Here is a copy of an article which I found online which states my own opinion of farm subsidies in a slightly more articulate manner than I can do on my own!

Farm subsidies are all-around bad ideas Tom McWilliams

Low prices because of high grain and meat supplies worldwide have prompted congressional leaders to consider spending between $7 billion and $10 billion to subsidize the farming industry. The National Farmers Union would prefer the amount to be $16.7 billion. I think Congress should spend $0, since the problems which inspired the idea are caused by the very subsidies under consideration.

According to the U.S. Department of Agriculture, the projected total income in 1999 for all farms in the United States is $43.8 billion. This makes the magnitude of the suggested subsidy alarmingly high: about one-third of the total income.

What’s alarming is not that the peril facing farmers is so great, but rather that farmers have so successfully pushed their costs away from the fields and markets and into political lobbying. Any business that gets one-third of its revenue as a handout is either hopelessly mismanaged, or has found a highly creative and effective advertising and public relations strategy.

Farm subsidies have been around for decades. The justification from the beginning has been that since food is such an important resource, it is imperative that we protect the producers of food from market forces that make the business difficult. In the current situation, low food prices caused by higher-than-usual supplies are leading to negative feedback (losses) for some farms.

Without the subsidies, many farms would go out of business. The owners would have to sell their land, or declare bankruptcy. Unlike the successfully manipulated farming market, this is the risk every business owner faces. When a business fails, as any economics student knows, the supply of its products decrease, which leads to an increase in prices, which in turn increases the profits for the businesses that didn’t fold.

Subsidies short-circuit this critical mechanism. Because farm subsidies have been around for decades, we shouldn’t be surprised at the result — super-low prices — because businesses that would have failed without the subsidies kept going, adding to the already too-high supply.

To understand how arbitrary (and unnecessary) subsidies are, imagine what would happen if we decided to start subsidizing the food consumer, say, with food stamps for everyone. Because there would be more money available for food, the prices would tend to rise, leading to the opposite situation: The food consumer wouldn’t be able to afford the arbitrarily-raised prices without the subsidy which originally caused the rise in prices.

Since farmers are looking to get about one-third of their revenue from the federal government, which can only get its money from taxpayers, the net effect of the subsidies is to shift some of our food costs from Meijer to the IRS. Put in such terms, it doesn’t seem quite so bad.

After all, people need to eat. Whether we pay for it at the grocery store, or secondhand through some agent, if the cost of production is not met, food won’t be produced.

The problem is that there are costs associated with the subsidy process that add nothing to the production of food.

First is payroll for the administrators of the subsidies. They don’t improve the food-production process, they only make it more expensive.

Second is the fact that inefficient farms (the ones that would fold first) keep going, wasting resources, which could have been better used by other farms, and, incidentally, charging the efficient farms, via taxes, to help their inefficient competitors stay afloat.

The worst effect is that subsidies distort the market information, (prices) which tell farmers what they should be growing. Because subsidies are given to crops with “too-low” prices, but not to crops with “normal” prices, farmers tend to keep producing the subsidized items instead of growing the things people would rather have, wasting more scarce resources.

There is also the issue of what “too low” or “too high” means with respect to prices. Since “too low” means someone doesn’t want to produce something and “too high” means a different person doesn’t want to buy something, it is easy to see that both phrases have no objective meaning. Naturally, Congress wants to legislate as if they do.

The old argument that food (and, by extension, farmers) is so important that we must protect it from the market is totally backwards. In reality, the food market is so important that we should protect it from the farmers and their lobbyists, so that it functions as efficiently as possible, making the best use of the limited resources we have.

There is another argument that the small family farm is dying out, being replaced by the giant corporate farm, which subsidies help prevent.

First of all, if ending subsidies kills the family farm, leading to a more efficient use of resources, so be it. Should we subsidize the candle industry to protect it from the light bulb market? Does your family deserve to have its business wrecked more so than some farmer’s, by the extra taxes that subsidies require?

Besides, if the agriculture students at MSU are going to work their family farms, do they need a degree? I’m not suggesting that running a family farm requires less knowledge than any other, but I’m probably correct in deducing that most of the agriculture students expect to hire on at a corporate farm.

Finally, in 1998, 94 percent of all American farms had total receipts less than $250,000. If those aren’t family-scale farms, then the family farm is already long gone.

