Thoughts from an aggie and student. Taking full responsibility for my words printed here.
Wednesday, November 24, 2010
Tuesday, November 23, 2010
A Case Against Farm Subsidies
This guest blog is written by Sterling Stoddard, a student at the University of Idaho. Sterling is majoring in Agribusiness in the College of Agriculture and Life Sciences. Stoddard is the President of the Young Americans for Liberty-U of I chapter. He is from Grace, Idaho in Caribou County. His family farms 3500 acres, 2500 acres of malt barley and 1000 acres of potatoes. Sterling plans on entering into farm management upon graduation.
OVERVIEW
In a country that despises massive debt, government programs seem to be ever growing. The government seems to have the mindset of continuing status quo and trying to use centralized planning to run our nation’s economy. If history has shown us anything, it’s that in a highly competitive market industrialists love to turn to the government to protect themselves from competition and give themselves an advantage, agriculture is no exception.
Each year the USDA pays out between $10 and $30 billion is cash subsidies to farmers and farmland owners. These account for over 800,000 people. However, the largest producers receive the most in benefits.
Federal subsidies in agriculture have a long history although subsidies were relatively small until the 1920's. The majority of subsidies came in the form of conducting research and gathering statistics for the industry. As part of FDR's ingenious idea known as 'The New Deal,' farm subsidies grew to include commodity price supports and production controls, marketing orders to limit competition, import barriers, and crop insurance. Agriculture was in no way the only industry to be heavily regulated in the 30’s. Unlike agriculture, many other industries have been deregulated and have seen great success.
Today, farmers represent a small portion of the population but they still have a very strong lobby. One reason is that farm-state legislators have co-opted the support of urban legislators, who seek increased subsidies in agriculture bills for programs such as food stamps. Legislators in favor of environmental subsidies have also been co-opted as supporters of farm bills. Unfortunately the support for the common tax payer isn’t near as strong.
This industry welfare program is especially costly to tax payers. Since it consists largely of government actions to hold up the price of crops, it is paid partly by taxes and higher food prices. Higher food prices have the effect of a regressive tax, since low-income people spend a greater portion of their income on food.
The game that the government plays with farm subsidies is a vicious cycle. Subsidies induce farmers to overproduce, which pushes down prices and creates political demands for further subsidies. Subsidies inflate land prices in rural America. The flow of subsidies from Washington hinders farmers from innovating, cutting costs, diversifying their land use, taking the actions needed to prosper in a competitive global economy.
EXAMPLES OF SUBSIDIES
Recently, direct payments have been among the largest form of subsidies. Direct payments are cash payments for producers of: wheat, corn, sorghum, barley, oats, cotton, rice, soybeans, minor oilseeds, and peanuts. Direct payments were intended to be transitional, a way to wean farmers from old-fashioned price guarantee programs. Unfortunately, direct payments have not been reduced over time as originally planned. Direct payments are based on a historical measure of the farm’s acrage used for production and are NOT related to current production or prices. The Washington Post estimated that between 2000 and 2006 the USDA handed out $1.3 billion in direct payments to people who do not farm. The newspaper pointed to thousands of acres of land previously used for rice growing in Texas.
Marketing Loans were created as a part of the 'New Deal.' They were meant to be, like most farm subsidies, a temporary solution. Yet, they still exist 70 years later. Marketing Loans create a price floor for crops (same ones covered in direct payments). Price floors in agriculture and all industry creates incentive for producers to overproduce. Under the program, farmers take loans with their crops as collateral. This allows farmers to keep the loan, and forfeit their low value crop. Tax payers are then stuck with the loan cost and the cost to store the crop. Farmers don’t receive subsidies from the marketing loan program only when crop prices are low, they have become experts at working the system to maximize their subsidies every year. Farmers can lock in high government benefits when seasonal prices are low, and then sell their crops when market prices are higher.
Countercyclical Payments are a classic example of agriculture receiving special protection that most industries don’t, and shouldn’t, receive. Countercyclical payments are basically a price guarantee which allows for over production because farmers are receiving a payment that is higher then what the market allows so they will produce more then what the market allows.
