The Truth About Farm Subsidies

[javaguru]

As with most fed programs a bad idea.....

reason.tv - Videos > Agricultural Subsidies


"The government is bailing out the banks...but who's going to bail out the government?" asks Texas cotton farmer Ken Gallaway, a vocal critic of agricultural subsidies that cost U.S. taxpayers and consumers billions of dollars a year in direct payments and higher prices for farm goods.

Agricultural subsidies were put in place in the 1930s during the Great Depression, when 25 percent of Americans lived on farms. At the time, Secretary of Agriculture Henry Wallace called them "a temporary solution to deal with an emergency." Those programs are still in place today, even though less than 1 percent of Americans currently live on farms that are larger, more efficient, and more productive than ever before.

Consider these facts. Ninety percent of all subsidies go to just five crops: corn, rice, cotton, wheat, and soybeans. Two thirds of all farm products—including perishable fruits and vegetables—receive almost no subsidies. And just 10 percent of recipients receive 75 percent of all subsidies. A program intended to be a “temporary solution” has become one of our government’s most glaring examples of corporate welfare.

U.S. taxpayers aren’t the only ones who pay the price. Cotton subsidies, for example, encourage overproduction which lowers the world price of cotton. That’s great for people who buy cotton, but it’s disastrous for already impoverished cotton farmers in places such as West Africa.

U.S. farm programs cost taxpayers billions each year, significantly raise the price of commodities such as sugar (which is protected from competition from other producers in other countries), undermine world trade agreements, and contribute to the suffering of poor farmers around the world. It’s bad public policy, especially in these troubled economic times.

 

[SPEKTOR-AAA]

Java this stuff is frustrating. People bash low income welfare recipients but dont realize the huge 1000 acre rice farmers down the street receives tons of money. What is a solution to something as dysfunctional as this?

 

[javaguru]

Java this stuff is frustrating. People bash low income welfare recipients but dont realize the huge 1000 acre rice farmers down the street receives tons of money. What is a solution to something as dysfunctional as this?

Lack of federal government involvement...

The market has always sorted itself out....in spite of attempted government control....reference the Soviet Union.

 

[SPEKTOR-AAA]

Interesting. Where I live most of the area is agriculture specifically rice farmers. Would the elimination of these subsidies put these farmers out of business?

 

[javaguru]

Interesting. Where I live most of the area is agriculture specifically rice farmers. Would the elimination of these subsidies put these farmers out of business?

Maybe and maybe not...depending on the farmer and their practices. Regardless, government subsidies creates an overallocation of capitol in subsidized industries that would be better allocated elsewhere. At the end of the day, why is my tax money going to subsidize ADM?

 

[SPEKTOR-AAA]

Ugghh b/s over 43+% of ADM profits come from products subsidized by us. I don't even understand how we allow it to happen. It must be that people really just don't understand or something.

 

[b0und]

For once I totally agree with Java.

Agricultural subs need to be abolished, in Australia, too.














b0und (2 cents)

 

[RottenWillow]

Cessation of subsidies will result in acute, but transient, adverse consequences. Suddenly people who always relied on payments irrespective of market values or their level of (appropriate) productivity will lose income. Some concerns no doubt will go broke.

Subsidized farmers who've been growers for 40+ years are going to struggle to adapt. Abrupt cessation would no doubt be unfair to them. We're talking 2nd and even 3rd gen subsidized farmers here. An explicit, well publicized plan to slowly phase out government payments needs to occur. Smart, flexible enterprises will adapt and diversify.

 

[mrplunkey]

Cessation of subsidies will result in acute, but transient, adverse consequences. Suddenly people who always relied on payments irrespective of market values or their level of (appropriate) productivity will lose income. Some concerns no doubt will go broke.

Subsidized farmers who've been growers for 40+ years are going to struggle to adapt. Abrupt cessation would no doubt be unfair to them. We're talking 2nd and even 3rd gen subsidized farmers here. An explicit, well publicized plan to slowly phase out government payments needs to occur. Smart, flexible enterprises will adapt and diversify.

