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Michael Vignone

Professor Babcock

ENGL 137H: Section 004

12 November, 2022

American Agriculture: How Government Policy Destroyed Our Farming System

America was built on the back of the farmer. Long before the time of the industrial

revolution and mass import and export systems, the United States protected itself with the ability

to produce all its own food. Today, majority of our consumables still come from within the

United States. Developing this system has been a long and arduous process of trial and error and

attempting to solve problems as they arise. Our agricultural system is the collection of a vast web

of inputs that each in their own regard affect the farming economy. Whether this is domestic

demand, overseas conflict, or economic hardship, the agricultural network is controlled passively

through the actions of other industries and entities. In an ideal world, all our intertwined systems

would function without oversight-this is never the case. It then becomes the job of the United

States government to act in attempts to remediate systemic problems. Throughout history, the

United States has had to make reactive measures to stabilize and reestablish the farming sector. It

is these impromptu measures that developed an agricultural system that is no longer self-

dependent and relies upon government input for continued prosperity.  

The War to End All Wars

When the United States government entered World War I, it became imperative that the

United States end the war as quickly and safely as possible. To end the war in under two years,

the United States had to supply its troops overseas with the food it needed in addition to their

newfound allies in the war. This meant pushing the current agricultural system to the limits.  
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           Coming off a bad harvest year the United States agricultural system was spread thin with

the number of viable crops. Farmers were forced to respond to the growing need for food to be

sent overseas to our soldiers. The nation was left with only one choice and one course of action;

to conserve more food domestically and to grow more food for export. Government propaganda

sprouted up encouraging homes to conserve and utilize alternative grains like corn to ensure

adequate demands for wheat, sugar, and fat for soldiers. More importantly, farmers had to find a

way to produce more than they ever had before. From 1917 to 1918, the United States saw more

than 13 million acres of land come into production, more than 10 times the rate of growth

witnessed just two years before in 1915. Of the production land, exported acreage grew by more

than 18 million acres in just one year (Olmstead and Rhode, 2006). Farmers were able to grow

the supply of food rapidly over a single season. It was modern advancements that made these

growths possible. Farmers switched out horse-drawn plows and cultivators for more powerful

tractors. These changes not only allowed for better products for wartime demand but also left

farmers realizing that this new system could bring continued profits after the war ended.

The advancements farmers made did not come without a cost during the war. Farmers

undertook more debt as they purchased new machines and more land to supply the demand. This

was all done in the hope that their investments would be repaid with increased profits during and

more so after the war. The wartime demand did not end up lasting forever, the exports soon

decreased after the war ended and America sank into the Great Depression. There was no longer

a need for the massive stockpiles that farmers had built up. With little demand, farmers were

forced to lower the price of their crops and sell with little or no profit. Farmers continued to grow

more each season as they tried to sell as much as they could at lower prices. All this did was

further exasperate the problem and lower prices to profitless margins. The future of many
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farmers depended on the value of the bushels that their fields were producing. Farmers

demanded that action be taken by the government to reinstate the value of the goods that their

futures relied so heavily upon.  

During his New Deal plan, President Roosevelt passed the Agriculture Adjustment Act in

1933. This was one of the first times that the US government intervened on behalf of the

agricultural industry. The AAA paid farmers to burn their crops and kill off their livestock. Thus,

lowering the amount of product in the market, and creating a higher value on the unburned

goods. This helped farmers massively as “Farm income in 1935 was more than 50 percent higher

than it was in 1932” according to USDA publications during the time (Rasmussen et al., 1976).

No sooner was the AAA passed than it was deemed unconstitutional by the Supreme Court.

Farmers were forced to again turn to mass production for small margins, as they began to

struggle to pay their debts. The government had to again act and pass the Agriculture Adjustment

Act of 1938. This reinstated many of the ideals of the AAA of 1933, while also promoting

conservation efforts to prevent another Dust Bowl from occurring.  

