The problem with farm subsidies?

Posted by $ blarman 9 years, 5 months ago to Economics
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They become a tool of partisan politics. The idea that an outcome should be guaranteed by the government makes me shake my head. Farmers are entrepreneurs just like any other business.
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  • Posted by dburgnersr 9 years, 5 months ago
    The problem is that the farmer who does not get subsidies gets screwed in two ways, 1. He does not receive the subsidy money. 2. The resulting market pressure on what he buys and sells puts him at a disadvantage. Even if he gets subsides the conditions can become overly burdensome.
    Bottom line-Get rid of USDA!
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  • Posted by $ Susanne 9 years, 5 months ago
    The other problem is it pays you to be a non-producer...

    When the government pays you to leave land fallow because they don't have a trade agreement to send the years produce to the People's Republic of China, so we have a "glut" and instead of storing it for lean years we have to not produce...

    When they pay us to kill off our milk cows because if we havd that many it would make it unprofitable for the milk transporters and mega-dairies to make their money...

    When they tell us instead of planting rutabagas and lima beans and asparagus to feed people we must plant Monsanto-engineered corn to produce methanol for our gas tanks... and deplete our land...

    We are no longer a market-based farming economy... we're fulfilling the current "5 year plan" as set forth by the People's Agricultural Collective Bureau" so senator so-and-so looks good to his supporters... not his constituents, but those who pay huge money to keep him in their pocket.

    People go hungry? Who cares about them... as long as we have Ethanol Corn and keep Monsanto happy... (Sorry, don't mean to pick on Monsanto, except they do make an easy target...)
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  • Posted by robertmbeard 9 years, 5 months ago
    While property tax rates are lower for farms, the significant chunk of land involved results in huge property tax confiscation every year. Instead of farm subsidies, eliminating property taxes on farms would be far more effective and fair. Of course homeowners also pay ridiculously unfair property taxes in most places. Farmers and landowners used to be able to accumulate wealth though land holdings. In today's socialist world of property taxes, that is largely impossible...
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    • Posted by XenokRoy 9 years, 5 months ago
      I have a small farm and a rental property. Between the two I net about 25k a year with about 12k annual expenses. The 13k I make about 5.5k goes to property taxes.

      The sad thing is that is not out of line with most other businesses. If they sit down and figure out their tax costs its about 50% of the net income after other expenses.

      This is not to say that the taxes are not out of control but rather than the farm and rental industry gets hit a bit differently but about the same.

      I have no employees so I do not have to match 14.7% for social security or pay unemployment and due to many very advantageous tax deductions its rare that I can't reduce the income to where I pay no other taxes other than property taxes.

      It is simply different on a farm, but all business are simply overly taxed in different ways.
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  • Posted by richrobinson 9 years, 5 months ago
    I have never understood the farming industry. They seem to have struggled throughout our history under Democrats, Republicans, Conservatives and Progressives. We can't live without food so why don't they make more profit? I remember reading that President Harding came from a farming background and it frustrated him in the 20's that the economy started doing well but farmers still struggled. Hoover tried to help farmers during the depression. More recently I have read about small farms being lost due to the "death tax". Subsidies have been around for years. With all this "help" why are farmers always having so much trouble?
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    • Posted by XenokRoy 9 years, 5 months ago
      Having a small farm, and my father did also I can tell you a few things. Its largely government, but its also poor business practices in the farming industry.

      Background:
      I consider myself a casual farmer. For the time I put into it, it pays me well. If I were to get very serious about it, I could make good money at it, there is a significant problem.

      A family farm is kinda like having a family rental business. You depend upon the money tied up in the assets to make your living. If you have a 1000 acre farm that is valued at 1000 an acre you have a million dollar net worth right there. Add in a basic house and your to the point that estate "death" tax will take 50% of what you have in net worth. Your farm does not have a 500k cash wad sitting around. Its tied up in property.

      This is both what causes family farms to close and what causes them to need subsidies. Basically a family farm has to take out a massive loan for taxes every generation, pay it off and then start over. The cycle kills the family farm and feeds firesafe farms to large corporate farms.