-- Elizabeth (ekfla@aol.com), March 09, 2002

Answers

There are some things to agree with in there, Elisabeth. However, there are a few other things to think about.

First, the guy seems to be confusing net income with gross revenue. The farm subsidies are a very small percent of gross income. Certainly _not_ the 33% figure he uses. In addition, from that total outlay, administration, some nature preservation, and the entire food stamp program is budgeted. These monies are not spent on farming or farmers. :)

Second, the USA spends billions and billions improving the ecconomy & infratructure of other countries - like Brazil, Argentina, and other ag countries. These improvements are being used directly to compete against the USA farmer. Should not the USA also support it's own farmers, if it so heavily subsidises our competition?

Third, The USA has had a policy in effect for years to support a high USA dollar. This helps (subsidises) people who have money in the stock market. It helps (subsidises) companies that face competition from 'cheap' importst, but it really, really hurts businesses that try to export bulk goods into the world ecconomy - like grain. It is much cheaper to buy soybeans from Brazil with their inflation & cheap dollars, while the USA artifically keeps it's dollar valued high.

Fourth, since the 1950's the USA government has had a policy of cheap food, in abundant supply. The govt has encouraged oversupply, as it is good for stability, both ecconomic & emotional. This ag policy is ingrained into farm policy for decades. It will not be an overnight thing to change it. The govt not only encouraged, but practically forced farmers to expand production, farm more acres, etc.

Fifth, embargos. The USA govt used food as a weapon. This seriously hurt our reliability as a food supplier to much of the world. It harmed, for decades to come, our exports. Other exports were allowed - mostly just grain was embargoed.

Sixth, farmers don't like the ag subsidies either. You need to look on the farm boards a bit more and get a real sense of how farmers feel. I realize you have strong anti-farmer thoughts. However, they are nice people, and they would rather have people in the USA pay farmers10 cents for the wheat in a $4 box of wheaties. However, you only pay 5 cents for the wheat in the box, and any attempt to raise the price and consumers (you) get upset and the company preposes importing wheat from other countries to hold down prices.

so, what to do? I guess we should get rid of farms here in the USA, and depend upon imports from other countries. It has been suggested before, the Buffalo Commons Plan. With the current inflated tax base on property, government demands, and enviornmental regulations, we just can't farm for any less. And the USA does _NOT_ allow a level playing field for farmers to compete on the world free trade markets.

Now, if you address some of _these_ concerns, I think you would have 90% of the farmers jumping on your bandwagon, to get the ^%^$^&& govt out of farming _entirely_ and let us compete in the _real_ market.

Thanks, --->Paul

-- paul (ramblerplm@hotmail.com), March 09, 2002.

Paul and Elizabeth here we are again! I could agree with you both and disagree with you both on some comments, but I would rather speak from personal experience. While we often hear of the exotic vacations that some farmers take....it makes one wonder about the stewardship of gov't monies. It all comes from the USDA.... farm subsidies and food stamps. Where is the "freedom to farm act?" There is limited freedom in planting what the gov't tells you to plant so you can get a check. Congress thinks farmers need their monies....I suspect because dirt farmers are the largest move of farmers out there and therefore get heard. Unlike the hog farmer who sees the potential of raising hogs going to the hog confinements. Likewise soon with the cattle going to huge, mega cattle feedlots. As so went the chickens to Tyson and Hudson. The family farm is no more! What a sad commentary. How disappointed the older farmers must be to see that farming has changed so much....maybe for good....maybe for bad. I believe in technology, but I think we have shot ourselves in the foot with technology. While our farm subsidy is non-existant....we are going to feel for farmers who have come to depend on this money to help keep their bottom line looking good, when the Gov't one day decides it will no longer continue the Farm Subsidy program or make severe cutbacks, there will be countless farm auctions....because there are no guarantees it will continue indefinately.

-- Carla (herbs@computer-concepts.com), March 10, 2002.

Well, the govt likes to control things. Us farmers are kinda hard to control - they found subsidies work pretty well to contorl us. So, I don't think subsidies will go away for a _long_ time - whatever folks want, farmers & non-farmers alike. Pretty easy to control the group when they attach a few conditions to getting the checks. :) Every year, a few more conditions...

