March 28, 2008
Ahh yes, the pending $288B Farm Bill. Subsidies to farmers were first proposed in the 1920s, but were shot down by President Coolidge who said “there is no reason why other industries – copper, coal, lumber, textiles, and others – in every occasional difficulty should not receive the same treatment by the Government. Such action would establish bureaucracy on such a scale as to dominate not only the economic life but the moral, social, and political future of our people.” If he could see us now.. Later, following the Great Depression, taxes were enforced and the Farm Board, which fixed price floors for wheat and cotton arose. Now I’m no expert but I’d argue that the subsidies over the past 70 years have done our country some good: stability for farmers in the ever fluctuating agriculture industry, increasing environmental programs for organic farmers and fruit and vegetable growers, and sustainable low prices for food, with plenty of it. Good, right? Well, maybe. According to the OECD, the higher domestic food prices caused by U.S. farm programs transferred $16.2 billion from American consumers to domestic agricultural producers in 2004. That’s an annual “food tax” per household of $146. But I’m okay with that tax as long as it’s going to where it should be. But is it? Sources say no. The number of farmers receiving subsidies has dwindled and the subsidy payments have increasingly tilted to the largest and wealthiest farms. In fact, according to the EWG Farm Subsidy Policy Analysis Database, fewer than 5% of congressional districts (19 out of 435 districts) accounted for about half of crop subsidy program spending in the US between 2003 and 2005. But you can and should see who the beneficiaries are for yourself. Check out who gets what in each state. I made the above graph which shows the annual net farm income for 2004 to 2008 (projected to be $92.3B). Many publications, op-eds and blogs tout the >50% increase in income from 2006 to 2007, concluding subsidy cuts must be made, our commodity prices are soaring, and there is no need for such protection. But these take little consideration of the 25% decline in income between 2005 and 2006, exemplifying the instability of the agriculture market. If only agricultural subsidies could go to people like Farmer John.

Ahh yes, the pending $288B Farm Bill. Subsidies to farmers were first proposed in the 1920s, but were shot down by President Coolidge who said “there is no reason why other industries – copper, coal, lumber, textiles, and others – in every occasional difficulty should not receive the same treatment by the Government. Such action would establish bureaucracy on such a scale as to dominate not only the economic life but the moral, social, and political future of our people.” If he could see us now..

Later, following the Great Depression, taxes were enforced and the Farm Board, which fixed price floors for wheat and cotton arose. Now I’m no expert but I’d argue that the subsidies over the past 70 years have done our country some good: stability for farmers in the ever fluctuating agriculture industry, increasing environmental programs for organic farmers and fruit and vegetable growers, and sustainable low prices for food, with plenty of it. Good, right?

Well, maybe. According to the OECD, the higher domestic food prices caused by U.S. farm programs transferred $16.2 billion from American consumers to domestic agricultural producers in 2004. That’s an annual “food tax” per household of $146. But I’m okay with that tax as long as it’s going to where it should be.

But is it? Sources say no. The number of farmers receiving subsidies has dwindled and the subsidy payments have increasingly tilted to the largest and wealthiest farms. In fact, according to the EWG Farm Subsidy Policy Analysis Database, fewer than 5% of congressional districts (19 out of 435 districts) accounted for about half of crop subsidy program spending in the US between 2003 and 2005.

But you can and should see who the beneficiaries are for yourself. Check out who gets what in each state.

I made the above graph which shows the annual net farm income for 2004 to 2008 (projected to be $92.3B). Many publications, op-eds and blogs tout the >50% increase in income from 2006 to 2007, concluding subsidy cuts must be made, our commodity prices are soaring, and there is no need for such protection. But these take little consideration of the 25% decline in income between 2005 and 2006, exemplifying the instability of the agriculture market.

If only agricultural subsidies could go to people like Farmer John.