+1

But the above post should be fill-in-the-blank style. Then several versions should be issued including:

1) farmers
2) welfare recipients
3) social security recipients
4) medicare/medicaid recipients
5) oil subsidies
6) public education

...

But I love the post and idea!

 

[kx250rider]

The whole thing is corrupt from front to back. And did anyone mention the manipulation of crops by the Fed (i.e. paying a farmer to NOT grow a certain crop in order to create a shortage/keep price up)? Yes, it happens with anything from corn to soy beans.

The only thing that they offer, which I can say is real help to promote farming without unfair manipulation, is the Williamson Act in CA. We are considering it, as it will help a little to level the playing field between our avocados and the imported ones from Chile and Mexico. Williamson Act Program - Basic Contract Provisions There are a few major drawbacks to signing up for it, but those same drawbacks actually protect from abuse. In other words, I can't sign up, get a huge property tax reduction, and then open a non-farming business and get rich, or put up a bunch of buildings and rent them out, etc.

The other thing that really helped us out in 2007, was the IRS allowing us to spread our loss from the Great Socal Ice Storm of 1-2-2007, over 3 years. We lost $250,000 in crops, plus all the trees were killed and thus NO crops 'til a tiny crop this year, and all of our plumbing was destroyed and had to be completely replaced. Even the backflow and fertilizer injection systems froze and smashed up. No insurance, but the tax break was a little help at least. I hope that REALLY WAS a 1000-years anomaly. It was the coldest temp ever recorded in an coastal county in California since records were kept in the mid 1800s, by far. In Somis where we are, it was 7 degrees for 5 hours, and never got above 15 degrees until later the next day. In a typical worst-case winter night, it might get down to 29 for a couple hours, then heat right back up long, LONG before anything gets killed or explodes from water freezing in pipes. Normally it never gets below 32 whatsoever, and seldom below 40 at night in the winter.

Charles

 

[SPEKTOR-AAA]

Something to ad to KX post.

DMI (Dairy Management Inc) recently has been promoting higher cheese intake by Americans. Mind you DMI is partially funded by USDA which also advocates against obesity. Anybody see the contradiction in that fight, as well as the massive amounts of wasted tax dollars. FML!!!

I just dont understand how there is seemingly no oversight to these wasteful programs in our country.

 

[nydj66]

What about the argument that we need to keep our food supply domestic is case of war or world-wide disaster? If you just let market conditions prevail, a lot of our food production would go to Mexico and South America.

 

[billfred]

I think the article, like most everyone here, does not understand much about farm subsidy program. Though I do think it is probably time to end it, let me outline what is was designed for and how it works:

* First - a farm is limited to $50k/yr maximum subsidy so forget all this, oh the farmer down the road is a millionaire from farm subsidies.

* Second - farms are required to set out a certain percent of their land (no crops) in order to receive the crop subsidy.

* The subsidy is based on the target price to obtain a good profit margin and the actual price of the crop. So the years that you have a spike in prices, you should receive zero subsidy (if market price hits target price)

* last part of the farm subsidy was to pay farmers to turn land that should have never been farmed back into grass land. This was a major conservation program and accomplished several major things 1) brought sloped and wet lands back to their natural state 2) greatly reduced surface erosion from poor farm land. Anyone who lived in west texas before and after this program knows how well it is working.

So summary, the farm program should phase itself out, if the farmers set out enough acreage, they commodity price should equal the target price. This is not quite happening for two reason 1) world wide trade 2) government keeps raising the target price.

So the real solution to this is to roll back the target price and let the subsidies phase out as designed.

 

[gotmilk]

ouch. I own two farms and trying to add a third.

 

[canadianhitman]

What about the argument that we need to keep our food supply domestic is case of war or world-wide disaster? If you just let market conditions prevail, a lot of our food production would go to Mexico and South America.

Great point. And to the point made about these subsidies hurting poor farmers in developing countries...I say...who gives a fug about some cotton farmer in West Africa?!?! You libs need to learn to look after your own first.

