Calling all "farmers"

[SnakeEyeSS]

In my AP Envriomental Science class, I have a question on an assignment:

 

"should all price supports, government subsidies, and taxbreaks given to farmers be eliminated? Explain. Try to consult one or more farmers in answering the question."

 

so far I have

"tax breaks and other help given to farmers should NOT be eliminated. The farmers could have crop failures or other troubles and may need the tax breaks to "keep going", and we need to them to keep producing food, as we need the continually need food output farms yield."

 

Now it's your turn

 

you guys feed the world

[MCourson]

Visible beneficiaries, invisible victims.

 

Ok lets take a look at this. Subsidies = surplus (Government subsidies cause a price floor, this higher price jacks up the quantity demanded up on the demand curve, thus creating surplus.) Now that we have this surplus what do we do with it? Well we can't just throw it away or let it sit around. So we give it to third world countries as foreign aid. How do we get it to the other countries? Well we have to harvest. There will be more to harvest now (surplus) so well we need more combines, more combines means the manufacturers need more steel to make them and the farmers need more fuel. Ok now we have it harvested and we need a temporary storage. More silos. More silos equals more steel. Then we need to get it to the port so we can ship it. It needs to be taken to the port, we need trucks, more silos to store it at the ports, and you guessed it more steel and fuel. Now we need to ship it to the other countries. Well we need to have a ship so we need more steel and more fuel. We still have to pay the truck drivers and the shipping companies. We could ship it cheaper on foreign ships making a return trip to that area that we are shipping to, but there is a clause in the agriculture subsidies bill that says it has to be shipped on American ships. Well that just jacked the cost up more. Ok now this third world country has there aid and Americans have a nice warm fuzzy feeling. Now who are the beneficiaries? Steel mills, truckers, shippers, farmers, you can see the rest. Who are the victims? EVERY AMERICAN TAXPAYER! How do we pay these people? Well we just have to jack up the taxes farther.

 

EDIT - I'm no farmer, just a concerned citizen.

[lrymal]

...Now it's your turn

Ummm, I graduated ages ago so it would no longer be my turn. In short, though, subsidies need to occur to provide a buffer during dry seasons, weather disasters, war and famine. We farm and do participate in some of these, especially for poultry during the hot summer months and the houses are no longer able to cool.

 

Abuses occur when non-farms begin participating by fulfilling some really bizarre requirements. These absuses are what the media focus on. The latest abuse that hit the news services was mohair.

 

I'd suggest you let Google be your friend on this project. Try this search:

 

http://www.google.com/search?sourceid=navc...+farm+subsidies

[Firetiger(MN)]

Unlike people who have 9-5 jobs with a guaranteed paycheck, farmers do not have this luxury. They have mother nature to contend with which can mean the difference between a decent crop and nothing at all. What would happen if these farmers have a bad year and cannot make it to the next year financially? Well, those smaller farms go broke while the bigger, corporate farms take the hit and keep going. The more smaller farms that disappear, the higher your food prices will go. These small to moderate farms are what keep this food coming at a reasonable price to your table.

 

You have the luxury to take a paycheck home every two weeks. Farmers do not. That makes it pretty easy for people to shoot them down and say take away their checks when they've never been on that side of the fence. Well, I have. The way people treat farmers I would think that they thought food just magically showed up in grocery stores and will always be there to fill your face everynight when you get home from your 9-5 job.

 

People may compare farming to a small business owner in that if they cannot run a business, then they go broke and fold up shop, too bad. True, but there are many more uncertainties in farming than running a small business on main street, USA.

 

Remember, don't complain with your mouth full!

[MCourson]

Farmers are no different than any other entrepreneurs. Entrepreneurs dont have a guaranteed pay check, they get whats left over at the end whether it be in the positives or the negatives. Yes there are many uncontrolable factors that affect a farmers output, but that also holds true for you average small business owner. The government is not going to go out of its way to save a sinking small business so what makes farmers any different? We are not going to run out of food anytime soon, and if we start to see a shortage that is incentive for farmers to step up production. I am a believer in Adam Smith's laissez faire (which in english means "let it be") economic plan as illistrated in his book An Inquiry into the Nature and Causes of the Wealth of Nations.

[Firetiger(MN)]

If Joe Blow's Tire and Exhuast store goes out of business, it's not that big of deal to the economy. We start eliminating farmers because of their inability to harvest a crop that isn't there due to drought, well, that's another story. Weather can have a huge effect on many farmers in a region. It's very unlikely that tire stores in one town or an entire state are all going belly-up in one year due to some sort of unexpected hardship. In farming it can have that result.

 

I just don't think people understand that farmers aren't out there making widgets. They have to have a crop to take to market to get paid. That crop isn't guaranteed and therefore neither is his income.

