Posted 12:34 am Monday, February 25, 2013
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Helping farmers and ending subsidies
It seems even the most stalwart supporters of government spending are coming around. It’s time to end farm subsidies. While they perhaps made sense when family farms faced the insurmountable challenges of weather and crop price fluctuations, the vast majority of subsidy recipients now are corporate farms with huge swaths of land and big profits.
“Farming no longer resembles the hardscrabble family enterprise of so much mawkish marketing,” the Washington Post opined last week. “Much of it is dominated by large operators supplying not only the U.S. dinner table but also far-flung export markets. Notwithstanding a major drought, net farm income for 2012 reached $112.8 billion, according to the Agriculture Department.”
Catch that? We’re in the middle of a record-breaking drought, and farming is still a hugely profitable endeavor.
“Farmers are wealthy, the U.S. food supply is not remotely at risk — and yet the government still piles on the subsidies,” the Post adds. “They totaled an annual average of $11.5 billion over the past four years, according to USDA. Farmers get direct payments for growing certain commodities, deeply subsidized crop insurance, cash rewards for practicing soil conservation — you name it. The programs distort markets and shift resources to agriculture that might find more efficient use elsewhere.”
Remember, this is coming from the Washington Post, which rarely has a problem with the government distorting markets. But even the Post acknowledges the farm bill that Congress considered last year didn’t make truly meaningful improvements.
“The bill contained ‘reforms that would have ended the most egregious direct payments to major commodity producers — and replaced them with an enhanced ‘crop insurance’ program that’s arguably just as lush,” the Post explained.
Interestingly, the Post editorial invokes the haunting Paul Harvey speech featured in Dodge’s truck commercial that aired during the Super Bowl. As an historical note, Harvey made that speech to the Future Farmers of America organization in 1978. His audience, we can presume, was part of the generation that would soon face the farm crisis of the 1980s that changed the faces of agriculture in America forever.
Catch that? We’re in the middle of a record-breaking drought, and farming is still a hugely profitable endeavor.
“Farmers are wealthy, the U.S. food supply is not remotely at risk — and yet the government still piles on the subsidies,” the Post adds. “They totaled an annual average of $11.5 billion over the past four years, according to USDA. Farmers get direct payments for growing certain commodities, deeply subsidized crop insurance, cash rewards for practicing soil conservation — you name it. The programs distort markets and shift resources to agriculture that might find more efficient use elsewhere.”
Remember, this is coming from the Washington Post, which rarely has a problem with the government distorting markets. But even the Post acknowledges the farm bill that Congress considered last year didn’t make truly meaningful improvements.
“The bill contained ‘reforms that would have ended the most egregious direct payments to major commodity producers — and replaced them with an enhanced ‘crop insurance’ program that’s arguably just as lush,” the Post explained.
Interestingly, the Post editorial invokes the haunting Paul Harvey speech featured in Dodge’s truck commercial that aired during the Super Bowl. As an historical note, Harvey made that speech to the Future Farmers of America organization in 1978. His audience, we can presume, was part of the generation that would soon face the farm crisis of the 1980s that changed the faces of agriculture in America forever.
The changes that brought about the crisis were already taking place when Harvey made his speech. Family farms in the 1970s took advantage of low interest rates to buy new, advanced equipment and more acreage on credit. They were attempting to keep up with new practices and new players — the corporations that were increasingly snapping up farmland to build massive operations with the latest technology and hired labor.
When commodity prices fell and interest rates went up in the 1980s, many family farms were crushed by that debt. Exports were curtailed for political reasons (President Jimmy Carter tried to punish the Soviet Union for invading Afghanistan by cutting off wheat exports, for example).
Yet government involvement really only made things worse. And in the present, the best way for the government to help really is to simply get out of the way and let the free market work.
“Perhaps God made the farmer, as Paul Harvey says,” the Post concludes. “But does the federal taxpayer have to make him rich?”
When commodity prices fell and interest rates went up in the 1980s, many family farms were crushed by that debt. Exports were curtailed for political reasons (President Jimmy Carter tried to punish the Soviet Union for invading Afghanistan by cutting off wheat exports, for example).
Yet government involvement really only made things worse. And in the present, the best way for the government to help really is to simply get out of the way and let the free market work.
“Perhaps God made the farmer, as Paul Harvey says,” the Post concludes. “But does the federal taxpayer have to make him rich?”
