Yes: Billions in agriculture subsidies could face the chopping block

posted at 11:41 am on June 4, 2012 by Erika Johnsen

While the economic malfeasance of agricultural subsidies may be relatively low on the totem pole of the federal government’s massively wasteful and intrusive spending binge (we’ve definitely got some bigger fish to fry), they are in and of themselves astoundingly terrible ideas that come with a whole host of neighborhood effects. From toying with market signals and inflating food prices; to inhibiting free trade that would benefit the poverty-stricken worldwide; to encouraging overproduction that degrades the environment: they’re just bad news. No American industry has been so persistently coddled as agriculture, helping out niche groups and special interests in the short term but making us all worse off in the long term.

So it warms my heart that, in this dire age in which extreme rent-seeking has become a trendy political sport, the costly implications of farm subsidies are at least open for discussion as a way to better the budget (even if this bill would also start pushing more money into crop-insurance subsidies, and predicted government “savings” so often aren’t… but hey, little victories, right? Right?)

The Senate is expected to begin debate this week on a five-year farm and food aid bill that would save $9.3 billion by ending direct payments to farmers and replacing them with subsidized insurance programs for when the weather turns bad or prices go south.

The details are still to be worked out. But there’s rare agreement that fixed annual subsidies of $5 billion a year for farmers are no longer feasible in this age of tight budgets and when farmers in general are enjoying record prosperity.

About 80 percent of the bill’s half-trillion-dollar cost over the next five years represents nutrition programs, primarily food stamps now going to some 46 million people. About $100 billion would be devoted to crop subsidies and other farm programs.

The Senate Agriculture, Nutrition and Forestry Committee last month approved a bill that would save $23 billion over the next decade by ending direct payments and consolidating other programs. The bill would strengthen the subsidized crop insurance program and create a program to compensate farmers for smaller, or “shallow,” revenue losses, based on a five-year average, for acres actually planted. …

The Agriculture Department says that in 2011 the government paid farmers about $10.6 billion, including about $3.6 billion for conservation programs, some 10 percent of the farm sector’s record-high net cash income of $108.7 billion. …

Not exactly the agricultural overhaul of my small-government dreams, but I suppose some scrutiny is better than no scrutiny. Agriculture is too tied up with expensive, competing, convoluted subsidies, and it’s been on the receiving end of untoward special treatment since before the Great Depression.

If you’re at all familiar with my past work over at Townhall, you may know that I’ve never met a subsidy I didn’t like… to absolutely rag on. I have a lot of trouble thinking up reasons to justify subsidies — their primary function is to distort market signals, no if’s, and’s, or but’s about it. Agricultural subsidies are particularly egregious, and they so aptly demonstrate how a lot of politicians will talk a big game about cutting down on pork, but if they happen to be from a farm-heavy state, they can magically think up excuses for why agricultural subsidies are so necessary. Everybody wants to cut spending, just not spending that benefits them.

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I don’t want to see all the little family farms go under. Many generations worked to hang on to them. The land is all they have. They also have debt, it is very expensive to run crop or dairy farms. Our state is one of the best dairy states in the country. Your eating our cheese and drinking our milk.

wi farmgirl
on June 4, 2012 at 7:19 PM

I’m with you ‘girl, but do we agree as to the solution?

Abolish the pricing regulations on milk ! ! !

listens2glenn on June 5, 2012 at 12:24 AM

Careful what you wish for, you fools.
Knock out all those subsidies in one swoop and you’ll crash food production in this nation. Ending subsidies will have to be done in a phased manner to give everyone time to re-adjust. Do it all at once and the only farmers NOT bankrupted right away will be those GEM-making monster conglomerates you same folk whinge about.

We DO need to end subsidies, but it has to be done slowly so markets and producers can adjust. And so we can stop burning food as fuel. And stop destroying generations of orchards and vineyards for a damned fish the size of your middle fingers.

rayra on June 5, 2012 at 1:35 AM

Voter from WA State on June 5, 2012 at 2:04 AM

How many actual farmers are there working at the USDA?

Cleombrotus on June 5, 2012 at 6:14 AM

As someone familiar with the workings of the CRP program I know that any contract with the government to hold land for wildlife and conservation purposes (what you would be paid the $70/acre for) can be terminated by a new landowner willing to pay the fees associated with doing so.

Caustic Conservative on June 4, 2012 at 10:54 PM

The only way to opt out of the CRP contract is to repay all of the rent payments made by the government to the previous my case this would be over $75,000 plus interest and fees. I’ve had the property for 1 year and have received only 1 payment from the USDA. I’d glady pay any fees or admin costs to void the contract but repaying 17 years worth of payments made to the previous owner makes no sense.

JetBlast on June 5, 2012 at 7:25 AM

Badger, sounds like farming in ND is not a good choice. Not so in the State of WA.

And from a food safety perspective organic food would not be my choice. I had to take a food safety class. The stories about organic food were both funny and horrifying. If you are into organic food, just be very sure you know the producer well enough to have confidence in them.

Here were I live, we have a particularly good organic producer. Makes money hand over fist charging extra for organic food.

Voter from WA State on June 5, 2012 at 1:58 AM

Farming in W. ND & SD is what that land was made for.
Out in the W. parts, NO. Other than flood plains.

I lived in Monroe, Fall City, Carnation, Mill Creek, Bothell areas during the late 80s & again in the early 90s.