I was a supporter of Freedom to Farm. And then, along comes LDP & the Oilseed Program.... Well, there goes Freedom to Farm. No chance for it to work with those programs. Kinda clear that the govt will not get out of subsidising cheap bulk feedstocks. Where we differ is that I view it as a welfare program for everybody - it ensures cheap food always in supply for everyone in the USA. It's built into the structure of farming, it' not like farmers make money on the crops, and then get this flood of cash from the govt! No, the LDP & ATMA payments are built into the balance sheet, already spent by midsummer on producing the crop.

For the record, I'd like to see the subsidies not be there either. I just don't see how we will get from here to there without hurting a lot of people; the govt is not interested in getting out of both the subsidies & meddling in the markets; and frankly, people want cheap food, and continue to buy whatever is cheap. For all the talk of ending farm subsidies, higher food prices would never fly with the public.

I just don't see where the changes will come about.

Oh, yes, poultry has gone commercial, hogs pretty much have. Dairy is well down the road on it. I think crops are next on the path. Actually cattle are more difficult to industrialize, as they are just so efficient at using odd bits of land that aren't suited for anything else. People can raise 5-20 head all over in little lots that aren't practical to commercialize. So I'm guessing cattle will be the last major ag segment to go commercial.

Since we didn't save the corner grocery store and didn't save the corner dime store, and we 'all' shop at Walmart, I can understand what people are saying about farming - let it go intergrated if that is more efficient. I do understand that argument.

--->Paul

-- paul (ramblerplm@hotmail.com), March 10, 2002.

I don't have a stong opinion either way. But I DO have information that is interesting reading. There is a website that shows what each person or farm gets in subssidies. All you have to do is go to www.ewg.org, click on th state then the county and there is the list. If you want to see some money thrown around, try Georgia, them Burke County.

-- Buddy in east Georgia (Buddybud@csranet.com), March 10, 2002.

Farm subsidies are at the bottom of my list of subsidies I'd like to see cut. Let's start with the money that goes *outside* of our nation first.

-- Dave (multiplierx9@hotmail.com), March 10, 2002.

Subsidies may have made food "cheap", but you pay for it dearly in federal taxes on April 15. There is no such thing as a free lunch.

-- gita (gita@directcon.net), March 10, 2002.

I am just a simple person who loves the land, seclusion, and rural attitudes. ( And just when I have my little place nearly all fixed up, they are building a 4000 unit housing development one mile to the north of me, selling/leasing all the farmland to the east of me for industrial and office building, and planning to make the road on which I live a "commuter artery" so the writing, in tax dollars no less, is on the wall).

I wonder if I'm not like most people. I knew one could go to the extension office and get help seeding pastures, building fences, or fencing off creeks and streams, and many other farm related enterprises, and I pretty much assumed that was the intended use of farm subsidy funds.

What I didn't know until weeks ago when the .com address of the site that has printed the lists of farm subsidies is how much some people are raking from the pot. I have an entirely different perspective now.

The top person on the list in my county has received nearly a MILLION dollars. That is obscene, and it is not, (in my opinion) a small farmer. Another person received over $600,000, and my next door neighbor received $271,000.

That same neighbor placed an entire meadow that runs on each side of the creek in trees from that program, but wait. . .there is another neighbor that joins both our lands. His land also abuts and in places crosses the creek. They are older, do not farm their land, instead rent it to another farmer. For years they have been struggling to keep their farm which the wife inherited from her father. They did an ag cluster development of 7 lots on the hill that looks directly down on me, ( thus destoying MY seclusion), and gave that money to the government - but it still wasn't enough. (Their land was appraised for taxes 3 1/2 times what land was selling for at the time. ( $2000 acre was normal farm land - they were appraised at $7000 because the only comp in the area at the time was a farm which had just sold for a golf course).

They have lost the battle, and are now having to sell to keep the government from forcing a sale. I asked them why they didn't take advantage of some of the farm programs to raise funds, ( like planting their bottom land in trees). They told me, "they were turned down". Turned down? Why? There isn't a good reason. Their land was as good. . . .( actually it's better) a location for the trees as the adjoining neighbor. Apparently, it is "who you know" that counts.

Bottom line - - I had no idea there were people raking off that kind of money. *I* thought these programs were for the "small" farmers. I think I thought wrong.

