USD Columnist: Farmers on welfare

Jake Mortenson, who reads us on occasion as well as having his own blog, is now a USD Volante columnist. And in today's Volante, he's saying something that might not earn him many brownie points in South Dakota's ag communities.

He's noting that Ag subsidies are expensive welfare for farmers that we don't need anymore:
In this reddest of red states lurk some of the largest welfare recipients in the country. No, they aren't urban poor or mentally handicapped. They probably don't have drug problems or turbulent family history. In fact, most of them have a multi-generational claim to substantial non-cash assets. So what are their rights to the public coffer? Well, they farm.

Subsidies to American agricultural producers totaled an estimated $26 billion in fiscal year 2005. Jonathan Gruber, textbook author and MIT economics professor, writes: "Together, these subsidies (direct subsidies and farm supports) cost each American household about $360 per year on average, and the average recipient of the direct subsidies receives $18,000 annually." What's more, the potential benefits from agricultural subsidies - food safety, small farm sustainability, and war-time self sufficiency - are no longer relevant in today's world.

The threat of being cut off from the world agricultural market by an invading force is tiny. The idea that USDA needs to give subsidies to American producers of wheat and corn, much less sugar and cotton, to ensure food safety is also no longer viable (if it ever was).
Oooo. You have to at least give Jake a little credit to have the courage of his convictions. But as my friend Ken says, day-ammm. That's a pretty strong statement for such an Ag oriented state as South Dakota.

I don't think I would have said that on the SDSU campus. Even saying it down at USD might be a dicey proposition. And I'm not so sure that Jake himself doesn't have close family members in the EWG's farm subsidy database.

Go read the column entitled "Sorry South Dakota, ag subsidies and trade protection aren't smart" for more on the story.

Comments

Anonymous said…
It is fairly ironic that this republican/small government state is so addicted to federal farm subsidies. I guess it proves that large government programs/entitlements aren't so bad so long as you are on the receiving end of them. Or I guess it also proves that most republican/small government advocates are hypocrits.
Anonymous said…
As the bumper sticker says "If you complain about farmers, don't talk with your mouth full!
lexrex said…
"As the bumper sticker says "If you complain about farmers, don't talk with your mouth full!"

sounds like you're saying that the non-ag community is held hostage. not sure that's a polite, or american, thing to say. that kind of attitude has got to go.

the problem isn't so much the subsidies but all the other messes the gov't have created when it comes to ag. it's no longer a free market.

i know most farmers would rather not receive those subsidies, but as much as they are pulled and drained by the gov't, they're hard-pressed not to take them.

i don't like the subsidies, either. government welfare programs flat just don't work.

but before we talk about yanking the subsidies, we ought to discuss all the other ways the gov't can get off the farmers' backs.
Anonymous said…
Remember this: it is the government who tells farmers how much they can plant and raise and for the most part how they can do it. What farmers raise is used as a tool in trade issues and/or bargining tool among other ploys.
Farmering is a hard life, long hours and dirty it is not for the light hearted or those who believe in a 40 or 50 work week.
Do you have any idea what a combine cost? Do you understand the risk involved in farming? Farming is not just buying seed and plopping it in the ground or buying a hog or cow and putting them in a field or building. If you want to know or learn about it contact a local farmer and i am sure they would love to see you this spring season and show you some of the ropes.
nonnie said…
It's also a mistake to think that the average farmer in SD get $18,000 or so in annual subsidies. We could live a lot better if we were to somehow grab that much of the political pork!

And I agree with the bumper sticker! And with the other posters above that shows where the true problem lies - government regulations and the games they play.
Douglas said…
The government ag and crop insurance regulations result because somebody somewhere figures out a way to cheat the system. After years of building barriers to connivance, the only people who really benefit are the most corrupt connivers.

I hope the Volante writer will next direct his attention to the roughly $1 Trillion per year in subsidies and tax breaks given to the petroleum industry.

The really big "subsidies" don't show up as direct payments.

A farm program that actually controlled production could be made that would cost the government next to nothing. I suspect that paying $26 per bushel for wheat which would be the price if it had kept up with inflation is not something bread eaters would like very well.

In any case, the ag subsidies help prevent the US from being dependent on foreign food producers which is something the US has tried to avoid since the world wars demonstrated the hazards of such dependency.
Anonymous said…
Looks like somebody's been reading Stephen Moore...
Anonymous said…
Showing that a relation recieves subsidies actually lends to Mr. Mortenson's credibility. He's not advocating a position due to an ulterior motive, he's actually arguing against his "close relatives" interest. Kudos to the young man for saying what logic is telling.
Anonymous said…
"Farmering is a hard life, long hours and dirty it is not for the light hearted or those who believe in a 40 or 50 work week. "

Farming is difficult. Nobody denies this. The problem is, a job's difficulty is not grounds for subsidization.

AND

"A farm program that actually controlled production could be made that would cost the government next to nothing."

You think a centrally planned agricultural market would be better? Since when has central planning worked? We're moving in the wrong direction here ...

"I suspect that paying $26 per bushel for wheat which would be the price if it had kept up with inflation is not something bread eaters would like very well."

The ol' cheap food argument. Unfortunately, if they got to keep the $360 per household they dished out in taxes, I'm guessing they would save money.

You're also forgetting we would still get to eat subsidized wheat courtesy of European taxdollars. That's right, they'd be paying for our meals.

See how screwed up subsidization is in a global economy?

Finally,

"It's also a mistake to think that the average farmer in SD get $18,000 or so in annual subsidies. We could live a lot better if we were to somehow grab that much of the political pork!"