My personal favorite subsidy is Conservation Subsidies. The largest conservation subsidy program is the Conservation Reserve Program, which was created in 1985 to idle millions of acres of farmland. Under CRP, farmers are paid to not grow crops, but to cultivate ground cover such as grass or trees on retired acres. A large share of land idled under the CRP is owned by retired farmers, thus one does not even have to be a working farmer to get these subsidies. In Idaho, Shoshone Bannock Tribe was the 2nd largest recipient of farm subsidies in 2009. Shoshone Bannock Tribe received $510,364 in total payments, $503,629 was in Conservation Subsidies. In 2009 Shoshone Bannock Tribe received over half a million dollars to do absolutely nothing!
REASON TO REPEAL
Farm subsidies are a clear example of redistribution of wealth. In this case it’s distributing wealth from less income to more income. The average farmer income is higher than the average American’s income. Ten percent of all farmers collected 74 percent of all subsidies. Top 10% based on size of producer received $29,675 average per year between 1995 and 2009 while the bottom 80% receive $579 average per year between 1995 and 2009. The largest recipients of these subsidies are the largest producers. The myth that these program are meant to help the small farm just doesn’t hold water.
Farm subsidies hurt the overall economy. In most industries, prices are set by the balance of supply and demand. Profits signal investment opportunities while downturn results in innovation and cost cutting. However, these market mechanisms are not found in a government controlled industry like agriculture. As a result, federal agricultural policies produce substantial “deadweight losses” and reduced U.S. incomes. What does result is overproduction, overuse of marginal farmland, and land price inflation.
Like all government subsidies programs, farm subsidies are prone to waste and scandal. Farm programs are subject to bureaucratic inefficiencies, recipient fraud, and congressional pork-barrel politics. The Government Accountability Office (GAO)found that as much as half a billion dollars in farm subsidies are paid improperly or fraudulently each year. Farmers create complex legal structures to get around legal subsidy limits. Another reason why large producers receive a disproportionately high amount of subsidies is because they have the recourses to get through the legal hoops that the small producer doesn’t have.
Farm subsidies damage U.S. trade relations. U.S. and European farm subsidies and agricultural import barriers are a serious hurdle to making progress in global trade agreements. Free trade helps global economic stability and security. "If goods don’t cross borders, soldiers will." The World Trade Organization (WTO) estimates that even a one-third drop in all tariffs around the world would boost global output by $686 billion, including $164 billion for the United States.
Farming would see great success without subsidies. It is true that agriculture would change with the repealing of farm subsidies. Different crops would be planted, land usage would change, and some farms would go bankrupt. However a stronger and more innovative industry would likely emerge having greater resilience to shocks and downturns. It’s important to remember that commodities that are covered by subsidies only account for about 36% of all production. Most farm production isn’t even currently eligible for subsidies and they still strive within a free market.
Agriculture has changed a lot since the days farm subsidies were established. USDA figures show that only 38 percent of farm households consider farming their primary occupation. So the majority of farm households earn the bulk of their income from non-farm sources which creates financial stability. An interesting example of farmers prospering without subsidies is in New Zealand. That nation ended its farm subsidies in 1984, which was a bold stroke because the country is four times more dependent on farming than is the United States. The changes were initially met with fierce resistance, but New Zealand farm productivity, profitability, and output have soared since the reforms. New Zealand’s farmers have cut costs, diversified their land use, sought off-farm income, and developed niche markets such as kiwifruit.
In my opinion it has become obvious that it is time to largely cut government programs to help fix our problems in this country and I think agriculture subsidies and trade barriers are a clear place to start.
OVERVIEW
In a country that despises massive debt, government programs seem to be ever growing. The government seems to have the mindset of continuing status quo and trying to use centralized planning to run our nation’s economy. If history has shown us anything, it’s that in a highly competitive market industrialists love to turn to the government to protect themselves from competition and give themselves an advantage, agriculture is no exception.
Each year the USDA pays out between $10 and $30 billion is cash subsidies to farmers and farmland owners. These account for over 800,000 people. However, the largest producers receive the most in benefits.
