Monday, January 12, 2009

"Big Farm" Is Not in Recession


Farm equity has increased by almost 50% since 2004, to a record $2.13 trillion, see top chart above (data here). And the debt to asset ratio for farms is at a five-year low of only 9.2% (down from 11.3% in 2004, see bottom chart), since farmers are carrying only $215 billion in debt on $2.13 trillion of farm assets.

Q. Does this wealthy group of agribusinesses ("Big Farm") really need taxpayer subsidies?

4 Comments:

At 1/13/2009 12:33 AM, Anonymous poor boomer said...

What about Big Pharma?

 
At 1/13/2009 6:23 AM, Anonymous Anonymous said...

Q: How do you starve an American farmer?

A: Weld his mailbox shut.

 
At 1/13/2009 12:30 PM, Anonymous Anonymous said...

My debt to asset ratio is only 3% on my farm, but that has literally NOTHING to do with making a profit on my farm operations.

If anything, the more my assets go up, the lower my return on investment and the more the incentive to sell out and get out.

Except, because of zoning and other restrictions I can't just sell to anyone for best value. I can only sell to another "rich farmer", thus perpetuating the myth that you are suggesting.

In my county ten farms get 95% of the subsidies, and they will tell you how "profitable" farming is. Without the subsidies there would be no profitable farms unless there is a drastic reduction in the number of farms.

That is not allowed to happen because of huge and successful drives to "save our farmland".

Tell me again, whose farmland?

The real subsidy is to residential homeowners who get artificially high valuations due to artificial lack of housing competition, and who get lower taxes due to the high taxes paid by farmers on all that equity - which uses very little in the way of services. And the farm drops a lot more revenue on the local economy than I get back out.

It is a win-win for everyone but me. And I get no subsidies. There are not enough to go around. To get in line for one you must be in a commodity business and have a five year history - if you don't go broke first.

There are abuses in the farm subsidy situation: huge ones, but your farm equity story is a red herring.

Hydra

 
At 1/15/2009 7:46 PM, Anonymous Anonymous said...

I think the small farmer is going to make a comeback. We need sustainable farms...I will not buy anything from mega farms full of antibiotics and growth hormones and no regulations. Or rather regulations that are not enforced. We are polluting the land, we are polluting our water, wake up.

 

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