The time post-World War I and during the Great Recession set the precedent for the next

30 years. It showed that a system unrestrained in a capitalist market would only further damage

the economy as each farm sought to maximize its own profits. It proved that an economy not

regulated by supply and demand would not witness prolonged function and profitability. The

farming system could not operate by itself and promote its own self-preservation. The U.S.

government had to step in as a means to ensure that our farming system continued to supply the

food that our growing country needed and to allow for future growth. Although a private system,

by applying small amounts of regulation, the system received the necessary stability to ensure its

future.  
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The Great Grain Robbery

The farming economy had begun to stabilize after the first World War. Although a

variety of farm bills and adjustment acts were passed to ensure balance after World War II, the

system appeared to be working. Farming restraints created a linear growth at the rate of inflation

that mirrored demand. It would turn out that this system, regulated by supply, demand, and mild

government oversight, was sustainable. Soon after, we found out just what could happen when

all the restraints are taken off. In 1972, Richard Nixon and his administration, most

predominantly Secretary of Agriculture Earl Butz, oversaw one of the largest sell-offs of

American grain in U.S. history. Over the 1971 and 1972 seasons, the Soviet Union suffered a

crop failure. This left the Soviets struggling to provide enough food for their people while in a

Cold War with the US and supporting North Vietnam in the Vietnam War. Attempting to act on

his promise to end the Vietnam War, the Nixon administration used our grain as a bargaining

chip with the Soviet Union to end their involvement with North Vietnam.  

Historically, exports have been used as bargaining chips with other nations. We see this

today, especially during the Russia-Ukraine conflict. However, the Nixon administration sought

to hoodwink the American agricultural system to do so. Nixon ordered the USDA to not disclose

to farmers that the United States would be selling a massive amount of grain. This left the price

low since there was no apparent demand. Some even report government officials encouraging the

grain sale claiming that it was a very successful production year and warning prices were going

to plummet soon. All this so that the six major grain exporters in the United States could make a

profit off the government subsidization and the Soviets. Over the course of 1973, the United

States exported 78 percent of all grain produced, all the while needing 52 percent of all

production for the domestic population’s consumption (“United States Wheat Exports: Past and
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Prospects.”). After the deal, the opposite of post-WWI occurred; there was simply not enough

grain to feed the American people. This caused a skyrocket in the value of the farm index, which

is a collective of all agricultural products, including grain, but also including livestock feed, and

other agricultural ventures.

Not anticipating this increase the U.S. government intervened to restabilize the farm

economy which had rapidly become a balloon about to explode. This came from Earl Butz in the

Agriculture and Consumer Protection Act of 1973. Arguably one of the most influential pieces of

legislation passed in the agriculture industry. This changed the mindset under which farming

systems operated in the United States. With this act, there was no longer a system regulated by

supply and demand. Since there was no supply left, Earl Butts encouraged the “fence row to

fence row” growth and told farmers repeatedly they either had to “get big or get out”. Instead of

paying farmers to only grow what was needed, The Agriculture and Consumer Protection Act

paid farmers when crop values dropped below a determined value. The ACPA served as means

to mitigate the high levels of risk that every farmer recognized could send the system into

depression-level lows if it failed (Philpot, 2008). But, at that time there was such a high market

value that the floor was far out of view. The government didn’t have to pay anything. This

allowed farmers to reach massive levels of profit as they rebuilt the domestic and international

supply knowing they couldn’t lose whether they sold everything or nothing.  

This was a time in history riddled with controversy and poor intentions through a variety

of government entities and officials. It was the corruption during this time that bred and

cemented the foundations upon which future agricultural strife would be built. No longer was

there a cap that regulated farmers and prevented the buildup of excess product. We saw farmers

growing as much as they possibly could, valuing production above all else. No longer did they
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fear having too much and not making any money; the government now would save them in crop

insurance payments.  In any system this is logical, why wouldn’t someone take advantage of

making more money? It was this short-sighted mindset that would lead to future problems in

agriculture. The growth of a market is never infinite, regardless of what it may appear. Whether

it was for political gain or capital profit, removing production caps on the agriculture industry

benefited the moment, but would greatly hinder the future.  

