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Thread: Farmer Welfare

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    Farmer Welfare

    I found Sen. Tom Harkin (D-Iowa), acknowledgment that crop subsidies are "very hard to justify when we're having record prices and incomes" to be on the mark. Can somebody justify why we should have crop subsidies when crop prices are setting records?

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    Re: Farmer Welfare

    Quote Originally Posted by alaskaguy View Post
    I found Sen. Tom Harkin (D-Iowa), acknowledgment that crop subsidies are "very hard to justify when we're having record prices and incomes" to be on the mark. Can somebody justify why we should have crop subsidies when crop prices are setting records?

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    Most of the crop subsidies are based on price. If the prices are good, the farmers don't get the subsidies.

    There are still programs out there that aren't based on price, but they are to encourage conservation and such stuff. And maybe there are some subsidies that are out there that aren't based on price, but for the most part, farmers are not getting that much from the government right now.



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    Re: Farmer Welfare

    Quote Originally Posted by alaskaguy View Post
    I found Sen. Tom Harkin (D-Iowa), acknowledgment that crop subsidies are "very hard to justify when we're having record prices and incomes" to be on the mark. Can somebody justify why we should have crop subsidies when crop prices are setting records?

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    I agree that when crop prices are high that crop subsidies are not needed. In 1996, the Republican Congress decoupled farm program payments from the crop price. This means that the payment made is not based on the price on crop received. They also lowered the price at which crops were supported at. Corn had a loan rate of less than $2.00 and it had a marketing loan type payment which triggered an LDP (Loan Deficiency Payment) if prices were below loan level. The LDP would change daily according to market. USDA personnel would have to contend with mountains of forms and paperwork to determine LDP payment. A paperwork nightmare.

    In 2002, Harkin added a measure known as the CSP (Conservation Security Program) in an effort to link farm program support to implemented Conservation measures. This has been implemented in some areas of the country and state and not in others. Bush has neglected to fund full implementation. (Not funding.....sounds like No Child Left Behind Act).

    Things have changed dramatically in the last year or so. But remember, it was only a little over a year ago that corn was around $1.75 and beans were around $4.75. I have more of an issue with OIL subsidies than with farmers.



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    Re: Farmer Welfare

    Why should any farm subsidies be needed? The New Zealand experiment seems to support that farmers flourish without subsidies:

    Save the Farms -- End the Subsidies

    They eliminated all farm subsidies in 1984, and the results were extremely positive. Why wouldn't this work here?



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    Re: Farmer Welfare

    Wow, Harkin admitting something like that. That should be the headline. I believe that our representatives keep passing these ridiculous things because when they don't, supporters of subsidies wave the banner of "affordable food". As if we weren't paying for it on the back side. We need someone with enough balls to oppose them, and with enough speaking ability to clearly state the fallacies of that argument.



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    Re: Farmer Welfare

    Quote Originally Posted by Stormin View Post
    I agree that when crop prices are high that crop subsidies are not needed. In 1996, the Republican Congress decoupled farm program payments from the crop price. This means that the payment made is not based on the price on crop received. They also lowered the price at which crops were supported at. Corn had a loan rate of less than $2.00 and it had a marketing loan type payment which triggered an LDP (Loan Deficiency Payment) if prices were below loan level. The LDP would change daily according to market. USDA personnel would have to contend with mountains of forms and paperwork to determine LDP payment. A paperwork nightmare.
    I find it very scary for someone to oversimplify the farm program into that paragraph. But I don't have the energy to fully explain the program myself. (that's my way of admitting I'm no expert at it)
    The decoupling was needed to offset the false supply/demand signals that subsidies created in the marketplace. Yes, there is a base payment for participating in the farm program. It was based on past production. Yes, there is a marketing loan program. I think that's been around for almost ever. The LDP program is where some serious money is involved, and it is based on price. High price = no payment. You may use the marketing loan or the LDP, but not both. The loan does not trigger the LDP. As far as the paperwork. It's the government. The paperwork nightmare has existed since the inception of the USDA. Mountains of forms to participate, yes. LDP program was on form to qualify and one form to apply for the LDP itself.

    Market development is way better than farm subsidies. I farm and I don't know anyone who would disagree with that statement. But keeping an even playing field in agriculture (nationally and internationally) will unfortunately mean some government intervention. But don't think that production agriculture is the only segment of our economy that gets subsidies. This conversation get real complicated real quick.