Federal subsidies in agriculture have a long history although subsidies were relatively small until the 1920's. The majority of subsidies came in the form of conducting research and gathering statistics for the industry. As part of FDR's ingenious idea known as 'The New Deal,' farm subsidies grew to include commodity price supports and production controls, marketing orders to limit competition, import barriers, and crop insurance. Agriculture was in no way the only industry to be heavily regulated in the 30’s. Unlike agriculture, many other industries have been deregulated and have seen great success.
Today, farmers represent a small portion of the population but they still have a very strong lobby. One reason is that farm-state legislators have co-opted the support of urban legislators, who seek increased subsidies in agriculture bills for programs such as food stamps. Legislators in favor of environmental subsidies have also been co-opted as supporters of farm bills. Unfortunately the support for the common tax payer isn’t near as strong.
This industry welfare program is especially costly to tax payers. Since it consists largely of government actions to hold up the price of crops, it is paid partly by taxes and higher food prices. Higher food prices have the effect of a regressive tax, since low-income people spend a greater portion of their income on food.
The game that the government plays with farm subsidies is a vicious cycle. Subsidies induce farmers to overproduce, which pushes down prices and creates political demands for further subsidies. Subsidies inflate land prices in rural America. The flow of subsidies from Washington hinders farmers from innovating, cutting costs, diversifying their land use, taking the actions needed to prosper in a competitive global economy.
EXAMPLES OF SUBSIDIES
Recently, direct payments have been among the largest form of subsidies. Direct payments are cash payments for producers of: wheat, corn, sorghum, barley, oats, cotton, rice, soybeans, minor oilseeds, and peanuts. Direct payments were intended to be transitional, a way to wean farmers from old-fashioned price guarantee programs. Unfortunately, direct payments have not been reduced over time as originally planned. Direct payments are based on a historical measure of the farm’s acrage used for production and are NOT related to current production or prices. The Washington Post estimated that between 2000 and 2006 the USDA handed out $1.3 billion in direct payments to people who do not farm. The newspaper pointed to thousands of acres of land previously used for rice growing in Texas.
Marketing Loans were created as a part of the 'New Deal.' They were meant to be, like most farm subsidies, a temporary solution. Yet, they still exist 70 years later. Marketing Loans create a price floor for crops (same ones covered in direct payments). Price floors in agriculture and all industry creates incentive for producers to overproduce. Under the program, farmers take loans with their crops as collateral. This allows farmers to keep the loan, and forfeit their low value crop. Tax payers are then stuck with the loan cost and the cost to store the crop. Farmers don’t receive subsidies from the marketing loan program only when crop prices are low, they have become experts at working the system to maximize their subsidies every year. Farmers can lock in high government benefits when seasonal prices are low, and then sell their crops when market prices are higher.
Countercyclical Payments are a classic example of agriculture receiving special protection that most industries don’t, and shouldn’t, receive. Countercyclical payments are basically a price guarantee which allows for over production because farmers are receiving a payment that is higher then what the market allows so they will produce more then what the market allows.
My personal favorite subsidy is Conservation Subsidies. The largest conservation subsidy program is the Conservation Reserve Program, which was created in 1985 to idle millions of acres of farmland. Under CRP, farmers are paid to not grow crops, but to cultivate ground cover such as grass or trees on retired acres. A large share of land idled under the CRP is owned by retired farmers, thus one does not even have to be a working farmer to get these subsidies. In Idaho, Shoshone Bannock Tribe was the 2nd largest recipient of farm subsidies in 2009. Shoshone Bannock Tribe received $510,364 in total payments, $503,629 was in Conservation Subsidies. In 2009 Shoshone Bannock Tribe received over half a million dollars to do absolutely nothing!
REASON TO REPEAL
Farm subsidies are a clear example of redistribution of wealth. In this case it’s distributing wealth from less income to more income. The average farmer income is higher than the average American’s income. Ten percent of all farmers collected 74 percent of all subsidies. Top 10% based on size of producer received $29,675 average per year between 1995 and 2009 while the bottom 80% receive $579 average per year between 1995 and 2009. The largest recipients of these subsidies are the largest producers. The myth that these program are meant to help the small farm just doesn’t hold water.
Farm subsidies hurt the overall economy. In most industries, prices are set by the balance of supply and demand. Profits signal investment opportunities while downturn results in innovation and cost cutting. However, these market mechanisms are not found in a government controlled industry like agriculture. As a result, federal agricultural policies produce substantial “deadweight losses” and reduced U.S. incomes. What does result is overproduction, overuse of marginal farmland, and land price inflation.