 

I'm not going to get into a battle of economics because that's not my area, but when you start letting the small guy go, everyone is going to notice it down the line somewhere. I guess we might as well say "F" the farmer and start importing all of our goods from foreign lands like we do oil. Then we can pay out of our nose for common things like bread and milk because our hands are tied and bound by the other countries. We aren't going to run out of food any time soon??? I hope you're right, because when the farmers are all gone and we can't import food into the country because of this or that (i.e. mad cow), I want to see all those city people out in the fields getting some dirt under their fingernails and praying for rain hoping they have a crop to feed their family.

 

(off my soapbox)

 

Have a nice day.

[MCourson]

We aren't going to run out of food any time soon??? I hope you're right, because when the farmers are all gone...

The farmers are not going to be all gone. The economics forces will always come into play and push the demand and in this case the supply to equilibrium, market clearing price. Right now we have a surplus, we are above the market-clearing price. I am not trying to be down on farmers but that fact of the matter may just be that we have too many and the government is not letting us reach equilibrium. What would happen if a ton of new tire manufactures just started popping up all of them place? The government is not going to support them all by enacting a price floor, they are going to sit there and watch a bunch of the companies fail. The strong will survive and thus the market will be back to equilibrium. The way to sell more goods is to move the whole demand curve not to move to another point on the curve. Right now the government is wasting our money buying up the surplus. That is not efficient, and not prosperous.

 

The law is from the Great Depression, our economy is much more stable and so are our people and it is archaic today.

 

Oh and this price floor does more to benefit the large stable farms than the small farmer because the price support payments are made on a per bushel basis not a per farm basis.

 

And what is so bad if we do have to import our agricultural products, a lot of which we already do. People seem think that once there is a few cases of disease, all of it is diseased. If it comes down (which I doubt) that we are importing all of it, that only means that they have a comparative advantage in agriculture, which would mean we have a comparative advantage in some thing else which they would import from us.

[Shadowfax]

Farmers are no different than any other entrepreneurs. Entrepreneurs dont have a guaranteed pay check, they get whats left over at the end whether it be in the positives or the negatives. Yes there are many uncontrolable factors that affect a farmers output, but that also holds true for you average small business owner. The government is not going to go out of its way to save a sinking small business so what makes farmers any different? We are not going to run out of food anytime soon, and if we start to see a shortage that is incentive for farmers to step up production. I am a believer in Adam Smith's laissez faire (which in english means "let it be") economic plan as illistrated in his book An Inquiry into the Nature and Causes of the Wealth of Nations.

Actually you take away all the help us farmers get and you'll see how soon food runs out in this country, along with a skyrocketing cost in your groceries. Unless you are on the side of the fence farmers are on its hard to see. Matter of fact, I dont know of one farmer who is in not in debt up to their ears. The costs of all the equipment, tools, man hours, chemicals, grain and etc are incredible. Many farmers are going in the tank and can barely afford to feed their kids much less buy anything.

 

If it wasnt for the government helping out the American Farmer, we would have another industry lost to another country and more American jobs gone. People just think its so easy for the farmers cause they get this help.

 

The help also isnt much as everyone likes to make it out as well, in the last 10 years every crop imaginable has suffered from declining worth. Its hard to make a living on anything these days. Sugar Cane is about the only thing left along with tabacco thats really not being pounded by foreign influx. At least down south anyways. But alas the government is about to drop sugarcane to the side too and put more farmers out of business.

 

Also, considering the cost of all the equipment the prices get astronomical. You think car dealerships are bad when they rip off customers? Try tractor/heavy equipment dealers. 30 bucks for a bearing? 200 for a belt? Dont even get me started on the 15000 it costs to replace the auger chain on a 150 thousand dollar Cane Combine.

 

You take away the help farmers need and you'll kill the American Farmer, then watch what happens to the American Beef industry, and watch it cascade from there.

[gave20]

Should you eliminate subsidies? Thats a good question, farm subsidies started back in the 1930's during the dust bowl to help farmers recoop crop losses and to keep prices in check for all taxpayers. Without these checks a crop shortage could easily jack up the price of a product or many products and put an over burden on low income families and all families for that matter, sort of like the oil shortages in the 1970's. The government has set limits on prices to regulate the ammount of crops grown and the price that you can receive for them this keeps the cost to consumers low i.e. milk $1.56/gal instead of $8.00/gal. The government then pays the farmers the difference so they can make money. For example milk maybe $12.00 per hundred weight but the government will make up the difference so the farmer actually receives $16.00 per hundred, this keeps the cost down for the consumer and the price up for the farmer so he can stay in business, but there are catches to this as larger dairy meet government set weight caps per month and when this happens the farm receives milk at the $12 price.

