Excerpts from the attached article follow: American farmers did well in 2012, to say the least. They benefited from record-high commodity prices, burgeoning organic produce markets, and high sale prices for farmland. As they have for two decades, farm families took home more annual income—about $20,000 more on average—than non-farm families. And they could count on many friends in Congress: While facing a “fiscal cliff,” the uncertain sustainability of entitlement programs, and the near certainty of tax increases, members of both parties came together around bills that would have spent at least $950 billion on agricultural subsidies over the next 10 years—an increase of more than $300 billion from the most recent (2008) farm bill. Quite simply, the current farm bill, now approaching its first round of major committee discussions, ought to be a crucible for anybody concerned about the country’s finances. somewhere around $300 billion over the 10-year period of the farm bill, farmer support programs have outlived their usefulness. The dairy price supports program (governed under a 1949 law based on policies first adopted in the 1920s) serves as a case in point. In the early 20th century, the program may have had a purpose: Practical refrigerated trucks didn’t exist, and as a result, milk couldn’t be sold more than about 70 miles from the dairy that produced it. Policymakers had reason to think that cities might have a hard time sustaining supplies of fresh milk. Thus, they dreamed up a Rube Goldberg series of equations to assure a commercially viable price for milk in every market—variables have included things like a city’s distance from the dairy center Eau Claire, Wisconsin. But the system remains in place and makes all dairy products more expensive. Other programs send U.S. tax money to Brazil in a blatant payoff to prevent the South American giant from bringing World Trade Organization complaints against the United States for our own even larger sugar subsidy and import restriction program. But the dairy and sugar programs are only one small corner of the universe of absurdity that characterizes the nation’s farm payments system. Take, for example, the second-largest agricultural subsidy program overall, something called “Direct Payments.” Originally passed in 1996 in what now can be counted as one of the last true small-government achievements of the reformist Republicans who led the class of 1994 in the House, the program was intended to wean most farmers off of subsidies. At the time it passed, Congress promised that the payments would decline each year and vanish entirely by 2002. Because of its status as a transitional program, however, it had fewer requirements than any program before or since: Subsidies flowed based on historical growing patterns, and farmers didn’t have to plant anything to receive federal money, and it continues to the present day. Although its downright absurdity has led to a broad consensus to eliminate it—even most farm groups say they are happy to see it end—that doesn’t stop farmers from trying to get their hands in the public till in other ways. Unlike the current crop insurance programs—which typically leave farmers themselves or entirely private insurers responsible for roughly 40 percent of a loss—it will cover as much as 90 percent of all losses. Since the proposed formulas will pay farmers for “losses” based on declines from current, historically high prices, this amounts to a virtual profit guarantee for those who grow food and fiber. Whatever function they once served, America’s producer-side farm subsidies no longer have any valid public purpose. The much-romanticized family farm is, for all intents and purposes, dead: The number of farms producing enough income to support a family (more than $100,000 in gross revenues) has declined every year since World War II. As of 2012, only about 400,000 commercially viable farms—less than three-tenths of 1 percent of all households—exist in the United States. The great bulk of subsidies flow—directly or indirectly—to wealthy people and agribusiness. The Environmental Working Group found that 26 businesses got over $1 million each in crop insurance premium subsidies during 2011 alone. Furthermore, many of the most promising sectors of the agricultural economy—boutique organic farms and wineries—are also those that receive the least support from the government. But America’s agricultural subsidies and price controls have well outlived any usefulness they may once have had. If they want to show they are serious about fiscal responsibilities, conservatives and liberals in Congress should get together and work to minimize the pointless largess that taxpayers now distribute to the nation’s farmers. weeklystandard/articles/farmers-benefits_718074.html
Posted on: Mon, 28 Oct 2013 13:50:42 +0000
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