Like all government subsidies programs, farm subsidies are prone to waste and scandal. Farm programs are subject to bureaucratic inefficiencies, recipient fraud, and congressional pork-barrel politics. The Government Accountability Office (GAO)found that as much as half a billion dollars in farm subsidies are paid improperly or fraudulently each year. Farmers create complex legal structures to get around legal subsidy limits. Another reason why large producers receive a disproportionately high amount of subsidies is because they have the recourses to get through the legal hoops that the small producer doesn’t have.
Farm subsidies damage U.S. trade relations. U.S. and European farm subsidies and agricultural import barriers are a serious hurdle to making progress in global trade agreements. Free trade helps global economic stability and security. "If goods don’t cross borders, soldiers will." The World Trade Organization (WTO) estimates that even a one-third drop in all tariffs around the world would boost global output by $686 billion, including $164 billion for the United States.
Farming would see great success without subsidies. It is true that agriculture would change with the repealing of farm subsidies. Different crops would be planted, land usage would change, and some farms would go bankrupt. However a stronger and more innovative industry would likely emerge having greater resilience to shocks and downturns. It’s important to remember that commodities that are covered by subsidies only account for about 36% of all production. Most farm production isn’t even currently eligible for subsidies and they still strive within a free market.
Agriculture has changed a lot since the days farm subsidies were established. USDA figures show that only 38 percent of farm households consider farming their primary occupation. So the majority of farm households earn the bulk of their income from non-farm sources which creates financial stability. An interesting example of farmers prospering without subsidies is in New Zealand. That nation ended its farm subsidies in 1984, which was a bold stroke because the country is four times more dependent on farming than is the United States. The changes were initially met with fierce resistance, but New Zealand farm productivity, profitability, and output have soared since the reforms. New Zealand’s farmers have cut costs, diversified their land use, sought off-farm income, and developed niche markets such as kiwifruit.
In my opinion it has become obvious that it is time to largely cut government programs to help fix our problems in this country and I think agriculture subsidies and trade barriers are a clear place to start.
Thanksgiving...
I have often wondered what the pilgrims felt when they came to this country. I remember just a year and a half ago when I took off from the Palouse to see what southern Idaho was like. After a month and a half away, coming home was like entering the gates of Heaven. The Pilgrims never went back home though.
Through hardships they stuck it out with a no-quit attitude that persevered. Their toils brought a new life that could not be taken back, and a new root into something absolutely extraordinary.
When they sat down for that celebration meal, what do you think went through their minds? They bowed their heads in humble prayer to give thanks to a Heavenly Father that provided their needs. They set a day apart to show their thanks to the Man who is great, and showed their appreciation toward those that worked hard to bring in the crop.
Over the years we have lost sight of the true value of this holiday. The day has drifted from a time to praise to our God, to a day of turkey and stuffing. The average person doesn't know the work it took to get the food to their possession, or the struggles that those families face.
So this year I hope to encourage you to think of Thanksgiving as a pre-funk to Christmas. Remember the Man that sent His own Son to us. Remember the Sacrifice that was made for us, and the Love that is expressed to us everyday. Remember this holiday, that there is something out there far greater than yourself. While you are important and what you do makes the world go around, there is Someone that allows you to do that.
Remember the family farm that worked hard to get their crops in this year. Some worked the summer away without anything bad happening, others were not so lucky. This year farmers died from accidents, equipment failed, and some lost their livelihoods to flooding, fires, and sadly, the bank. While you sit and enjoy that hot meal, think of those farmers that love to bring this to you.
This is a wonderful industry to work and live in. Growing food is an amazing thing whether it is in the barns with cattle or on a hilltop with the wheat swaying in the wind. I want my family to thrive in this business and I love it with my whole soul. So I end with this, a sincere thank you to all those who know what it is like to wake up early and go to bed late, to work in the coldest of snow storms or in the hottest afternoons without air conditioning. Thank you for being good stewards of the land and the animals God has put you in charge of. You deserve so much more than just one day a year.
