is followed, their computer model predicts total cropland planted to the eight major U.S. crops will drop by 14 million acres in the first year, while prices for the major commodities will increase between 23 and 30 percent. Net farm income will then rise as government payments fall by more than $10 billion per year. Also, “farmer-friendly” policies will limit future asset consolidation, reinvigorate farmer investment in agriculture and eliminate global concerns about commodity dumping.

“This is not a farm bill proposal,” said Ray. “It’s an analysis and a discussion of one possible solution to the serious problems facing farm families and their communities worldwide.”

The full report is available on-line at the Agricultural Policy Analysis Center’s Web site: http://www.agpolicy.org/blueprint.html.

The research was sponsored by Oxfam America and endorsed by several farm and commodity organizations.

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Contact: Dr. Kelly Tiller, 865-974-7407; Patricia McDaniels, 865-974-7141