Posted by paul on November 07, 2012 at 18:23:42 from (76.77.196.231):
In Reply to: Farm subsidies posted by Fritz Maurer on November 07, 2012 at 16:58:42:
The farm ecconomy was crashed back in the 1960's with govt intervention by politics.
Govt subsidies began back then, or the entire rural area of the country woulda folded up. Politics again came into the picture in the 1980s with a repeat grain embargo to totally mess up rural ecconomy.
There have been many plans over the years, some are pretty good, some are a worse disaster than the original grain embargoes.....
Currently the govt rents some land from land owners that is better suited for wildlife than for grain production. That is the CRP program, and tax payers seem to want to preserve wildlife areas, so this is the program. It is generally a good program, the govt requires the owner to plant native type grasses, and control weeds - lot of costs to the landowner in return for a rather low rent payment.
The farm program has 4 different payments to farmers:
Direct payment - this might be around $15-20 per acre, based on what you grew back in the 1980's. It is a forgone deal that this part of the program will go away for the next farm program.
LDP - this is a complicated deal that kicks in when grain prices are _very_ low, you can pick a day and get a per bushel payment from the govt for the crops you already harvested that year. If you are collecting this, the farm ecconomy is horrible, it's like you going on food stamps things are bad.... Hope this doesn't come back to be needed. Things are dire out on the farm when this kicks in.
Counter-cyclical - if the grain prices are low for much of the year, this is a per bushel payment you get the following year, it is sorta like the minimum wage many people work under - if this is all you are getting paid, you need the help.
Crop insurance subsidies: This is the latest deal the govt and many groups prefer, and is likely to be expanded in the coming legislation. The govt helps pay for private insurance on the grain _and_ grain prices, and farmers collect if things go bad with either production or prices. The govt perfers this deal, as they know how much it will cost each year, and private insurance companies take the risk, instead of endless crop disaster packages the govt used to put out.
In addition, there are some small programs that pay farmers to try new green practices, to improve the environment.
About 80% of the 'Farm Bill' is actually going to food stamp and other city and town assistance programs. So _most_ of the money - almost 80% - of the 'farm bill' money is not spent on farmers at all.
The old farm buill expired a few months ago, and Congress gott into a big argumnent about it. Both sides agreed to cut spending on farmers - the direct payment, and cut back other farm expenses. My coyuntyu office was eleminated for example, I am supposed to drive 35 miles now to the far end of the next county... Anyhow, congress got into a fight about the 80% of the spending that goes to town people.
And so we have no farm bill, no actual plan for next summer at all at this time. These bills are typically for 5 years.
If nothing gets passed this early spring, we will revert to some 1940's legislation, that talks about 'parity' price supports and so forth. It would get very spendy for the govt, and be very hard to apply to 2010's agriculture. :)
Anyhow, that's a real brief summery of it all.
The govt spends alot of farm subsidies in really bad years - but those are years that rural America would fold up without help, and often is caused directly by govt actions that mess up the price of grain - we ship almost 1/2 of our grain to other countries, and are very dependent on the world market for grain.
Most of the 'farm bill' money is actually spent on town/city programs.
What little is spent on farmers tends to go into land prices, which results in more local property taxes for schools and so forth....
You'll get a lot of different answers, there are different viewpoints on this here on this site.
But this is how it works. There could be better ways to do what the govt is trying to do, and it should cost less. But this is the govt, do you know any of their programs that are streamlined and smooth? What we have now isn't so bad, and it is clear we will have a cheaper smaller farm program the next 5 years.....
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