Finally, I thank Heavenly Father for my family. Even though we have so many differences, we seem to always find a common love that keeps us going. My prayers are with my uncle and his family and the family farm. I thank God for the greatest siblings and grandparents anyone could have chosen.
Take a moment and enjoy the day, the 8 degree snow blizzard outside calls my name, time to get some stuff done.
MHF
Friday, November 19, 2010
Priority Issues in Agriculture
My friends, it is winter time on the Palouse! My greenhouse is full of plants and I have two disease trials and one seed treatment trial now. With this winter and slow work I have time to get even more active in planning and setting the scene for 2011.
These holidays are not all calm for agriculture. We have more to defend than ever and more consumers to educate, with all sorts of resources and avenues to utilize. I want to share with you the key issues that I will be putting my extra time into, aside from full-time research in the greenpea industry and full-time college. These are ranked in their priority.
Key Organizations:
-American/Idaho Farm Bureau and the Young Farmers and Ranchers Committee
-Idaho Grain Producers
-Idaho Eastern Oregon Seed Association
-Inland Northwest Partners
-Idaho Cattleman's Association
-National Cattleman's Beed Association
-National Pork Producers Association
-National FFA Organization
-Agchat Foundation
-National Farmers Union
-Idaho State Legislature
-U.S. Congress
-University of Idaho-Moscow
-Washington State University-Pullman
-Idaho/Latah County Republicans
Key Issues
1. Consumer/Producer Education
-To include Farm Bureau Events
-Consumer Workshops
-Political Leader Education
-Ag In The Classroom
-Ag In The Newsroom
-Squared Leadership
2. Agri Business/Small Business Growth and Promotion
-Young Farmers and Ranchers
-Inland Northwest Young Producers Seminar
-Education of Ownership on Resources
3. Inland-Northwest Agriculture Development
4. Proposed GIPSA Rule Change
-Education of local consumers on effects of change
-Commenting on proposal
-Working with Elected Officials to stand against anti-ag policy
5. EPA Regulation on Farm Chemicals
-To include undue regulation
-To include approval of Roundup Ready Technology
-Fight Against Nozzel Regulation
5. Giant Palouse Earthworm/Grey Wolf/ESA
-Fight Enlistment of Non-Researched Species
-Removal of Grey Wolf
-Support for States Rights in control of ESA programs
6. Farm Program Development/Improvement
-To include a call for restructure of the CRP
-Fair assesment of the SURE Program
-Due process in disaster relief
-Farm Subsidy program evaluation/restructure
The most important thing for me is that the public is educated on the truth of agriculture. We see too many people beating producers to the punch and their false statements put a big dent in Agriculture. It will take people from all parts of the country to win this fight.
Stay connected with me and we will work together for a better agriculture.
These holidays are not all calm for agriculture. We have more to defend than ever and more consumers to educate, with all sorts of resources and avenues to utilize. I want to share with you the key issues that I will be putting my extra time into, aside from full-time research in the greenpea industry and full-time college. These are ranked in their priority.
Key Organizations:
-American/Idaho Farm Bureau and the Young Farmers and Ranchers Committee
-Idaho Grain Producers
-Idaho Eastern Oregon Seed Association
-Inland Northwest Partners
-Idaho Cattleman's Association
-National Cattleman's Beed Association
-National Pork Producers Association
-National FFA Organization
-Agchat Foundation
-National Farmers Union
-Idaho State Legislature
-U.S. Congress
-University of Idaho-Moscow
-Washington State University-Pullman
-Idaho/Latah County Republicans
Key Issues
1. Consumer/Producer Education
-To include Farm Bureau Events
-Consumer Workshops
-Political Leader Education
-Ag In The Classroom
-Ag In The Newsroom
-Squared Leadership
2. Agri Business/Small Business Growth and Promotion
-Young Farmers and Ranchers
-Inland Northwest Young Producers Seminar
-Education of Ownership on Resources
3. Inland-Northwest Agriculture Development
4. Proposed GIPSA Rule Change
-Education of local consumers on effects of change
-Commenting on proposal
-Working with Elected Officials to stand against anti-ag policy
5. EPA Regulation on Farm Chemicals
-To include undue regulation
-To include approval of Roundup Ready Technology
-Fight Against Nozzel Regulation
5. Giant Palouse Earthworm/Grey Wolf/ESA
-Fight Enlistment of Non-Researched Species
-Removal of Grey Wolf
-Support for States Rights in control of ESA programs
6. Farm Program Development/Improvement
-To include a call for restructure of the CRP
-Fair assesment of the SURE Program
-Due process in disaster relief
-Farm Subsidy program evaluation/restructure
The most important thing for me is that the public is educated on the truth of agriculture. We see too many people beating producers to the punch and their false statements put a big dent in Agriculture. It will take people from all parts of the country to win this fight.