 

[EnderJE]

Great point. And to the point made about these subsidies hurting poor farmers in developing countries...I say...who gives a fug about some cotton farmer in West Africa?!?! You libs need to learn to look after your own first.

So you're saying to not let market forces control the outcome? If you let it, then the outcome will be to the lowest cost provider that the consumer is willing to pay for. The lowest cost provider is usually where the cost of production is low and there is no social net (ie third world), no?

 

[puddlemonkey]

ouch. I own two farms and trying to add a third.

pot farms don't count brah

 

[canadianhitman]

So you're saying to not let market forces control the outcome? If you let it, then the outcome will be to the lowest cost provider that the consumer is willing to pay for. The lowest cost provider is usually where the cost of production is low and there is no social net (ie third world), no?

That's right...I'm saying rig the game so that the third world doesn't continue to kick our asses the way they have been lately. Fucking China is manipulating it's currency to keep it low to make it's exports attractive as possible...so why can't the USA subsidize farms to keep that industry from disappearing overseas? Gotta do whatever it takes to keep the local economy churning...fuck playing fair.

 

[SPEKTOR-AAA]

That's right...I'm saying rig the game so that the third world doesn't continue to kick our asses the way they have been lately. Fucking China is manipulating it's currency to keep it low to make it's exports attractive as possible...so why can't the USA subsidize farms to keep that industry from disappearing overseas? Gotta do whatever it takes to keep the local economy churning...fuck playing fair.

Interesting...good point

 

[mrplunkey]

What about the argument that we need to keep our food supply domestic is case of war or world-wide disaster? If you just let market conditions prevail, a lot of our food production would go to Mexico and South America.

1) We're already so globalized in key areas (oil, clothing, electronics, medical devices) that a world-wide disaster would already interrupt a vast number of critical supply chains.

2) Letting food become a non-subsidized global commodity might actually spread production such that we're no longer as dependent on US production. What if the US had a catastrophic bug or disease for 1-2 years?

3) It wouldn't hurt us to diversity food, because a lot of the new trading partners could be in tropical regions, where we (the US) don't fare that well politically. Good trade makes for good relations -- it might actually help us bond.

 

[gotmilk]

pot farms don't count brah

One is tomatoes and cucumbers, the other is 3400 apple trees.

 

[puddlemonkey]

One is tomatoes and cucumbers, the other is 3400 apple trees.

what kind of apples?

 

[javaguru]

What about the argument that we need to keep our food supply domestic is case of war or world-wide disaster? If you just let market conditions prevail, a lot of our food production would go to Mexico and South America.

LOL @ try to produce food for the country if foreign oil is cut off...

Hell, thanks to the disastrous ethanol subsidies we produce much less food and a hell of a lot of "feed corn."


For people that don't know shit about farming....that's corn humans don't consume...

 

[javaguru]

That's right...I'm saying rig the game so that the third world doesn't continue to kick our asses the way they have been lately. Fucking China is manipulating it's currency to keep it low to make it's exports attractive as possible...so why can't the USA subsidize farms to keep that industry from disappearing overseas? Gotta do whatever it takes to keep the local economy churning...fuck playing fair.

Google Smoot-Hawley Act...

You're missing the point, why should I send money to someone that can't compete...it's welfare. I lose contracts to Indian and Chinese programmers but I've never gotten a welfare check paid for by the taxpayers....

 

[javaguru]

I think the article, like most everyone here, does not understand much about farm subsidy program. Though I do think it is probably time to end it, let me outline what is was designed for and how it works:

* First - a farm is limited to $50k/yr maximum subsidy so forget all this, oh the farmer down the road is a millionaire from farm subsidies.

* Second - farms are required to set out a certain percent of their land (no crops) in order to receive the crop subsidy.

* The subsidy is based on the target price to obtain a good profit margin and the actual price of the crop. So the years that you have a spike in prices, you should receive zero subsidy (if market price hits target price)

* last part of the farm subsidy was to pay farmers to turn land that should have never been farmed back into grass land. This was a major conservation program and accomplished several major things 1) brought sloped and wet lands back to their natural state 2) greatly reduced surface erosion from poor farm land. Anyone who lived in west texas before and after this program knows how well it is working.

