Tuesday, January 27, 2009

Harvesting Cash: Corporate Welfare for Farmers

Consider these facts. Ninety percent of all subsidies go to just five crops: corn, rice, cotton, wheat, and soybeans. Two thirds of all farm products—including perishable fruits and vegetables—receive almost no subsidies. And just 10% of recipients receive 75% of all subsidies. A program intended to be a “temporary solution” has become one of our government’s most glaring examples of corporate welfare.

U.S. taxpayers aren’t the only ones who pay the price. Cotton subsidies, for example, encourage overproduction which lowers the world price of cotton. That’s great for people who buy cotton, but it’s disastrous for already impoverished cotton farmers in places such as West Africa.

U.S. farm programs cost taxpayers billions each year, significantly raise the price of commodities such as sugar (which is protected from competition from other producers in other countries), undermine world trade agreements, and contribute to the suffering of poor farmers around the world. It’s bad public policy, especially in these troubled economic times.

From a new report and video from Reason "Agricultural Subsidies: Corporate Welfare for Farmers," (link here).

MP: As the chart above shows, another fact to consider is that average 2007 household farm income ($86,223) was 27.5% higher than U.S. average household income ($67,609), according to the USDA.


At 1/27/2009 11:42 AM, Anonymous Anonymous said...

"Two thirds of all farm products—including perishable fruits and vegetables—receive almost no subsidies. And just 10% of recipients receive 75% of all subsidies."

I think it is actually worse than that. Most products get nos ssubsidies and the real conentration of subsidies recieved is probabluy closer to 90%

The problem you have here is that you consider only the products produced for sale. in fact, farmers provide many other services that they are not paid for, and they provide a boost to the local economy that is frequently much larger than the farm boosts their own economy.

In these circumstances it would seem worthwhile to at least ensure that some minimum standards of profitability are ensured - consistent with the total benefits supplied.

i don;t think you have the full system boundaries correct.


At 1/27/2009 12:29 PM, Blogger Unknown said...

Not to take away from the main point of the economic wastefulness of subsiding farms. But why the comparison with average income? Considering that farming tend to be a very capital intensive business, and the average household has very little capital. Is there any reason to expect that the incomes should be the same? This is bogus, rabble rousing comparison that detracts from your argument.

At 1/27/2009 1:09 PM, Anonymous Anonymous said...

Joe, I don;t understand your point.

Farmers may have a lot of equity, or just a lot of loans. Either way their return on investment is very low.

To my mind the real question is whether they are being adequately paid for all that they do and all the limits that are put on their activities - in return for the subsidies.

Some countries have reconciled this issue by simply paying for "environmental services". But to complain about farm subsidies based only on the market products produced is to miss out on (or deliberately misunderstand) some pretty serious market failures.

Just because the present system is flawed does not mean that EVERY system of "subsidies" is flawed.


At 1/27/2009 1:26 PM, Blogger Unknown said...

My point is why are farmers income be compared to average income? Is there anything "average" about farmers? Why not compare them to the NFL lineman income, it would make about as much sense.

In reply to your question, if the subsidies are "adequate" of course they are, as long as farmers are able to turn them down, they must be at least "adequate" most are probably more than "adequate" I am sure that ADM lobbies hard to make them that way.

At 1/27/2009 2:16 PM, Anonymous Anonymous said...

I also have to question the income comparisons. Many farmers work 80+ hours per week, and during the planting and harvest season much more, especially if they also raise livestock. Consider a livestock farmer who must be at the farm EVERY day to feed, milk, etc. Also the average farmer carries a larger risk than the average American. Think of putting hundreds or even thousands of dollars per acre on the table to produce a crop and then be wiped out by nature or low commodity prices.

At 1/27/2009 4:04 PM, Blogger David Foster said...

It is utterly meaningless to compare farm family income with average income without adjusting for the cost of the capital employed. A factory worker also uses capital, but the return on this capital takes the form of net income to the corporation that made the investment. He doesn't have to contribute his personal savings to purchase the production equipment: a farmer does.

At 1/28/2009 2:05 AM, Anonymous Anonymous said...

Of that amount, only about $27,000.00 was Farm Income! (most farmers have off-farm jobs.)

Another pathetic thing about this pathetic farmaphobia our Ivory-Towered Elitist is engaged in is to ignore that subsidies for corn, soybean, and wheat have virtually disappeared in the last two years.

At 1/28/2009 10:37 AM, Anonymous Anonymous said...

You need an off farm job, unless your farm is very large indeed. If nothing else, it provides health insurance.

Most farms provide suppplemental income, if they are lucky.



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