Subsidies for US farmers growing, despite years of reform talk

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The GLP aggregated and excerpted this blog/article to reflect the diversity of news, opinion and analysis.

Farm subsidies don’t lack for critics. Free-market conservatives and welfare state-defending liberals alike have called for deep cuts in these payments to farmers. After all, farmers, as a group, are wealthier than the average American. Why should they get tens of billions of dollars each year in federal aid?

Two years ago, when the most recent Farm Bill emerged from Congress . . .The Senate Agriculture Committee noted in a press release that the new law would eliminate one big subsidy altogether and save taxpayers a total of $23.3 billion over the following 10 years.

Those projected savings, it turns out, were a mirage. According new estimates for Farm Bill spending over the next few years released by the Congressional Budget Office, total government aid to farmers will swell to $23.9 billion in 2017.

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. . .  Bruce Babcock, an agricultural economist at Iowa State University [says] “Farm policy isn’t really about policy. It’s about farmers getting their money. And the agriculture committees in Congress are there to make sure that farmers get their money.”

. . . This latest Farm Bill ditched a politically unpopular subsidy program that wrote checks to farmers simply based on the number of acres they owned. In its place, the law set up new programs that pay farmers when commodity prices fall. And indeed they have been falling since the last Farm Bill.

Many observers, in fact, expected corn and soybean prices to fall, because they had been extraordinarily high in recent years.

. . . .

If prices stay low, or rebound, spending under some of these new programs should decline, but only gradually — and within a few years Congress will once again revise the Farm Bill.

Read full, original post: Farm Subsidies Persist And Grow, Despite Talk Of Reform

 

  • Farmer with a Dell

    Bruce Babcock is some piece of work. He was hired a decade ago by USDA’s Risk Management Agency (RMA) to craft crop insurance for livestock, dairy in particular. The resulting cluster**** was called Livestock Gross Margin (LMG) coverage and it was hyped to dairymen across the nation as God’s gift to eliminate producer risk due to price volatility in milk and feed markets.

    The project was a dismal failure. In fact, I have never seen documented evidence of how few policies were ever sold, during several years and with some 60,000 eligible dairymen as potential customers. It is possible sales numbered no more than one dozen policies over the entire course of that insurance product’s history!

    The product was predicated on a good idea — hedge milk price and feed price simultaneously, thereby beating the market and locking in a modest profit for the milk producer. Trouble is, premiums were astronomically high and the profit, when one could lock in a profit at all was small. In fact, it was a plan to guarantee a dairy could only ever earn a small profit (and there still remained a possibility of some loss). Huge payments would go to insurance companies and those massive premium payments had to be made up front! No dairyman could pay those out of pocket and no banker could see the logic of loaning vast sums for insurance premium payments only to guarantee the farm would never make more than a small pre-determined profit. Bankers are a lot of things but they are not stupid.

    Bruce Babcock was an epic failure on a colossal scale and I can understand why he is so bitter, and am not surprised when his gravy train with RMA ended he promptly sold out to EWG. The guy has run off the rails and will never be anything more than a loose cannon.

    A certain poetic justice in all this, that this man who put all his career eggs in one feeble basket risked everything to try to remove the risk from dairy farming — and he lost. In fact, nobody won. We are all losers for Bruce Babcock’s ill fated adventure. Now we have to listen to his venomous diatribes. And we still produce into risky markets.

    • FaunaAndFlora

      You should post this comment on the original article at NPR. I posted a short comment last night criticizing the EWG blurb. Would have posted more if I had known more about Babcock’s foray into dairy insurance or that this piece was written after the 2012 drought and before the 2014 Farm Bill.

      http://www.npr.org/sections/thesalt/2016/02/01/465132866/farm-subsidies-persist-and-grow-despite-talk-of-reform?platform=hootsuite

      Warning: if you do post at NPR, realize that their moderation is terrible.

      • Farmer with a Dell

        Feel free to copy/paste as you see fit if you are familiar with the turf over there. I lived through the LGM debacle and was simply delighted this morning to finally see an opening to review the true history after so many years. Just happy to get the word out. Thanks FAF!