      The subsidies then go out to save the small farm that would not be distressed if they did not effectively have to buy the ground over and over again in the form of a death tax.

      its a bit simplified but maybe that helps.
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    • Posted by $ Mimi 9 years, 5 months ago
      I’ve seen in my county that not just the death tax is a problem but regulators as well. The county swoops in and takes away the ability of the relatives to claim the property as a farm after the primary owner dies. The tax collectors start taxing the farm as multiple ‘lots’ instead of multiple acreage of one lot. Unable to pay the astronomical tax bill, the the families are forced to sell to property developers cheaply. We use to have some of the most beautiful vistas of rolling pastures. Now much of the farm land has become ‘lots’ of either cheaply constructed townhouses or the most ghastly McMansions.
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  • Posted by freedomforall 9 years, 5 months ago
    Forgive all small farm loans made by large federal banks since they created the money from nothing. That should help small farmers and force the GD banksters into a final death spiral, the exact free market remedy for their anti-productive anti-liberty non-free market methods.
    Hell, forgive all loans made to all individual native born and naturalized Americans. Put some producer assets back in the everyday economy instead of bankster super-yachts, drugs, and prostitutes. (With apologies to hard working prostitutes and yacht builders.)
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  • Posted by ObjectiveAnalyst 9 years, 5 months ago
    Unless it can be demonstrated that for national security reasons a subsidy is essential and there is no other option, all subsidies should end. Sure, we might pay a bit more for groceries, but we are paying more now, only it is in the form of subsidies. Subsidies that are diminished by wasteful bureaucratic overheads...
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    • Posted by XenokRoy 9 years, 5 months ago
      OA,

      It would lower the price of groceries. Most subsidies today are to farms that are being subsidized to not product in order to keep the food prices up so that other farmers can make a living off the food they produce.

      Actually it would likely not change the price of food. Case evidence but my dad has 280 acre that he gets about 6k every year from for not growing anything. Its a dry land farm. It could grow some crop that would be a spring crop only. The best thing to grow there would be a spring soy crop and then use it to produce ethanol with it
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      • Posted by ObjectiveAnalyst 9 years, 5 months ago
        Hello XenokRoy,
        Good to hear. I have a few farmer friends that have been paid (and regulated I believe) to keep certain fields fallow. What you are saying makes good sense. I suspect farmers would make more from the crops than the subsidy, if they have a good year and plant the right crops. The price of food commodities would naturally depend upon the weather and the usual supply and demand then, without interference... Yes?
        Regards,
        O.A.
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        • Posted by XenokRoy 9 years, 5 months ago
          Exactly.

          Some crops would drop in price, farmers would adjust what they grow and attempt to grow the crops with the highest profits available.... those with the better brains to identify the better crop to grow that year (variables would be weather, demand, regional growing choices, crop yields, finalizing, spraying for the right insects, bringing in the right insects ...) would do much better.

          For an example, I worked out (on the 280 acre) a plan to grow Soy and produce ethanol in that area. For it to really work you would have to get other land owners in the area to also grow the same crop with the same intent. I took an idea form Brazil in how the cook the ethanol out (they use black PVC pipes and solar powered fans combined with sun, IE not fuel usage) ton increase profit margins... my proposal to my dad would make 3k more a year after paying others to do everything with it than the "free money" from the government. All the work is hardly worth the extra 3k, but if it was nothing or 9k. That margin can be increased if you had another 5 other land owners with about the same plot of land producing the same product to share shipping costs with. Cant talk people into taking the risk when the "free" money is around. So I gave it up.

          Corn is expensive because we use it for ethanol, plastics and food. If we could shift some of the ethanol to dry land farms that produce nothing corn would come down in price. The above example (with 6 farms about that size) would keep 4 people employed full time at about 30k a year income (very conservative on the income) and increase owner profits to boot, but 6k sure money verses 9k maybe money. Most will take the 6k.

          A bit lengthy answer to say yes, but it perhaps explains the real problem with subsidies a bit better. This is a very specific example, and may not be like other situations at all, but I suspect that to not be the case. This is likely very typical and likely something that is holing back the farming industry in the US from hiring thousands across the country.
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  • Posted by plusaf 9 years, 5 months ago
    Or, in other words, the US Government, once again, is tasked with the goal of making sure that no citizen EVER has to 'suffer' from ANYTHING in the future.

    FSM Help us!
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  • Posted by bassboat 9 years, 5 months ago
    The government has no business whatsoever in taking my money and giving it to anyone in order for his business to survive or to guarantee it to succeed. More of FDR's meddling that we apparently can't get rid of. Where is John Galt? Is there a John Galt?
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