The Farming Exodus

In the years following the Great Grain Robbery, farmers saw a mass amount of

prosperity. As they made their systems more efficient, farming’s production capabilities and

realities skyrocketed. America became a massive exporter of grain as the foreign growers

struggled. This is what I have come to call the “honeymoon period” of the agricultural industry.

Demand was high, production was high, and everything was going great. Governmental caps

were taken off and obviously, farmers would be able to respond quickly and reap the rewards, for

the system had been primed for rapid growth. Nixon and his administration inflated the value of

commodity crops to extreme levels. Coupled with the less-than-bare minimum supply and

demand overseas the new system appeared to be the perfect solution.                 

Both banks and the government were more than willing to fund farmers to expand their

operations at rapid levels. Oftentimes, farmers leveraged their farms so that they could convince

the bank they could afford to purchase more land to grow more crops and, in theory, make more

money. This was all possible because at the time, on paper, everything was saying farmers were

doing great. But, like all good things, they must come to an end.

In 1979, as the Soviet Union invaded Afghanistan, President Carter cut off the trade of

grain with the Soviet Union established by the Nixon administration. However, it was not just
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grain that could not be sold. President Carter placed embargoes against all agricultural exports to

the Soviet Union in his act of defiance of the invasion. In doing so, the United States agricultural

system was left with enough crops to feed two countries, with only the demand for one.  

Outside of the farming sector, the United States was experiencing record inflation rates. To

curtail the growth, the Federal Reserve increased interest rates for all loans taken out. For

farmers, this meant that the value of the property they had promised was only going to get more

valuable and plummeted in price. No longer was farmland lucrative to the banks. Entire

operations lost all their intrinsic value because they were financed off future production. The

Midwest saw operation-wide devaluations of more than 60 percent and a loss in total revenue of

more than 14.6 billion dollars compared to the second nearest time of agricultural prosperity,

post-World War Two (Krymowski, 2020). Farmers had financed with the hope that they would

make the money back to pay off the loans; they no longer could prove that they were able to do

much else than grow a bushel of corn or wheat.   

Compounding the inflation-limiting measures and the devaluation of their massive

surpluses of crops, farming operations had risked it all and stood to lose it all. As crop demands

plummeted, farm debt increased from 71.4 billion dollars to a whopping 113.2 billion dollars

from 1970-1980, more than a 59% increase (Barnett 371). This became a period that was known

as the farming exodus, as millions of farmers had to foreclose on their farms because they could

no longer afford the principal payments, let alone the interest payments. Farmers fled rural

America as they sought new lives in urban cities that could promise more than their farm fields

could.

Not long after in 1981 Ronald Reagan inherited the failing system and lifted the Soviet

grain embargo. The farmers were again able to export their crops to the ever-growing demands
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of the Soviet Union. Congress rolled out Chapter 12 bankruptcy: a relief package tailored for

family farmers. This allowed farmers to restructure the debt in their operations so that they did

not have to foreclose on their farms and lose everything. However, the damage was already done.

The American farming system was left unregulated for too long. Then, when the idyllic world

was no longer there, the system that had grown to become so accustomed to the massive

demands could not survive.

Reflections on Farming Policy in History

America has a free-market capitalist economy. Although to some, that may sound like a

bunch of random words jumbled together, it is quite easy to understand when you break it into

parts. A free market is a system that operates solely on supply and demand. This means products

are only produced when a demand is expressed. There is an infinite number of items that can

become “hot” and therefore companies cannot force a predisposed product onto consumers. 

A capitalist system refers to the means that profits are distributed. A person or a company will

collect the profits from their good, workers build the goods at a wage that makes them the most

money, while companies try to pay the lowest possible for production and labor.  

