Agribusiness Industrial Complex strikes again!

I just can't stand it!! I'm sure there's another side to this and I'm really too old to let my blood boil like this, but here's an Op-ed piece that describes how agribusiness interests in California and Florida and the Agriculture department are working the subsidy angle to keep local farmers from expanding.


My Forbidden Fruits (and Vegetables)

Yes it's NY times and you have to register. Not a big deal. Just do it.

What is sad/amusing is that the writer never actually suggests that farm subsidies be eliminated, just made more "flexible."

As soon as the Feds get involved with stuff like this, it is inevitable that the programs will take on a life of their own and will be structured to favor campaign contributors and the interests of entities rich enough to do intensive lobbying. This guy's surprise that after years of being on the dole, he suddenly finds that the attached strings are too confining is both naive and scandalous.

I'm sure there are reasons for farm subsidies. Can someone explain them to me?

Hi Stuart,
My take on this was different from yours. The subsidies that are involved were given to the guy who OWNED the land this farmer RENTED. So I don't think the guy complaining benefited from the subsidies. I think his complaint is that the government shouldn't be actively discouraging small farmers from getting bigger by giving stupid subsidies to already enormous farmers. That makes sense to me so it will probably never be policy.

I'm sure there are reasons for farm subsidies. Can someone explain them to me?

Hey where's the lemon guy to explain farm policy when you need him?

I'm sure there are reasons for farm subsidies. Can someone explain them to me?

Historically, they've been justified for two main reasons:

1) Left to themselves, agricultural markets tend to go into boom/bust cycles with very wide swings in productivity and prices that are bad for both farmers and consumers. Nature provides a bumper crop; prices plummet due to the overabundant availability of the commodity; farmers switch to a more profitable crop next year; within a year or two there's a shortage and prices skyrocket; farmers switch back to producing the crop; the cycle starts over again. By buying overproduction (providing a price floor) and releasing stores when there's a shortage (providing a price ceiling), government subsidies can help stabilize prices. A similar rationale is used to justify paying farmers to keep land fallow--the land is in reserve, and not committed to another crop, so it can be put into production at times of a shortage.

2) National security. Reliance on foreign food supplies is fine until they get cut off in a time of crisis. For this reason, many countries subsidize some level of farming even though it is not economical on its own merits. This is France's justification for a lot of its farm subsidies.

-Paul W.

Hey where's the lemon guy to explain farm policy when you need him?

%^(

There is no logical explanation for subsidies ! Of the billions upon billions of dollars the U.S. government pays out each year in the form of subsidies, approximately 75 to 80 percent is direct payment for commodities, 10 to 15 percent is for "conservation", and 10 percent are for "disasters" ... of the direct payment for commodities, approximately 97 percent goes to the following - feed grains including corn, cotton, wheat, rice, soybeans, milk and cheese, peanuts, and sugar ... and get this - approximately 2 percent of all payments are made to people who don't even farm !

Want to see who exactly is paid ? Easy ! Go to

http://farm.ewg.org/farm/

You might find your next door neighbor on the list ! Who/what you find on the list will boggle your mind !

And oh BTW - row and permanent crop farmers like me who produce all your fruits and veggies don't get a dime !

Somebody mention "national security ?" Does that include "food safety" and "food security ?" Don't look now but less than one-half of one percent of all food imported into the U.S., including fruits and veggies, are inspected by the government for anything including bacterial or pesticide contamination ... but don't worry - I'm sure those foreign farmers have to jump through the same food safety and food security hoops I and the rest of our nations' farmers are forced to jump through ... NOT !

Buy foreign with confidence ! Help put another U.S. farmer outa business ! Free trade not fair trade - that's the American way !

Clink !

%^(

Hey where's the lemon guy to explain farm policy when you need him?

%^(

... and get this - approximately 2 percent of all payments are made to people who don't even farm !



%^(

This is interesting! How do I get on the list to get paid for not farming? I am really terrible at growing things, but I can not-grow things with the best of 'em!

I'm sure there are reasons for farm subsidies. Can someone explain them to me?

Historically, they've been justified for two main reasons:

1) Left to themselves, agricultural markets tend to go into boom/bust cycles with very wide swings in productivity and prices that are bad for both farmers and consumers. Nature provides a bumper crop; prices plummet due to the overabundant availability of the commodity; farmers switch to a more profitable crop next year; within a year or two there's a shortage and prices skyrocket; farmers switch back to producing the crop; the cycle starts over again. By buying overproduction (providing a price floor) and releasing stores when there's a shortage (providing a price ceiling), government subsidies can help stabilize prices. A similar rationale is used to justify paying farmers to keep land fallow--the land is in reserve, and not committed to another crop, so it can be put into production at times of a shortage.

2) National security. Reliance on foreign food supplies is fine until they get cut off in a time of crisis. For this reason, many countries subsidize some level of farming even though it is not economical on its own merits. This is France's justification for a lot of its farm subsidies.

-Paul W.

By the government’s microeconomic “logic”, and not mine, they should then subsidize Wall Street. That is the quintessential boom and bust industry. Take for example their wildly profitable “crop” of CMO’s and CDO’s in 2004, 2005 and 2006. In 2007 and likely through 2009 that “crop” has and will fail resulting in massive losses. That certainly hurts both the producer and consumer, so perhaps the government, by their “logic”, should subsidize Wall Street investment banks as well.