-- J McFerrin (JMcFerrin@aol.com), March 10, 2002.

I've farmed or helped my father farm all my life,and if the gov't really wanted to help the small farmer,which they don't,they would cut out all farm payments.I don't want their payments or their advise which is usually worthless.

-- Gary (burnett_gary@msn.com), March 10, 2002.

Just heard on the news the GAO Report on Sugar Subsidies brings the cost of sugar production in the U.S. to 21 cents per LB, while we could IMPORT sugar from Brazil for 9 cents per LB. That's our own GAO Report!!!

Sugar Lobbyist paid our politicians off by spending $281 Million to keep the subsidy.

In my opinion, the same holds true for Corn, Milo, Wheat etc.

You ever wonder who and what pays for those beautiful monster machines in the fields? Our tax dollars….You wonder why small farmers are being forced out of business? You got it. You wonder why the cost of land is $1500 to $3000 per acre….when many farmers have extra cash they get into a bidding process for land; thus, the price has gone up. The more land, the more subsidies you get and the more land you can buy to get more subsidies --you got the picture. The small farmer doesn't stand a chance of getting a subsidy. And Yes, the farmers are dwindling in numbers because the BIG are getting BIGGER.

Guess what, subsidy recipients get cash which can be spent on anything…combines, tractors, land, pickups, new cars, world cruises.

Subsidy recipients (supporters) will argue that subsidies are there for (not welfare) but to provide price stability which in turn yields a lower price for related products to the consumer. Do they think we are crazy? Have your prices lowered in the past few years? All I see is increases in the grocery market!

Don't get me wrong, I support the farmer and the hard work; but, I do not support subsidies as they are applied today. They simply do not work. They only work for the recipients…$$$. Twenty percent of the farmers get eighty percent of the money.

Farm subsidies increase the cost of food - groceries. Farm subsidies increase the cost of land. Farm subsidies increase taxes Americans pay. Farm subsidies do not produce improved productivity…they support waste; as proven by the govt's own report.

-- milam (milamgerick@juno.com), March 11, 2002.

milam, I'll agree with a few of your points.

1. The government wants fewer farmers with more land per farm. It is easier to regulate them, when there are fewer. The ag programs from the govt since the 70's would rather have fewer individual farmers.

2. Land prices & rents are up because of farm subsidies. That is one of the few variables farmers can bid higher or lower. (The downside - if farm land plumets in value, you will be hurting the older retiring farmers who depended on the land for their retirement; Much of the midwest relies on property tax for local govt income - lower value, more tax on other things; Developers already can double the bid for farm land, to turn it into housing developments. They would buy a larger portion if it were cheaper, more urban sprawl - less farmers in control of land.)

I will disagree with some of what you said.

The farm subsidies are available for any farmer who meets the proper (mostly sod-buster, non-drainage, Highly Eroadable Land, and other conservation type) requirements. It is a flat subsidy. If you farm 10 acres and raise 1000 bu of corn, you get the same payment per acre & per bushel as a person with 10,000 acres and a million bushels. It is not based on a per-person payment, but on a fair across-the-board payment per unit.

2. Food prices certainly ARE going up in the grociery store. This has _NO_ relationship to the price a farmer gets for a truckload of grain!!!! Back in the late 70's, I could get $7.50 per bushel of soybeans. I could get well over $2.50 a bushel of corn.

In the late 90's through 02, I have to try very hard to get $4.20 for a bushel of soybeans. Corn hovers between $1.45 & 1.80. If you ADD the govt subsidy I got this year, I just sold some soybeans for $4.18, plus I got $1.09 subsidy in fall from the govt - total of $5.27. On corn I sold some last month for $1.73, plus last fall I got a govt subsidy of 23 cents, for a total of $1.96.

There is an additional ATMA per acre payment - this was the 'Freedom to Farm' bill that, as all govt programs, doesn't work the way they planned. But anyhow, I got an additonal $25-30 per acre. (This bill ends this year - it ran for 7 years. I'm sure the govt will replace it with another, but it does end!) With corn yielding 140 bu/acre, this adds 21 cents per bushel, and with 35 bu soybeans this adds 86 cents per bushel.

