Posted on 12/30/2001 6:21:57 PM PST by logic101.net
FARM SUBSIDIES AND THE END OF THE FAMILY FARM
12/30/01
Many people use the cry of the vanishing family farm to justify ever increasing farm subsidies. However, it may just be that such subsidies are actually creating this problem, if indeed it is a problem. First let's define some terms, it seems silly to call Archer Daniel Midland's vast farm holdings a "family farm". Let's call anything over 500 acres a corporate farm. There are many extended family farms with the parents and a number of grown children, let's call this a co-op farm and define it as between 150 and 499 acres. Let's not worry about the hobby farm, of less than 30 acres. This leaves the "family farm" between 30 and 149 acres. When the proponents of subsidies paint their picture, this is the size farm they want us to envision.
The majority of these subsidies do not go to family farms, but rather corporate and co-op farms. There was recently a story in my local paper where a co-op farmer was interviewed. His subsidies, and that of his 4 sons totaled almost $1.25 million over the last 5 years. This puts his hand-out (not counting his sons') from my tax dollars at about $50,000/year! I'd love to get a "subsidy" like that! The farmers who receive these subsidies hate having them called hand-outs, but what else is it when the government takes money from my paycheck and gives it to someone else?
Even more importantly is the lie given to perpetuate these subsidies. Catch phrases like "save the family farm" are common. Yet, the majority of this cash goes to corporate and co-op farms rather than the family farmer. This lowers the cost of production for the large farms that already have a huge advantage because they can utilize Economies of Scale (EOC). To illustrate how EOC work let's take two farms, Archer Daniels Midland (ADM) and George. Both buy a brand new 4wd Case tractor. Both pay the same price for this tractor, yet the cost of ADM is less. This is because that tractor can be used to produce food on over 1000 acres, while George has only 100 acres he can use it on. The cost per unit of production is 100 times more for George. The tractor George bought sits idle most of the time, but ADM's tractor is used constantly. Now, if we give a huge hand-out to ADM, we have further lowered their cost of production, giving the corporate farm an even greater advantage over George. ADM can afford to sell their products at a lower cost than can George, and still make a profit.
What happens to George if he has a bad year? George doesn't get any subsidy because his farm is too small. He doesn't have the extra money to hire a lobbyist to ensure he is included in the program. So, what does he do? He probably sells his land to ADM; one less family farm.
Even if George does get a subsidy, it isn't much compared to ADM's subsidy; certainly not enough to offset ADM's natural and unnatural advantages.
In addition, our "farm program" has so many twisted goals as to be silly. One of the goals is cheaper food at the grocery store. Another is keeping prices to the farmer high. These are mutually exclusive goals and cannot exist together. The "solution" is to keep both prices high, but hide the true cost at the grocery store by taking the money out of our paychecks before we see it, then transferring that cash to the farmer via a subsidy. The subsidy program also results in an over-production of food, keeping wholesale prices low, and "justifies" the need for more subsidies. To "correct" the over-production problem subsidies create, we also pay farmers NOT to grow crops. This is done via the Conservation Reserve Program (CRP). CRP is intended to help wildlife by giving them back some of the habitat that our over-production would have otherwise taken away.
Oddly enough, we can solve all these problems by going to a free market, as we had before subsidies. Corporate farms won't find over-production as profitable, and may even sell back some land to family farmers, who will again be able to compete. Marginal land will be taken out of production and create habitat for wildlife since it won't be as profitable to farm. Wholesale prices will fluctuate as a result of supply and demand, but after a short while, they will stabilize when farmers figure out the "new" market forces. The price we pay at the store will be the true price of the product, without part of the price being taken directly from our pay checks. In fact, the true price of food will be lower to the consumer, since any time the government transfers cash from one person to another at least half of it is used up in the bureaucracy.
Sadly, simple solutions never seem to appeal to politicians, or to those who feed off our paychecks.
MARK A SITY
http://www.logic101.net/
Hey, as long as they don't think they have
a taxpayer funded right to do so, I really
am not concerned. Families making
minimum wage have problems, too.
I don't see a clamor to give them
$150,000 a year for not working.
It isn't corporate welfare. Farm subsidies are welfare. It's a business, and if you choose to be in it, I shouldn't be forced to subsidize it with my tax dpllars. The best thing that could happen to the farming business would be to get the government out of the subsidy business and let people who want to be in the real business of farming compete.
To the extent ADM gets it, it is.
But welfare is welfare.
I love the mental gyrations of the farm subsidy apologists.
People make the mistake of thinking that farming is like other businesses...it is not.
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