So summary, the farm program should phase itself out, if the farmers set out enough acreage, they commodity price should equal the target price. This is not quite happening for two reason 1) world wide trade 2) government keeps raising the target price.

So the real solution to this is to roll back the target price and let the subsidies phase out as designed.

They get a matching amount of money from the feds for every acre they seed with corn..it isn't just to not produce. Like you said, that's the problem...

 

[nydj66]

LOL @ try to produce food for the country if foreign oil is cut off...

Hell, thanks to the disastrous ethanol subsidies we produce much less food and a hell of a lot of "feed corn."


For people that don't know shit about farming....that's corn humans don't consume...

The US has enough coal to meet our domestic energy needs for the next 120 years. So all we need is cost-effective electric vehicles and a shitload more powerplants to end our dependence on foreign oil.

You can be damn sure that there are government strategists who are well aware of this and will move us in that direction when the time is right.

But to play the game for full effect, we want to run the rest of the world out of oil first; eppecially when it's the least expensive option. Then our domestic reserves will be all the more valuable and we will remain the dominant world power for at least a couple more centuries.

When oil gets so expensive that people's standard of living takes a plummet, wait and see how fast the envirnomentalists get steamrollered and a bevy of new coal powerplants gets green-lighted.

 

[gotmilk]

what kind of apples?

Macs, Honeycrisp

 

[billfred]

They get a matching amount of money from the feds for every acre they seed with corn..it isn't just to not produce. Like you said, that's the problem...

No they don't. They have a corn base that shows how many acres of corn they can produce and what the average yield is for that base.

They get a check for the acres * yield * profit (profit = Target price - actual price). But in order to get that check they have to agree to not plant xx number of acres

 

[shirlene29]

I read not one post other than the first and fourth response



java, DIAF

 

[redshirt27se]

I read not one post other than the first and fourth response



java, DIAF

considering your recent circumstances i probably would have used another acronym than DIAF

 

[shirlene29]

considering your recent circumstances i probably would have used another acronym than DIAF

nah..it is exactly how I feel right now

 

[puddlemonkey]

Macs, Honeycrisp

dem der Honeycrisps are purdy good

 

[javaguru]

No they don't. They have a corn base that shows how many acres of corn they can produce and what the average yield is for that base.

They get a check for the acres * yield * profit (profit = Target price - actual price). But in order to get that check they have to agree to not plant xx number of acres

True or false, corn farmers get a gubment check for producing corn.


Caveat...assuming they follow the bureaucratic rules and file the proper paperwork...

 

[javaguru]

considering your recent circumstances i probably would have used another acronym than DIAF

Maybe Jesus gave her a shot across the prow...

 

[javaguru]

The US has enough coal to meet our domestic energy needs for the next 120 years. So all we need is cost-effective electric vehicles and a shitload more powerplants to end our dependence on foreign oil.

You can be damn sure that there are government strategists who are well aware of this and will move us in that direction when the time is right.

But to play the game for full effect, we want to run the rest of the world out of oil first; eppecially when it's the least expensive option. Then our domestic reserves will be all the more valuable and we will remain the dominant world power for at least a couple more centuries.

When oil gets so expensive that people's standard of living takes a plummet, wait and see how fast the envirnomentalists get steamrollered and a bevy of new coal powerplants gets green-lighted.

lol @ cost effective electric vehicles...hybrid is as close as you are going to get with foreseeable technology. How are those electric tractors, combines and fertilizers coming along? I was talking about our agricultural dependence on hydrocarbons..... fertilizer is made from oil. Converting coal to oil is extremely expensive...just sayin'.

 

[cindylou]

Maybe Jesus gave her a shot across the prow...

watch it

 

[javaguru]

watch it

I harbor no ill will toward Shirlene and especially not her family; I would never wish harm come to her or her family....just sayin'.

