Government subsidies at Work

[nathanm]

I understand why we have farm subsidies. It helps immensely in keeping farmers from losing their shirts from one bad year. The current subsidy structure is incredibly stupid, though. It breeds poor dietary choices.

I don't know that it was the right solution, but our previous method of using price support instead of direct subsidies seemed not to do as much damage.

The problem with coming up with a solution is that you've got to have something that satisfies the ideological purists (who were behind the change to direct subsidies!) and still makes it possible for farmers to survive the volatility of the agricultural markets. It's a hard problem, so nothing gets done, and corn remains so cheap due to subsidies that I drink it and eat it most every day because it's in nearly every processed food sold in this country.

[Gaspar]

I understand why we have farm subsidies. It helps immensely in keeping farmers from losing their shirts from one bad year. The current subsidy structure is incredibly stupid, though. It breeds poor dietary choices.

I don't know that it was the right solution, but our previous method of using price support instead of direct subsidies seemed not to do as much damage.

The problem with coming up with a solution is that you've got to have something that satisfies the ideological purists (who were behind the change to direct subsidies!) and still makes it possible for farmers to survive the volatility of the agricultural markets. It's a hard problem, so nothing gets done, and corn remains so cheap due to subsidies that I drink it and eat it most every day because it's in nearly every processed food sold in this country.

Again, you are correct.  Subsidies were developed to help farmers survive poor seasons.  Now they support the farm from year to year and dictate what will be grown.  In many cases, farmers are paid not to grow anything.  It's an excellent example of the cycle of such entitlements.  The action designed as a safety-net for farmers has made them dependents, and loyal voters to the politician that promises to continue their servitude.  Many farmers and ranchers have become a slaves to the state.  Before subsidies, farmers used to invest in private crop insurance programs that were very successful. 

It's the same story. Liberals grew angry that the insurance companies were making a profit from the farmers, and farmers who didn't want to buy insurance supported a "public option."  Once in place, the bureaucracy grew.  Bureaucrats began to make decisions on what crops would be covered by the subsidies. For the most part these decisions were based on economy rather than market demand or other factors such as health.  Corn produces a very high calorie product per acre, and is inexpensive to grow.  Farmers that used to grow spinach, and high nutrition crops converted to corn because it was covered by the plan.  They got guaranteed payment regardless of market demand.

Now lets take a moment to digest this and imagine. . .
It's the same story. Liberals grew angry that the insurance companies were making a profit from the patients, and patients who didn't want to buy insurance supported a "public option."  Once in place, the bureaucracy grew.  Bureaucrats began to make decisions on what conditions would be covered by the program. For the most part these decisions were based on economy rather than market demand or other factors such as health. . .

[rwarn17588]

Again, you are correct.  Subsidies were developed to help farmers survive poor seasons.  Now they support the farm from year to year and dictate what will be grown.  In many cases, farmers are paid not to grow anything.  It's an excellent example of the cycle of such entitlements.  The action designed as a safety-net for farmers has made them dependents, and loyal voters to the politician that promises to continue their servitude.  Many farmers and ranchers have become a slaves to the state.  Before subsidies, farmers used to invest in private crop insurance programs that were very successful. 

It's the same story. Liberals grew angry that the insurance companies were making a profit from the farmers, and farmers who didn't want to buy insurance supported a "public option."  Once in place, the bureaucracy grew.  Bureaucrats began to make decisions on what crops would be covered by the subsidies. For the most part these decisions were based on economy rather than market demand or other factors such as health.  Corn produces a very high calorie product per acre, and is inexpensive to grow.  Farmers that used to grow spinach, and high nutrition crops converted to corn because it was covered by the plan.  They got guaranteed payment regardless of market demand.

Having grown up on a farm and in a farming region in the Midwest, I can tell that you know very little about what farmers used to grow or what their motivation is to grow corn.

Farmers grow corn in the Midwest because the land there is spectacularly well-adapted to corn. Farmers there have been growing corn there as long as my grandfather has been alive and then some, and has been the dominant crop long before FDR came along. Soybeans have been grown in the Midwest for 60 years.

Also, there is an infrastructure in place in the form of grain elevators that will buy said corn, and this infrastructure has been in place for generations. There's no sense in growing a certain type of produce or grain if you can't readily sell it.

If you know any farmers in Illinois or Iowa who used to grow spinach and switched to corn, I'd like to hear them.

City folk ... 

