Profit Incentive—Subtle Enemy of the Hungry World
UNITED STATES exports accounted for one in every five acres harvested in the country during 1973. If that huge export market is closed or is too tightly restricted, farm products pile up in the U.S. and this results in sagging prices. Then what happens?
The farmer may purposely grow less food. To continue flooding the market with food would bring yet lower prices.
Not surprisingly, therefore, when Farm Chemicals journal asked U.S. Secretary of Agriculture Earl Butz what would happen if farm prices declined, he responded: “Agricultural production also will decline.” Yes, farmers have concluded, says an observer in Iowa, that ‘the name of the game is profits.’
On the other hand, the same profit incentive has produced a euphoria among many farmers. Until events of the last couple of years shattered many farmers’ serene picture, they believed that there was no end to the money that they could make. But some who invested more and more money in their desire for big profits are now overwhelmingly in debt.
The profit incentive has also moved many farmers to oppose world food reserves. If you are not a farmer, the idea of setting aside an ample storage of grain during abundant years to provide for lean ones probably seems reasonable. The Bible records how this was done in ancient Egypt in the days of Joseph, a fact noted by any number of world food reserve advocates.—See Genesis chapters 41-47.
But, to many American farmers, this is not a good idea. Why? One answer comes from a former assistant U.S. Secretary of Agriculture, who told farmers that they would have to fill and fund any world food reserve. The need for exports would then dwindle, and a major base of the farmer’s income would slip from under him. Farm Journal asked experts if the reserve could be set up without adversely affecting prices for the farmer. The answer was a plain “No!”
The profit incentive could therefore produce disastrous worldwide results.
Is the Middleman Reaping Profits?
If the farmer is not getting rich from rising prices, who is? Many farmers and consumers point to “The Middleman.” Who is that?
The term is used to describe everybody involved in the food picture from the time the food leaves the farmer until you purchase it at the grocery store. Farmers blame packers, shippers, managers of supermarkets and others for higher food prices. Yet each of these groups claims that they, like the farmer, are victims of inflation and that they must raise prices as their own costs go up. All they want, they say, is an honest profit to support themselves and to stay in business. In other words, they are just part of the system.
Farmers also blame market speculators and large food commodity companies for higher prices. How valid are such charges?
When a farmer has some major food commodity to sell, such as grain, he does not ordinarily sell it directly to a bakery or someone else that will actually put it to use. Rather, it is taken to a local grain elevator where it is bought and at least temporarily stored. The price that the farmer is paid at the elevator is determined by the ‘commodity market.’
The Board of Trade keeps track of the amount of grain (and other commodities) coming into elevators all over the country, letting prospective buyers know what is for sale. Then it accepts orders from buyers. The supply available in bins around the U.S. weighed against the demand for that supply from buyers determines the price that the farmer is paid for his grain.
Speculators buy commodities for a certain price, much as someone might purchase stocks on the stock exchange. The speculator does not actually buy the grain; he has no intention of ever taking delivery of it, but merely waits for its price on the market to go up. Then he sells and realizes a profit. These men, argue the farmers, even though they have no direct connection with growing food, are major contributors to higher food costs.
But the speculators remind farmers that they, too, are just part of the system, merely interested in an honest profit. They take a big chance every time that they invest. Prices do not always go up, they point out, and when they go down, speculators can suffer devastating losses.
In any event, the speculator says, somebody must own the grain after it leaves the farmer’s hands and before it reaches the actual user. If the speculator did not risk his money to pay for what amounts to “storing” that grain, then, he notes, somebody else would have to do so; thus, somebody would have to be paid what the speculator is getting.
And what about the big grain companies? Do they manipulate the market, that is, conspire together so as to make tremendous profits? Of course, the possibility always exists that someone could control the market in some way for their benefit. But possibility is by no means proof. Like the farmer and all the rest of the “middlemen,” the grain companies too claim that they only want to make a decent profit. And it is for this reason that they sell most of the grain that is exported from the U.S. to “rich,” not “poor,” nations! The poor cannot afford it.
The huge American agriculture system based on profits, while partly successful, cannot continue to work indefinitely. It is like a pup chasing its own tail. Because everyone along the way wants, and necessarily needs, to make money according to the present economic system, food does not reach the ones who cannot afford to buy it or have someone buy it for them.
The St. Louis Globe-Democrat therefore concludes: “The food picture includes farmers on one hand, grocery shoppers on the other and a bewildering maze in between known as the middlemen. Pinpointing a villain, if there is one, is next to impossible.”
“Put this all together and what have you got?” asks Harper’s magazine. Its answer: “A prescription for a system on the verge of collapse.”
Obviously, some better system is needed. What?
Hope for the Hungry
Would not a system based on unselfishness, on true love and concern for others be better than the present profit-incentive system? But who can establish and put in operation such a new system?
The Creator of the earth and humankind can. And the Bible reveals that it is his purpose to do so. The Kingdom government for which Jesus Christ taught his followers to pray will see to it that a righteous new earthly system will soon be established. (Matt. 6:9, 10; 2 Pet. 3:13) The Bible promises that at that time “the earth itself will certainly give its produce; God, our God, will bless us.” (Ps. 67:6) Earth will be a paradise.
Why not let Jehovah’s witnesses explain to you from the Bible what the rule by God’s kingdom will eventually mean for the whole earth? You can reach them by writing to the publishers of this magazine.
But under the present system of things, what about farming? Many farmers do not want to quit farming. They appreciate that their chosen life has many fine benefits. A Wisconsin farmer notes: “There is the satisfaction of having your own business. It is enjoyable to work with animals and’ watch them grow up, going through their various playful stages of life. It is enjoyable, too, to see crops of grain and hay grow and to harvest it each year. A farmer can set his own work schedule and be with his family many times each day. So there is an enjoyable part to farming also. Many farmers feel that their occupation brings them close to God.”
They love farming. But they detest the oppressive worldwide system that will work honest men—farmers, packers, sellers, shippers, distributors—day and night, give them minimum returns for their labors and then somehow never get the food to the people that really need it. With real fervency, such people pray to God for the realization of his promise: “Let your kingdom come. Let your will take place, as in heaven, also upon earth.”—Matt. 6:9, 10.
[Picture on page 12]
The profit incentive moves most farmers and grain companies to oppose any form of world food reserve