When we look at America's agricultural system, it becomes clear to see how the system

has evolved and underwent massive changes during the twentieth century. Starting before World

War I, the system worked relatively well. It was a pure free market. The only demand was

domestic. Farmers grew what the nation needed plus just a little bit more. There were no massive

surpluses and stockpiles. The system relied and operated on supply and demand.

During and after World War I, the system experienced turbulence as it undertook the

pressures of wartime demands and expanded to bolster the supply. But the demand was solely

artificial, and the production expansion was permanent. As farmers pumped out more and more
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grain, the capitalist mindset left goods valueless as each farmer lowered their price to sell more

of his grain in a race to the bottom across all farmers. The government intervened with The

Agricultural Adjustment Act of 1933 and 1938 were merely a means to ease farmers back to the

new levels of demand post-war. The AAA reestablished the free market and supplied only what

was necessary for stability.

In the time of the Nixon Administration, we witnessed the monumental change that

arguably restructured the way that our agricultural system functioned. During this time, the

market changed drastically from a free market to a sole production market unregulated by the

government or supply and demand. It was only natural for the farms to expand and capitalize on

the new untapped production quantiles. Yet, when the time came for the system to be challenged

by a changing world and economic system, farmers were not able to handle the blow. Collapsing

in on itself, the US government began forking billions of dollars each year as crops fell below

price floors and the government paid the difference to the farmers that remained.  

Much of what remained in the 1980s still stands today, even after it suffered such

problems during the 1970s and 1980s. Our agricultural system continued to operate on the bases

of pure capitalistic intent. Yet, our government continues to provide crop insurance for a system

that exceeds its limits and continues to grow knowing that it will face continued struggle and

continued loss. Farmers now face some of the harshest environmental conditions witnessed in

history including droughts, insect attacks, and inflation. The system continues to grow and

expand into open land solely because nothing is stopping them. All the while, farms received

more than 40 percent of their income from government parity and insurance payments, that is

more than 46.5 billion dollars in 2020 (Lincicome, 2020). Without regard for demand,

sustainability, or the future, family farms have been replaced with mega corporations
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encompassing thousands of acres. Each continues to reap rewards from massive plantings even

as they fail year after year. At one time in history, farming was a necessary duty of our citizens

for our citizens. Now, farming has become a cash cow that only a few get the privilege to milk,

all at the cost of the American citizen and the stability of our domestic agricultural system.  

 
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Works Cited

Barnett, Barry J. The U.S. Farm Financial Crisis of the 1980s. vol. 74, Jstor,

https://www.jstor.org/stable/3744858?seq=6#metadata_info_tab_contents, Accessed 12

Nov. 2022.

Lincicome, Scott. “Examining America’s Farm Subsidy Problem.” Cato.org, 18 Dec. 2020,

https://www.cato.org/commentary/examining-americas-farm-subsidy-problem.

Olmstead, Alan L, and Paul W Rhode. “Cropland–Acreage Harvested and Indexes of Cropland

Use and Production per Acre: 1910–1990.” Historical Statistics of the United States

Millennial Edition Online, 2006, https://hsus.cambridge.org/HSUSWeb/toc/tableToc.do?

id=Da661-666.

Philpott, Tom. “A Reflection on the Lasting Legacy of 1970s USDA Secretary Earl Butz.” Grist,

8 Feb. 2008, https://grist.org/article/the-butz-stops-here/.

Rasmussen, Wayne D, et al. A Short History of Agricultural Adjustment, 1933-75 - USDA. 25

Mar. 1976, https://naldc.nal.usda.gov/download/CAT87210025/PDF.

Scott, Brianna. “From Protecting America to Feeding It: Helping Vets Transition into Ag.”

AGDAILY, 11 Nov. 2022, https://www.agdaily.com/insights/protecting-america-to-

feeding-it-helping-veterans-transition-into-agriculture/.

“United States Wheat Exports: Past and Prospects.” Business, University of Nebraska, May

1984, https://business.unl.edu/research/bureau-of-business-research/.