 

The same thing occurs for grain farmers, the grain board of trade sets market prices for grains and forcasts futures also, so for example soybeans in Dec of '04 go for $9.00/Bu alot of farmers see that and grow beans this year then at harvest sell them but the market floods and the price drops but the government will pay the difference if there is one to keep the price at $9.00 for Dec. During the 1985 farm bill the big thing was to tell farmers how much of a certain crop they could grow that year to help keep prices high for the farmers with less government payouts. The problem that occured was farmers were told to plant 50 acres of corn 50 acreas of wheat and leave 10 acres set aside for example, the farmer would cheat and plant 55 acreas and 55 acres and then receive addtional money for setting 10 acres aside to make more money so we still wound up with surpluses, but farmers would set aside wetlands and other marginal farm ground and then plow and or destroy habitat and create erosion problems so conservation programs were enacted to pay farmers not to do this, the catch ws farmers must stay in compliance by farming in a fashion that minimizes soil erosion to a tolerable level and they were not allowed to convert wetlands into farmground without a wetland determination and conservation plan. Conservation program payments are a whole nother subject.

 

Now some people say that these payments are not fair but the popluation would not be able to handle the huge increase in food costs overnight caused by the removal of subsidies, yes farmers would make loads of money similar to softwareand internet companies in the early 90's but the bottom will fall out and farmers will go under.

 

As far as diaster payments farmers can receive compensation for droughts nad other natural disasters either through the government or from private insurance but they pay premiums for this coverage.

 

Why do farmers get so many breaks its because unlike the small tire shop 1/3 of the population feeds us all and that number reduces yearly as more of us take their land for development. There are more crops grown on less acreage today then there was 50 years ago and this trend will need to continue to keep up with sprawl. Also farmers pay higher property tax then anyone else yet see only and equal return in services unlike a renter or small lot owner who receives 1.3 times the services.

 

People need to think how much there lives revolve around farms, food and related products. Without subsidies how much do you think all your cotton made clothing would cost, I bet you would learn to like the feel of polyester. How much do you think food alone would cost, office supplies, restaurant meals, hotel stays everything has crops in it, so everything would increase. I'm sure everone knows how auto prices have increased over the years yet milk has stayed relatively the same, now is that good or bad?

[Jpshostr]

You guys can thank K1500 for bringing this post to my attention, guess he thought I might find it interesting. Can't really resist the urge to post so I'm going to put my thoughts up on this matter, take them as you wish.

 

As posters that have been around awhile know, my Dad and I farm close to 800 acres of corn, soybeans, hay, and beef in Illinois. It is a life and profession that brings much satisfaction and happiness, but along with it much frustration, risk, and extremely worrisome times. While I'm a relatively younger person in terms of this, I've been dealing with all aspects of the farm for close to nine years, from machine operation to production decisions to these dreaded farm programs (AKA subsidies).

 

If it was up to us, you better believe that if it was possible to make a go at farming without having the government involved, we'd do it. The way it stands at the current time however, it is nearly impossible to do just that. Years ago when the government first started distributing these subsidies, it didn't know what it was starting. It created a monster that just kept snowballing until the current point we are at, with which these subsidies can not just be eliminated without dramatic effects on the ENTIRE American economy (worldwide for that matter).

 

The whole reason for these subsidies is due to the low prices that persist; the price received for our grain has basically flatlined for decades now. How else is one left to try to overcome this? By producing more, which further creates problems with the surplus on hand. This plays into the long-standing government policy of a cheap domestic food cost nicely. In the long run its easier to pay a little to a million farmers then deal with a country of tens of millions of people complaining about the amount of their disposable income going to food. The average family earns enough to pay the food bill for the year by February 7th, leaves most of the rest of the year left to pay for housing, and brand new pickup trucks.

 

The common belief that most not directly involved with production agriculture have is that we just need to become more efficient, cut back on luxuries in the operation, and the one that really gets me, quit living so grandly in your personal life. Right now we are about as efficient as we can get, with the equipment size that is now used, seed genetics improved to the point they are, technology being used to cut back as much as possible on the amounts of chemicals and fertilizer used, there isn't much fat left to cut. I hear from many people that farmers don't need to drive around fancy new tractors and combines, with their air-conditioned cabs listening to the CD player. Well, you also can't farm with worn out, antique equipment either; it's an expense of the business. I've also read magazine/newspaper articles saying that farmers need to cut back on their lifestyle. This one really burns me up, what makes us "lesser citizens" that we aren't able to enjoy some of the perks of life that our suburban/urban neighbors enjoy? Even after all the "incredible amounts" of farm subsidies we received last year, our household income was roughly $30K. If you want to join us all in living off the fat hog with these subsidies with a minimal amount of work, then you are free to do so. Lately I haven't seen many takers, not even the younger people such as myself that have grown up on farms. It is a very sad thing to see this.