Stay connected with me and we will work together for a better agriculture.
Wednesday, November 3, 2010
Onward...
Congratulations to all the candidates that won their elections! Though it was a tough and sometimes dirty race, the people who were elected are qualified and will do the jobs they said they would do. It will be our main goal to work side by side with each of these people and educate them on the issues and happenings in agriculture.
One thing that amazed me was the change we are seeing in America. Many officials on the Ag Committee were fired, and some new GOP candidates will fill those positions. The most amazing was the ousting of freshman Representative, Walt Minnick, who just a short month ago was awarded the 'Friend of Farm Bureau' award. It is my personal goal to call Raul Labrador on a regular basis to make sure north Idaho is represented on the Ag Committee.
Now that the rush is over look forward to articles on here. I have a guest coming up soon who is active in his league of politics and is a farmer, like us. You will see guests on here from time to time that will address their side of an issue or their operation. Guests will include students, professors, industry representatives, neighboring farms, and elected officials.
I am excited to announce that in 2011 we will be covering the family farm on here, leading you through our operation and why we do the things we do. You will meet my family, their interests, and what crops we grow and why we grow them. If you have any questions or want to see something specific, I can be reached at 509.844.8855 or on my BlackBerry email: m.friddle@live.com.
One thing that amazed me was the change we are seeing in America. Many officials on the Ag Committee were fired, and some new GOP candidates will fill those positions. The most amazing was the ousting of freshman Representative, Walt Minnick, who just a short month ago was awarded the 'Friend of Farm Bureau' award. It is my personal goal to call Raul Labrador on a regular basis to make sure north Idaho is represented on the Ag Committee.
Now that the rush is over look forward to articles on here. I have a guest coming up soon who is active in his league of politics and is a farmer, like us. You will see guests on here from time to time that will address their side of an issue or their operation. Guests will include students, professors, industry representatives, neighboring farms, and elected officials.
I am excited to announce that in 2011 we will be covering the family farm on here, leading you through our operation and why we do the things we do. You will meet my family, their interests, and what crops we grow and why we grow them. If you have any questions or want to see something specific, I can be reached at 509.844.8855 or on my BlackBerry email: m.friddle@live.com.
Monday, November 1, 2010
Election Day
Election day is upon us. Take the time to get out there and vote, because more than ever, your vote counts. Here are some tips for those who are interested:
1: Take the time. Getting out there is an important thing, but don't cut it so short that if you get caught up in line that you get frustrated.
2: Proof. Some of you may have questions about residency. If you rent in the county, take your lease, power bill, or phone records with you. Something with your address on it that places you in the state and at the place of residence for more than 30 days.
3: DL. It is now a law in the State of Idaho that you provide a state issued form of identification, so don't get caught without it. Bring your ID in ID.
4: Don't let intimidation push you from making your move. It has been reported all over the country, people don't want you to get your vote in. If you see someone trying to get you discouraged about voting simply take a picture with your cell and notify the authorities.
5: Vote with your conscience at play. If you have a certain set of principles, stick with it. Vote for those candidates that you feel will make those decisions.
As a side note: Students that are from out-of-state, BE AWARE. If you are here at the UI on scholarship and don't want to loose that scholarship, do not vote in Idaho. Once you vote in Idaho you are considered an Idaho Resident and will no longer be eligible for your out of state scholarships or the WUE. This means you have to pay out-of-state tuition for the next 12 months because you have to have an Idaho ID for 12 months in order to get in-state tuition. It is a big goof on your part if you do so.
Good luck tomorrow and I hope my team wins!
MHF
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