By the government’s microeconomic “logic”, and not mine, they should then subsidize Wall Street. That is the quintessential boom and bust industry. Take for example their wildly profitable “crop” of CMO’s and CDO’s in 2004, 2005 and 2006. In 2007 and likely through 2009 that “crop” has and will fail resulting in massive losses. That certainly hurts both the producer and consumer, so perhaps the government, by their “logic”, should subsidize Wall Street investment banks as well.

Except that when Wall Street's "crop" fails, people don't starve. They just lose money on paper. I.e., fake assets.

And this is macroeconomic logic, not microeconomic.

-Paul W.

Somebody mention "national security ?"

I said that this is the excuse that the French use for their fat farm subsidies.

I didn't say I thought it was justified. To some extent it is, but not to the extent that they use this excuse to curry political favor with their farmers.

Nor did I say that this is a rationale that the US has ever used (We're a continent--we have plenty of room to cultivate food to feed ourselves. If cut off from foreign food imports, we would have no problem feeding ourselves).

In this day and age, it is not the fragile, family-owned, small agricultural concern that gets the subsidies. The big hogs of corporate agribusiness have pushed them out of the troughs. ADM and friends don't need subsidies--they're more than adequately protected against market fluctuations, thank you very much. But they are precisely the ones getting the subsidies, because they can pay for the politicians.

Next to the defense industry, it's the most reprehensible waste of public funds that's currently going on.

-Paul W.

By the government’s microeconomic “logic”, and not mine, they should then subsidize Wall Street. That is the quintessential boom and bust industry. Take for example their wildly profitable “crop” of CMO’s and CDO’s in 2004, 2005 and 2006. In 2007 and likely through 2009 that “crop” has and will fail resulting in massive losses. That certainly hurts both the producer and consumer, so perhaps the government, by their “logic”, should subsidize Wall Street investment banks as well.

Except that when Wall Street's "crop" fails, people don't starve. They just lose money on paper. I.e., fake assets.

And this is macroeconomic logic, not microeconomic.

-Paul W.[/quote]

So individual middle-class investors that own pieces of failed CMO's in their IRA and 401-K accounts do not lose assets? Those are just fake assets?

I consider it microeconomic policy because it is applied to specific businesses on a smaller scale. If it were macroeconomic it would be broader in scope such as adjusting the federal funds rate or the discount rate that would affect all business on a higher scale.

In this day and age, it is not the fragile, family-owned, small agricultural concern that gets the subsidies. The big hogs of corporate agribusiness have pushed them out of the troughs. ADM and friends don't need subsidies--they're more than adequately protected against market fluctuations, thank you very much. But they are precisely the ones getting the subsidies, because they can pay for the politicians.


-Paul W.

Good point, Paul and I concur.

Whatever.

I repeat--nobody eats money.

When Wall Street loses money, it doesn't mean that the nation starves because there isn't food available--at any price.

If there's a real crop failure, such as the potato famine in Ireland, everyone starves, because there isn't any food around, no matter how much money you might have.

We, thank God, have never experienced true famine in the USA. Given that we have continental resources available to grow food, we probably never shall, unless we are subject to a governmental screw-up on a scale far worse even than the G. W. Bush administration.

Agribusiness is big enough to appear on the macroeconomic radar screen.

Wall Street does not, and never has, dealt with reality. They trade in pieces of paper that, with each passing year, have less and less to do with real production or consumption. Every now and then, something like the current sub-prime mortgage crisis reminds them that, ultimately, what they trade in depends on sheer fantasy and faith. If the fantasies are smashed, and the faith disappears, they are left with nothing.

I'd love to see every last one of the bastards pauperized.

-Paul W.

Wow. Thanks everyone, for the explanation.

Paul,

My point was that by our government's "logic", other boom and bust industries should also be subsidized. I do not agree with subsidizing industries whether it be the farming industry or the oil industry or Wall Street. My thought is that free competition on a level playing field is the best route to prosperity.

I'm sure there are reasons for farm subsidies. Can someone explain them to me?

Historically, they've been justified for two main reasons:

1) Left to themselves, agricultural markets tend to go into boom/bust cycles with very wide swings in productivity and prices that are bad for both farmers and consumers. Nature provides a bumper crop; prices plummet due to the overabundant availability of the commodity; farmers switch to a more profitable crop next year; within a year or two there's a shortage and prices skyrocket; farmers switch back to producing the crop; the cycle starts over again. By buying overproduction (providing a price floor) and releasing stores when there's a shortage (providing a price ceiling), government subsidies can help stabilize prices. A similar rationale is used to justify paying farmers to keep land fallow--the land is in reserve, and not committed to another crop, so it can be put into production at times of a shortage.

2) National security. Reliance on foreign food supplies is fine until they get cut off in a time of crisis. For this reason, many countries subsidize some level of farming even though it is not economical on its own merits. This is France's justification for a lot of its farm subsidies.

-Paul W.

These reasons may be pretty valid in the historical context. If one were to look at the structure of the agriculture industry at the time when the first subsidies were enacted, I suspect you will find a significant percentage of the industry was family-owned farms. Those businesses could not remain solvent through the boom and bust cycles. But nowadays with the ADMs et al, there isn't much reason to worry about their ability to weather a down cycle in a few of their commodity markets. So really the subsidies have outlived their usefulness.