The problem is, the top 10% of all recipients get 52% of all subsidies in SD.

THAT is why there is such an organized resistance to ending farm subsidies.
Anonymous said…
This kid obviously doesn't understand - Federal Farm subsidies DO NOT EXIST to supplement farm income. They exist to keep FOOD CHEAPER for everyone in the country. The program isn't perfect, and obviously some farmers benefit, but many farmers would be happier in a real free-market system
Anonymous said…
Anon 6:43 pm:

1. Are you suggesting COTTON subsidies exist to keep food prices down?

2. From the article, domestic consumers of sugar pay more than double the price on the world market ... "not perfect" indeed; especially if your aim is to keep prices down.

3. Have you studied the history of ag subsidies at all? The feds used to buy crops to take them off of the market in order to RAISE the price of commodities and food. Furthermore, if you read the initial legislation, it was implemented to supplement producer incomes.

4. If we were truly concerned about keeping food cheap, why do we put tariffs on ag imports from other countries (who can provide it at a cheaper price)?

5. Do you have any evidence it is more efficient to subsidize production of food products than it is to subsidize consumption?Wouldn't a direct subsidy to poor people to purchase food be much more efficient than creating and operating the USDA?
Jake Mortenson said…
PP,

Thanks for the post ... I think.

Feel free to check out any of my other articles by searching my name on the Volante homepage:

http://www.volanteonline.com/home-/search/
Anonymous said…
The real problem is a few BIG farmers get most of the money. A cap needs to be put on payments. Or IS the government trying to concentrate the power/control in a few by eliminating all the little guys??
Douglas said…
""A farm program that actually controlled production could be made that would cost the government next to nothing."

You think a centrally planned agricultural market would be better? Since when has central planning worked? We're moving in the wrong direction here ..."

My idea would be the opposite of central planning. I doubt PP wants the details spelled out here.

Payments ought to be limited to about $20,000 with the current program and we would see a re-birth of rural America.

We really don't have a "cheap foods" policy. It is actually a "a cheap commodity" policy that allows giant corporations to make large profits on food that seems cheap in comparison to other products, but is not really all that cheap in relation to the commodity prices.

Compare what it costs to mail an ounce of first class mail with the cost of mailing advertising trash, newspapers, and magazines and you will also get an idea of what subsidy is. It is so easy to hammer ag subsidies because probably fewer than 4% of the population lives on farms.

Subsidies to airlines, steel companies, car companies, etc. etc. etc. don't get press coverage because they also advertise in the media.

I am somewhat amused by people who are forced to move off the farm because they can't make a living, but then immediately seem to think farmers have it too good and perhaps should be living in freezing hovels without bathrooms, washing machines, or dishwashers.

The government and our congress critters don't want a farm program that actually works. They would then have to put up with all the bitching from doctors, lawyers, dentists, hospital executives, etc bitching because bread costs $2 or more a loaf. Oops, bread isn't 50cents a loaf anymore even if wheat is not $5 a bushel..

Anyway, this is mostly beating a brain dead horse.

I suppose next we will be hearing from some brave Volante writer claiming he or she should have a right to hunt on any farmers land anytime, anyplace.

Let's turn the campus into a buffalo commons.
me said…
This comment has been removed by the author.
granonymous said…
Subsidies do not exist to keep food cheap. By their very nature, they cannot do this. The subsidy money comes from our tax dollars. Furthermore, the subsidies thwart true economic competition within our borders and from without, meaning that the market does not get to help push the prices of food down through normal, healthy competition.

Subsidies existed originally to guarantee a steady food supply. They succeeded in performing this function. However, food security is not a concern now. But farmers have grown addicted to the subsidies. And the programs end up putting to much money in the hands of big farming interests.

There IS, however, a good rationale for propping up small farms, IF they are integral to small rural communities, and their failure would irrepably destroy those small towns and their economies. The answer, however, could be as simple as slowly weaning to promote market substitution by producers.
Anonymous said…
hope all you 'nanny stater haters' realize your centrally planned farm economy lauds are pure hypocrisy.

Recall plank five of the Republican Party platform... ('proper role of government is to provide critical functions that individuals and private organizations cannot')
Anonymous said…
Douglas:

I agree the subsidies are directed at big farms, but that being said, I still don't think redistribution based on occupation is legitimate.

Less than 2 percent of the population lives on farms, not 4. And it is illogical to use other unjustifiable subsidies to justify ag subsidies.

"The government and our congress critters don't want a farm program that actually works. They would then have to put up with all the bitching from doctors, lawyers, dentists, hospital executives, etc bitching because bread costs $2 or more a loaf. Oops, bread isn't 50cents a loaf anymore even if wheat is not $5 a bushel.."

I thought you said it wasn't a cheap food policy?

And once again, I would love to see any studies suggesting the amount the price of food would increase would be greater than the amount of refunded taxes. If consumers actually had access to many commodities on the world market, I am guessing the price would not increase more than the refunded taxes.

Either way, the burden is on the INTERVENTIONISTS to prove subsidies and trade protections are necessary to reduce prices, not visa versa.

"I suppose next we will be hearing from some brave Volante writer claiming he or she should have a right to hunt on any farmers land anytime, anyplace."

I'm pretty sure the Volante writer was arguing for more of a free market (which includes property rights). Try reading the article (or re-reading it). You are completely missing the point if you think he'd be in favor of some sort of socialistic land policy.
Anonymous said…
The "Farm Program" is about price structure... in more than one way.

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