 

[orange2]

the payment limit is 40,000, its callled the direct payment. The govt is basically paying us to provide information about what and how many acres of corn or beans we plant each year. We can also take out a loan on grain in storage for 9 months at low interest. That money is payed back when the grain is sold or the 9 months is up. That money doesn't go back into the farm program though, it is put in the general fund of the goverment so it always looks like an expense when in reality it is payed back.

 

[nydj66]

lol @ cost effective electric vehicles...hybrid is as close as you are going to get with foreseeable technology. How are those electric tractors, combines and fertilizers coming along? I was talking about our agricultural dependence on hydrocarbons..... fertilizer is made from oil. Converting coal to oil is extremely expensive...just sayin'.

The deisel engine was invented to run on vegetable oil. No reason high HP farm equipment can't run that way, even if it's not the most efficient option. I'm just saying our power is going to come from coal and cars will be electric. We have the technology to do it today and the cost will come down with mass production.

There are other options for fertilizer besides oil as well, just going to cost more. No need to convert coal to oil.

 

[juiceddreadlocks]

The US doesn't have enough coal for energy production in any regard. Most of the coal people quote as "enough for blah blah blah years" is only useful for metallurgic purposes, which is why we import so much already.

No there is no other form of energy as dense as oil, no there are no viable alternatives which provide for our current lifestyles. Fertilizer comes largely from natural gas inputs.

 

[javaguru]

The US doesn't have enough coal for energy production in any regard. Most of the coal people quote as "enough for blah blah blah years" is only useful for metallurgic purposes, which is why we import so much already.

No there is no other form of energy as dense as oil, no there are no viable alternatives which provide for our current lifestyles. Fertilizer comes largely from natural gas inputs.

Basically, if hydrocarbons didn't exist we would have had to invent them to create the current boom in technology and lifestyle....I'm a Star Trek science nerd hoping for a better future but I've also taken enough science and math classes to understand that our current lifestyle can't be salvaged by 15th century windmill technology or solar...To quote Scotty, "You cannot change the laws of physics" and hydrocarbons are cheap and energy rich compared to the alternatives.

 

[javaguru]

The deisel engine was invented to run on vegetable oil. No reason high HP farm equipment can't run that way, even if it's not the most efficient option. I'm just saying our power is going to come from coal and cars will be electric. We have the technology to do it today and the cost will come down with mass production.

There are other options for fertilizer besides oil as well, just going to cost more. No need to convert coal to oil.

You cannot change the laws of physics...

Hydrocarbons are the most cost effective form of energy. Research has shown that ethanol and other plant based fuels aren't cost effective and produce more CO2 emissions with their production than they save as a fuel additive.

 

[nydj66]

You cannot change the laws of physics...

Hydrocarbons are the most cost effective form of energy. Research has shown that ethanol and other plant based fuels aren't cost effective and produce more CO2 emissions with their production than they save as a fuel additive.

I have said that using those other forms of energy would be less efficient which implies that it would cost more and reduce our standard of living.

However, I still maintain that's the direction we will go in. Also, there will be an efficiency gain when all the 10% efficiency internal combustion engines are off the roads and energy is generated via steam turbines. That will reduce CO2 emissions.

 

[javaguru]

I have said that using those other forms of energy would be less efficient which implies that it would cost more and reduce our standard of living.

However, I still maintain that's the direction we will go in. Also, there will be an efficiency gain when all the 10% efficiency internal combustion engines are off the roads and energy is generated via steam turbines. That will reduce CO2 emissions.

Whatever source of energy we use should be determined by the market and not the Feds...I know Barry points to China as the future leader in clean energy, a PR stunt, but they bring a dirty coal plant online every week to fuel the consumerism of the west...lol.

 

[mrplunkey]

Whatever source of energy we use should be determined by the market and not the Feds...I know Barry points to China as the future leader in clean energy, a PR stunt, but they bring a dirty coal plant online every week to fuel the consumerism of the west...lol.

China's not leading clean energy anywhere. There are fossil-fueled plants going up everywhere. I'm pretty sure power plants (complete with cooling towers) with 3-5 very high smokestacks aren't solar farms.