In 1978 I got $7.50, now I get $6.13 for beans. In 1978 I got $2.56 for corn - now I get $2.17 - with the subsidies included!

It is very, very wrong to blame higher food prices at the grociery store onto midwest corn, wheat (similar story for wheat, but I grow so little I best not try to include prices) and soybean farmers. We are really struggling, big or small. Our incomes, even _with_ the govt subsidy, has gone down in the past 30-40 years. Please blame someone else for higher store prices! :)

How would you like to see your paycheck take a 20% reduction - even with a 'welfare' check added? And that is not counting inflation at all! What was minumum wage in the late 1970s? What is it now?

The sugar lobby is very strong in the USA, yes. Do we want all our food imported? I don't think I'd be happy depending upon other contries for our food. Recent events, and our energy supplies, make that kind of a scary thought for me. Not that I like paying taxes, nor do I like getting farm subsidies - but you seem to be complaining on both ends. Seems confusing, what you really want?

Oh, and I am a small farmer! I'm way under the county average on acres run. I haven't ever been on a world cruise - I rarely leave the state. My newest tractor is a 1979, my combine is a 1977 model, and I do most of my own maintenence.

I guess I just feel you are getting some things _all_ wrong on this? Store prices have no relation to what a farmer gets. There's about a nickel's worth of wheat in a loaf of bread, corn in a box of Wheaties, and so on. Who _is_ making all the money? Maybe it's you, making the cardboard box, or enforcing the govt standards, or shipping the packages around - after all, you get the minumum wage garentee, 1/2 your social security taxes paid, most of you get a benifits pacage with health insurance - I don't get any of that! I don't know who makes all the money, but it sure isn't me or any of the neigboring farmers!

As to the enviornmental Working Group's web site, they have raw data - they don't include payments returned back to the govt, they _do_ include enviornmental (non-farm) payments, and most of the largest recievers are coops or partnerships where the money is split up and payed to many people. You do know there is a payment limit to any individual person or corporation? One of the biggest recievers in Arazona turns out to be an Indian tribe - the govt wrote one check, but the money gets split beween them all - fairly poor people, hard working.

Now, rather than being negative, how do we get rid of the govt subsidies? Cut them all off this year? Phase them out? Will you be willing to pay more for your food? What do we do, how do we get there? I don't know a farmer, big or small, that can make money with $1.73 corn or $4.18 soybeans in the USA with current taxes, labor wages, & government (spendy!!!) regulations. That's a loss, everybody's out of farming in the USA real quick!

You say farmers shouldn't get subsidies; There should be more inefficient small farms; and you want to pay less for your grocieries from imported foods.

Oh, but you like farmers...... Um, well, how do we get 'there' from 'here'?????

--->Paul

-- paul (ramblerplm@hotmail.com), March 11, 2002.

Banning farm subsidies worked in New Zealand Harry Schultz

New Zealand is taking a message to the World Farmer's Congress in Istanbul that should be mandatory reading for all GATT trade members: banning farm subsidies and deregulation of labour is good for farmers, taxpayers, consumers and the environment. Before withdrawal in 1984, subsidies accounted for 40% of NZ farmers' gross income. Since government got out, New Zealand has built an agricultural powerhouse, accounting for 60% of all New Zealand's exports. New Zealand now exports 50% of the world's trade in sheep meat and employs 11% of the workforce. The other benefits have been: increased wages, lower agricultural costs, higher profits, more efficient fertiliser use and reforestation of undesirable land.

Paul- you think the Kiwi's are smarter than us?

-- Elizabeth (ekfla@aol.com), March 11, 2002.

I like it - how do we get there? Cut off all subsidies cold turkey and let all the farmers die? Import sugar & soybeans from Brazil, corn from Argentina, more wheat from Canada? Will that bring us better agriculture in the USA?

I'm all for it! Really! But how do we get there? Sit on our duffs & compain about the rich USA farmers? That is what I am hearing.

How about something positive? How about a way to get from 'here' to 'there'. I wanna get 'there'!

--->Paul

-- paul (ramblerplm@hotmail.com), March 12, 2002.

As I see it the payments from the gov't are the reason for overproduction,if it were not for support payments alot of the big corporate farms would not be in business,they farm the gov't not the land and create hugh surpluses as a result.

-- Gary (burnett_gary@msn.com), March 12, 2002.