 

The one thing that I do have to say is that the media gives a VERY unfair portrayal of this whole situation. Most have heard that the largest twenty percent of farms receive eighty percent of all farm subsides, which is true. However, they fail to mention that the government considers anyone who sold $1000 of agricultural products a farmer. To put this in perspective, that is only 2-3 acres of average corn sold for an average price, ONE horse, fifty Christmas trees (yes, it is considered a farm). As you can see, it does skew the results when not even close to everyone receiving subsidies is a full, or even part-time, farmer. By contrast, we are considered an average sized farm, we sold a couple hundred thousand dollars worth of product last year, putting us in that "larger, corporate" area that the media wants the general public to believe. Large portions of the subsidies also come in the form of crop loans, which ARE repaid to the government. For several years we put all of our corn under loan, as it is called, which inflated our reported subsidy earned total, much more then we actually received.

 

Closing comments, yes, we receive checks from the government, we do cash these checks, we do use the money, we are not living the high life. However, we also turn much of that money over in our communities (several thousand a week when its averaged out), writing checks to the input dealers, equipment dealers, feed stores, supply centers, grocery stores, the church, etc. It isn't going to Walmart corporate headquarters, Detroit, overseas, its going back to the people that paid the money in the first place, the taxpayers. Also, I know I'm giving the impression that I'm complaining about being a farmer. Fact is, I'm pretty dang proud to be one, even with most people thinking of me and those earning the same living as myself as lower class citizens and peons. If it were possible to make a living farming without taking money from the government, you better believe we'd do it. However, with the food and foreign trade policies in effect, and the fact we have NO control over the prices received makes that virtually impossible at the current time. Its my hope that in the future the prices received for crops will rise up to what they are worth so government involvement can be kept to a minimum, however the general public also better expect to pay more at the store and restaurant then they are accustomed.

 

[Jpshostr]

Right now we have a surplus, we are above the market-clearing price.

Far from the truth, at the current time stocks for corn and soybeans are the tightest they have been in for many, many years. This is why you, and your fellow taxpayers, will not be paying out as much in the form of farm subsidies this year, prices are actually somewhat repectable now (though they're slamming the heck out of the markets the past few days again).

[k1500chevy97]

Do we benifit from the subsidies? Yes .

Does it make or break us? I really don't know I don't handle the finances all that much.

 

I can tell you this much though. We have just shy of 4000 acres.

Once you pay for the help , the machinery costs, vehicle costs, the fuel , the chemicals, the land rent, contracts (one is well over 1 million dollars), taxes, and the water rights there isnt all that much left and without the subsidies we would be hurting.

You can just tell by looking around this county , lots of places are packing up and moving out because there is no buisness because the people who provide the buisness are no longer in buisness .

If the american farmers go under I can tell you that big companies who are money hungry and have a big big voice in the government will step in and you will be paying at least 3 times more than what you are paying now as said in a previous post.

[MCourson]

Without these checks a crop shortage could easily jack up the price of a product or many products and put an over burden on low income families and all families for that matter, sort of like the oil shortages in the 1970's.

Without these checks we would go to the market clearing price. We would not see a shortage unless either we see a price cieling or the farmers cut us off like the middle east did, and I doubt they would do that.

 

The government has set limits on prices to regulate the ammount of crops grown...

 

That was the intent, but this falls under the law of perverse results. "Anytime the governemet tries to do something in the economy, the opposite comes about" What happens is now that that prices are high the farmers have and incentive to produce more, and you can see where this goes.

[MCourson]

Far from the truth, at the current time stocks for corn and soybeans are the tightest they have been in for many, many years.  This is why you, and your fellow taxpayers, will not be paying out as much in the form of farm subsidies this year, prices are actually somewhat repectable now (though they're slamming the heck out of the markets the past few days again).

If the surplus is smaller this year, then that is good news. My family farms 1300 acres in Ga and its not the effieciecy that is the problem, it is the government stepping in with the subisidies. Again, with the prices higher, there is more incentive to produce more. If I was a farmer I sure wouldn't hesitate to milk the gov't for what I could get.

 

**DISCLAIMER** My view is not that of a farmer, but that of an economics major.

[SnakeEyeSS]

Wow, I just wanted posted looking for a simple asnwer from one of the farmers on here. talk about snowballing!

 

Anyway, thanks Jp, and K1500. I think I'll print out yurs guys answer and turn them in. looks like an easy A.

 

I know how important farms are, We have been doing population dynamics and food distribution. The numbers are not what I ever thought they were, farms produce one heck of a lot of the world's food.