Friday, February 18, 2011

2012 Is Finally The Time to Prune Farm Subsidies

From the editorial "Pruning Farm Subsidies," by Victor Davis Hanson:

"We need a drastic reset of agricultural policy. The use of prime ag land to grow corn for ethanol biofuel makes no sense. Why divert farmland for fuels when the world’s poor are short of food, and there are millions of unfarmable areas in Alaska and the arid West, as well as off the American coast, that either are not being tapped for more efficient gas and oil or are only partially exploited?  

When North Americans do not fully utilize their own fossil-fuel resources, two very bad things usually follow: 

1. Someone in Africa, Asia, or Russia is far more likely to harm the environment in order to provide us with oil, and 

2. Precious farmland is diverted to growing less efficient biofuels instead of food — and billions worldwide pay the price.  

No supporter has ever been able to explain why the advent of massive subsidies over the last half-century coincided with the decline, not the renaissance, of “the family farm.” Nor has anyone offered reasons why cotton, wheat, soy, sugar, and corn are directly subsidized, but not, for example, nuts, peaches, or carrots.  

Finally, the United States is supposed to be the world’s premier free-market economy, based on the principles that competition is good and that entrepreneurs freely reacting to markets create more wealth when unfettered by government red tape. Why, then, would the conservative agribusiness community want government intrusion that warps world food markets, ends up hurting the global poor, and contributes to an unsustainable national debt?

2012 is finally the time to end the crop-subsidy business, with the annual budget deficit approaching $1.5 trillion in 2011, farmers receiving record prices on the open market, and the new conservative House of Representatives having been elected on the promise of fiscal responsibility."

MP: As the chart above shows (data from EWG), there is also massive "farm subsidy inequality" - the top 1% of farm subsidy recipients (13,186) got almost as much taxpayer-subsidized "pork" ($2.16 billion and 20% of the total payments) as the entire bottom 80% ($2.32 billion, and 21% of total payments).

12 Comments:

At 2/18/2011 3:45 PM, Blogger morganovich said...

anyone know what percentage of output the top 1% produce vs the bottom 80%?

i'm wondering if it correlates to the subsidies or if the system is regressive.

 
At 2/18/2011 3:48 PM, Blogger Buddy R Pacifico said...

Soybeans are the #1 U.S. Export to China. So, why are soybean farmers getting direct subsidies from U.S. taxpayers?

 
At 2/18/2011 4:38 PM, Blogger juandos said...

Hmmm, prune farm subsidies, eh?

No, if the pruning is going to get down and get serious then maybe the pruning of subsidized housing and government GSEs should be considered first...

 
At 2/18/2011 4:55 PM, Blogger Michael Hoff said...

"Why divert farmland for fuels when the world’s poor are short of food?"

Well, the global/environmental elites have been predicting man-made starvation for the last 50 years. Maybe they got tired of waiting and are just taking matters into their own hands.

 
At 2/18/2011 5:12 PM, Blogger Dr. T said...

Many of the farm subsidy recipients in the bottom 80% aren't really farmers. There are all kinds of tricky things one can do to qualify for small farm subsidies, including leaving fields unplanted for years. I knew a pathologist who owned 100 acres of land that was partly planted in Xmas trees. He received farmland conservation subsidies for not planting his remaining acreage.

 
At 2/18/2011 5:54 PM, Blogger Rufus II said...

Poor people don't eat "field" corn.

Poor cattle eat field corn, and are, in turn, eaten by Rich People.

We used to raise about 8 Billion bushels of field corn. Approx 10 went for Breakfast Cereals, and HFCS for soft drinks, with a very small amount used for corn meal.

All the rest was fed to livestock, or Exported to be fed to Foreign livestock.

Today, we grow on the order of 13 Billion bushels of field corn. After allowing for DDGS we use about 2.7 Billion bushels for ethanol.

That leaves a little over 10 Billion bushels for Cereals, HFCS, corn meal, and Livestock Feed (apprx. 25% More than a few years ago.)

 
At 2/18/2011 5:56 PM, Blogger Rufus II said...

That should have been 10% that went to cereal, hfcs, etc.

 
At 2/18/2011 6:13 PM, Blogger Rufus II said...

Most people don't understand that corn is about the same price it's always been. Sure, we're in a price spike, now, due to some really anomalous weather last year, but there have always been years of high prices. It's the nature of farming.

But, year in, and year out, you're looking at very similar prices. It's not readily apparent, because prior to the last few years, the subsidy on corn was in the range of $1.50/bu. Today, it's about $0.30/bu.

So, what is happening is you're paying a couple of pennies more (literally) for a 2 Liter of Coca cola, or another two, to three cents for a quarter-pounder, but your tax bill (at least as far as farm subsidies go) is lower.

Oh, and you're also, it's been estimated, saving up to $50 Billion/Yr on your gasoline.

VDH should stick to racial rabble-rousing, and leave "energy," and agriculture to those that have studied it.

 
At 2/19/2011 7:27 AM, Blogger juandos said...

"So, what is happening is you're paying a couple of pennies more (literally) for a 2 Liter of Coca cola, or another two, to three cents for a quarter-pounder, but your tax bill (at least as far as farm subsidies go) is lower"...

Obviously you missed the point but I'm not suprised...

Its one of those, "if you think the subsidy is worth it then why don't YOU use your own money to finance it?"...

I for one see first hand how the increased cost of 'human edible corn' does have a major impact on the poorer people in this country and other countries to the south of us...

"Oh, and you're also, it's been estimated, saving up to $50 Billion/Yr on your gasoline"...

A delusional estimate if there ever was one...

More than once on this site it has been shown that the ethanol scam not only doesn't pay for itself but has other destructive side effects...

"VDH should stick to racial rabble-rousing, and leave "energy," and agriculture to those that have studied it">..

Yes rufus something you should consider...

 
At 2/20/2011 1:57 AM, Blogger Benjamin said...

Maybe modern-day US farmers should wear skirts and bras. Jeez, they make Liberace look tough/.

 
At 2/20/2011 12:39 PM, Blogger VangelV said...

No supporter has ever been able to explain why the advent of massive subsidies over the last half-century coincided with the decline, not the renaissance, of “the family farm.” Nor has anyone offered reasons why cotton, wheat, soy, sugar, and corn are directly subsidized, but not, for example, nuts, peaches, or carrots.

The issue has to do with incentives. The primaries have the Iowa caucuses early in the game. That means that the person who is likely to become the President will pledge support for subsidies. Politicians from farm states trade their votes to others who will support subsidies to their state. If the Senator from Michigan supports subsidies for sugar in Florida and corn in Iowa they will support a bailout for GM. All the rent seekers are happy. The campaign coffers are filled up. The taxpayer and consumers are screwed.

The answers are simple of you begin with the premise that individuals act and that they have to make choices by selecting what is best for them and rejecting what is not of benefit to them. If you want to get elected you will choose subsidies no matter what harm is done to the taxpayers and consumers. People talk a big game about cutting spending but they will not vote for anyone who wants to cut their handouts. If you can't understand that logic you can't be a good economist.

 
At 2/20/2011 1:37 PM, Blogger Ron H. said...

"If you want to get elected you will choose subsidies no matter what harm is done to the taxpayers and consumers."

you are exactly right. Walter Williams had the following to say in a speech he gave in Sept. 2009:

"This reminds me of a lunch I had a number of years ago with my friend Jesse Helms, the late Senator from North Carolina. He knew that I was critical of farm subsidies, and he said he agreed with me 100 percent. But he wondered how a Senator from North Carolina could possibly vote against them. If he did so, his fellow North Carolinians would dump him and elect somebody worse in his place."

 

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