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    Re: Farmer Welfare

    Quote Originally Posted by Jerry1982 View Post
    But keeping an even playing field in agriculture (nationally and internationally) will unfortunately mean some government intervention.
    I don’t understand why this is true, and I refer again to the example of New Zealand that I cited above. Agriculture is extremely important to New Zealand’s economy and agriculture products are major export products over there. Indeed, not only is it more important to New Zealand (as a percentage of GDP) than to the US economy as a whole; agriculture’s share in the New Zealand economy is larger than agriculture’s share in Iowa’s economy! Cutting all subsidies was successful over there, and I don’t understand how we are different?



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    Re: Farmer Welfare

    Pardon me for this soapbox moment, but this issue really touches a nerve with me. This isn't the popular opinion, but one I've alwaysl held: why do we even have crop payments? Everyone thinks that we need to save the family farm like the universe will implode if corporation X buys out Smith Family Farms? It won't. And when that farm is bought by a larger comapny, the output will still be there to "feed the world."

    In virtually every other sector a small business owner gets a big f you/too bad if we have a bad year. Farmers? Hell, give them more money, in fact, pay them to not work (see: CRP.) In any small community in Iowa (10,000 or less) governments give Wal Mart's numerous incentives to come in and crush family businesses. Yet if a corporate farm comes in to crush a small farm everyone screams how vital family farms are for the state.

    Now without the exact numbers I'm willing to bet there are significantly more small businesses that employ significantly more Iowans and generate significantly more tax revenue than small farms. There is nothing that pi$$es me off more than to go into a coffee shop in the middle of winter and listening to farmers crying about their payment for the year when I'm working my but off w/o half the government support they receive to make it.

    I have nothing against small farmers, I just don't understand why my tax dollars need to prop up their failing business. It's called capitalism-it has worked well for America so far.



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    Re: Farmer Welfare

    I agree bandit, I love bringing this up at family get togethers. It really makes my realatives ****** off, but i agrue if they cannot make it alone, they should get out. But of course, why do we give GM and United Airlines subsidies to fail?


    They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety. - Benjamin Franklin 1775

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    Re: Farmer Welfare

    Quote Originally Posted by bandit View Post
    Pardon me for this soapbox moment, but this issue really touches a nerve with me.

    ...

    Now without the exact numbers I'm willing to bet there are significantly more small businesses that employ significantly more Iowans and generate significantly more tax revenue than small farms. There is nothing that pi$$es me off more than to go into a coffee shop in the middle of winter and listening to farmers crying about their payment for the year when I'm working my but off w/o half the government support they receive to make it.
    Soapboxes are encouraged around here

    Some exact numbers for your use:

    Iowa GDP (2005):

    Agriculture, forestry, fishing and hunting: $3,707
    Finance and insurance: $11,234
    Services: $20,293
    Manufacturing: $24,710

    (in millions, of course).

    Source: Iowa Quick Facts — State Data Center



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    Re: Farmer Welfare

    Quote Originally Posted by iceclone View Post
    They eliminated all farm subsidies in 1984, and the results were extremely positive. Why wouldn't this work here?
    Please keep in mind that New Zealand exports the majority of its agricultural products and consumes very little of what it produces. The United States is rather the opposite, as we consume most of what we produce.


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    Re: Farmer Welfare

    In most industries government subsidies reduce the cost of the end product. However, crop subsidies make food prices higher for consumers.

    The USDA says about two-thirds of the farm aid goes to the weathiest 10% of the farms. Therefore, should farm aid be considered a direct transfer from taxpayers to mostly rich corporate farmers (there currently are no income caps for farm aid)?

    Are the farm bills really anything more that than payoffs to the agricultural constituency?


    Last edited by alaskaguy; 11-15-2007 at 11:35 AM.

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    Re: Farmer Welfare

    Quote Originally Posted by jbhtexas View Post
    Please keep in mind that New Zealand exports the majority of its agricultural products and consumes very little of what it produces. The United States is rather the opposite, as we consume most of what we produce.
    You are correct, but I'm not sure if I understand your argument. Are you arguing that farm subsidies are desirable to lower domestic food prices? I just want to make sure I understand you correctly.



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    Re: Farmer Welfare

    Quote Originally Posted by iceclone View Post
    You are correct, but I'm not sure if I understand your argument. Are you arguing that farm subsidies are desirable to lower domestic food prices? I just want to make sure I understand you correctly.
    US farm programs make food prices higher. Economists estimate that Americans pay about $12 billion more a year for food as a consequence.



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