There were many small farms & ranches in those areas until the urban sprawl started eating everything up & the rich folks wanted away from the city.
Then they didn’t like the smell of poop or having to navigate around tractors on the road & such & I know of at least one case where these kinds of people agitated to get rid of an old dairy.
Niche markets, like the organic you mentioned, are chic out there, I’m sure. They were beginning to be when I left in ’96.
But farm payments work the same way no matter what state we’re talking about.
If a person has established history on a piece of land regarding a crop, then depending on the crop, they will receive payments whether they plant anything or not.
We have some wheat acres on our property somewhere & FSA always wants us to sign up to get paid, like $80/year, for them. And nothing has been planted anywhere on our land since the late 80s.

Farming is beholden to the federal govt programs. And I don’t care what you’re planting, somewhere, somehow, most farmers are gaming that myriad of rules & regs to make a buck.
What they don’t realize is that life would be freer & easier on them if they quit that game.
But unfortunately, the Fed has made it very difficult to farm on your own without them.
And WA is not much different than ND, or any other state that way.

Badger40 on June 5, 2012 at 9:16 AM

Farming in W. EASTERN ND & SD is what that land was made for.

That’s what I meant.

Badger40 on June 5, 2012 at 9:16 AM

Vote from WA State here is some basic info on some subsidies your state receives:

Badger40 on June 5, 2012 at 9:18 AM

And I probably could get more educated on crop insurance.
My brother in law, when he quit farming, became a crop adjuster.
His wife is the head of the FSA office in Dickinson.
So they know the game.

Badger40 on June 5, 2012 at 9:21 AM

I’m really getting tired of the “drop in the bucket” rationalization for overlooking corruption. Not only is that real money but it real theft or at the very least a confidence game. It should not go unnoticed or unpunished because of the Beltway’s “big picture” view of amounts of money most of us could never conceived of having. Subsidies are just another way of government picking winners and losers but obviously it will have to be reformed realistically.

Cindy Munford on June 5, 2012 at 9:28 AM

Subsidies are just another way of government picking winners and losers but obviously it will have to be reformed realistically.

Cindy Munford on June 5, 2012 at 9:28 AM

I agree. Like SS & Medicare/caid, we need to wean these people off the teat til they can stand on their own.
If they can’t, they better find a way to exist without nanny Govt.
I don’t take farm payments, & we struggle along.
And I have a feeling we’d probably have lower costs of doing business if the Fed govt got out of the farming biz.

I forgot to say something about this milk thing.
You take away subsidies/pricing schemes for milk & it will level out to an affordable price eventually.
I already pay $6/gallon for milk here in SW ND.
And I imagine a lot of that is bcs of fuel.
You get rid of govt meddling all over the place, regs, EPA etc., & we in agriculture will be able to do for ourselves.
Also get rid of Death taxes.
I can’t tell you how many places this has crippled, families destroyed.
A person should not have to find creative ways, like give up some land for conservation easements & BS like that to avoid a death tax.
It is criminal.

Badger40 on June 5, 2012 at 9:39 AM

Badger40 on June 5, 2012 at 9:39 AM

Holy cow! No pun intended. I would not have thought that there was that much difference in price across the country. We don’t drink enough to buy gallon quantities but I believe we are around the $4 range in Florida.

Cindy Munford on June 5, 2012 at 9:47 AM

Badger40 on June 5, 2012 at 9:39 AM

Badger, where in ND are you?

My father-in-law is a farmer in Wishek.

gravityman on June 5, 2012 at 1:19 PM

@Badger40 hmm I’n in favor of estate taxes, it breaks up family dynasties and makes people work as well as keeping money liquid. Doesn’t “Clean and Green” cover passing family farms down the line? that’s what my family did.

Zekecorlain on June 5, 2012 at 1:56 PM

@Badger40 hmm I’n in favor of estate taxes, it breaks up family dynasties and makes people work as well as keeping money liquid. Doesn’t “Clean and Green” cover passing family farms down the line? that’s what my family did.

Zekecorlain on June 5, 2012 at 1:56 PM

Did you really just say, to paraphrase “family dynasties should be broken up, except for MY family dynasty”?

cptacek on June 5, 2012 at 2:30 PM

@cptacek apparently you are confusing the Vanderbilts and Rockefellers , but either way one is talking about pure property and the other is talking about accumulated wealth. Regardless, in a sense you are correct, and eventually farms break apart and others buy them. But since I’m willing to accept the final outcome your cries of hypocrisy are misplaced.

Zekecorlain on June 5, 2012 at 3:02 PM

So your family dynasty just isn’t big enough, I suppose. How big is too big, and who gets to decide?

cptacek on June 5, 2012 at 3:31 PM

Zekecorlain on June 5, 2012 at 3:02 PM

God forbid a family be able to keep the wealth they have created for themselves? God forbid the head of a family be able to decide to whom his/her wealth goes when they pass?

gravityman on June 5, 2012 at 3:35 PM

Agriculture is just one of these agencies but what about these others and I’m very sure you have never heard of some of them, here take a look and I’ll bet you can’t say the titles out loud without laughing at some of them.

mixplix on June 5, 2012 at 8:46 PM

Ever wonder why our deaf Congress is actually deaf? Do you really think those letters you send are read by the person you voted for? Okay, okay it’s the staff that does this but did you ever know how many staff we have for the 435 plus the 100 Senators. This data is ten years old but it will give you a good idea of the volume. Shocking huh?

mixplix on June 5, 2012 at 8:54 PM