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AgWeb Editor Greg Vincent takes a big-picture look at agriculture and current events.

Farm Programs for the Citified

Apr 06, 2009

Saturday’s New York Times ran an article on Washington’s farm subsidy debate. A friend of mine, a transplanted Iowan turned New York City actor, texted me asking to put the debate in layman's terms.  Here’s my attempt and what I told him:

 

  • We have a cheap food policy in this country and we have since the New Deal. The farm program is set up as much to keep food prices affordable as it is to keep farmers on the farm.
  • Keep in mind the 2007 bill was the largest “farm bill” in history, but only 10% of that bill dealt with actual on-farm production. The majority of the bill was for nutrition programs like food stamps, WIC, school lunches, etc.
  • $500,000 used to be quite a bit, but commodity prices have risen recently and that really isn’t that much production.
  • The $500,000 the Obama administration has pegged is for total gross sales, but it’s not taking into account what it takes to produce the crops that get $500,000.
  • Cost of production for corn today is between $4.50 and $5.00 bushel as a general rule.
  • Friday’s close on the Chicago Board of Trade was $4.34 ½/bu. for the December contract, which represents the first contract that is an indication of what farmers may get paid for their 2009 production. (i.e. the cost of production is higher than the price farmers are getting.)
  • Iowa’s average yield per acre in 2008 was about 172 bu./acre.
  • Using an average 172 bu./acre at $4.34/bu. ($746.48 gross profit per acre) you would have to have 670 acres of corn (give or take) to get to the magical $500,000 number.
  • By today’s standards, a 670 acre farm isn’t terribly big, so the big agribusiness that people believe get these subsidies are not the big farmers the news media is making them out to be.
  • Most of the farmers I’ve talked to would gladly give up their subsidies to get the government out of their business.
  • Without a subsidy program a 670 acre grower is incredibly less competitive and the farms with 5,000 acres or more could gobble them up more quickly than they already are.  
  • For the National Farmers Union to publicly oppose the Obama administration is huge.
  • Nobody in agriculture will argue the point that the largest farms need to get their subsidies cut. A major concern is people who have nothing to do with farming, except owning the ground, get subsidies (It would be like subsidizing a Wall Street investor’s—oh wait, we are doing that. Anyway, that’s what land is to these people, just an investment.)
  • This link (http://agweb.com/TopProducer/Article.aspx?id=138528) shows you a story I wrote from an interview with the acting Ag Secretary in October 2007. There is a bunch of money going to people in Manhattan—a lot.

 

What did I leave out? Do you agree with my assessment that most farmers would give up a subsidy in return for the government getting out of their business?

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COMMENTS (5 Comments)

Anonymous
i like that comment. eliminate direct payments in return for a better ra policy.

4:22 PM Apr 9th
 
Anonymous
The crop payment goes to the tenant, not the landlord in Manhattan.
11:02 AM Apr 8th
 
 
 
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