[Gaspar]

Having grown up on a farm and in a farming region in the Midwest, I can tell that you know very little about what farmers used to grow or what their motivation is to grow corn.

Farmers grow corn in the Midwest because the land there is spectacularly well-adapted to corn. Farmers there have been growing corn there as long as my grandfather has been alive and then some, and has been the dominant crop long before FDR came along. Soybeans have been grown in the Midwest for 60 years.

Also, there is an infrastructure in place in the form of grain elevators that will buy said corn, and this infrastructure has been in place for generations. There's no sense in growing a certain type of produce or grain if you can't readily sell it.

If you know any farmers in Illinois or Iowa who used to grow spinach and switched to corn, I'd like to hear them.

City folk ... 

I know, I never lived on a farm.   The product is unimportant.  What is important is that the market is not dictating what is grown any more, and the farmer is not in control of his success or failure.  I understand that for the most part corn is a feed crop subsidized to support the (also subsidized) meat and dairy industry.  It's a deeply woven mess.  Our American diet is vastly different because of it.

[rwarn17588]

What is important is that the market is not dictating what is grown any more, and the farmer is not in control of his success or failure. 

Oh, the market very much dictates what is being grown. When corn went up over $7 a bushel in 2008, you're darned tootin' that farmers put as much of their acreage as possible into corn.

To give you perspective, corn was $2 to $3 a bushel for years.

The price has backed off because 2009 was a spectacular year for yields in many parts of the Midwest. I know of some farmers in my home region that were getting 300 bushels per acre, which was unthinkable 25 years ago. The corn varieties have gotten better, and for many, 2009 was nearly perfect for growing conditions ... although dicey, as I'll go into.

And the notion that a farmer is no longer in control of his success or failure is nothing new to a farmer. It's called weather, which is biggest variable between success and failure in any given season. That variable of weather can make the difference between a good year and a bad year depending on where that thunderstorm cell goes. The Midwest last year had splotches of drought amid soil-quenching thunderstorms. Mother Nature can be a true beast. In that case, little has changed.

[rwarn17588]

I understand that for the most part corn is a feed crop subsidized to support the (also subsidized) meat and dairy industry. ... Our American diet is vastly different because of it.

The biggest impact to the American diet, quite frankly, is the rise of Archer Daniels Midland. ADM is the one that peddles fructose and other soybean and corn products to other players in the food industry. ADM undercut competitors in the sugar cane and other industries (and did some price-fixing, too).

Frankly, ADM is good old American capitalism at work.

[Gaspar]

The biggest impact to the American diet, quite frankly, is the rise of Archer Daniels Midland. ADM is the one that peddles fructose and other soybean and corn products to other players in the food industry. ADM undercut competitors in the sugar cane and other industries (and did some price-fixing, too).

Frankly, ADM is good old American capitalism at work.

Yes they did, but without an inexpensive subsidized product there would have been more competition.  I'm not sure how I feel about ADM today.   

[Conan71]

The biggest impact to the American diet, quite frankly, is the rise of Archer Daniels Midland. ADM is the one that peddles fructose and other soybean and corn products to other players in the food industry. ADM undercut competitors in the sugar cane and other industries (and did some price-fixing, too).

Frankly, ADM is good old American capitalism at work.

Cargill is another

[nathanm]

Again, you are correct.  Subsidies were developed to help farmers survive poor seasons. 

That's not quite what I said. Originally, we had the AAA, which both paid farmers not to grow so as to keep commodity prices at a sustainable level. Then we got the CCC, which did the same thing, but through supply and demand. When prices were above the target price, CCC would sell from their storage so as to increase supply and reduce price. When prices were below the price floor, CCC would buy and store (or destroy, or after 1949, donate to other countries) commodities so as to reduce supply and support prices.

The quest for ideological purity (under Nixon, as I recall) is what caused the ol' switcheroo, leaving us with direct subsidies only. Direct subsidies are distorting the market more than indirect price support was. They do make it clearer exactly how we are distorting the market, though. The subsidy payment and the price floor payment are more easily quantifiable, but leads us to things like high fructose corn syrup. At least with the former price support regime, farmers couldn't sell ADM or whoever corn at below cost like they do today.

[Conan71]

Ethanol and biofuels from virgin stock are examples of indirect price support when the government mandates their use.

[nathanm]

Ethanol and biofuels from virgin stock are examples of indirect price support when the government mandates their use.

True, but the mandate isn't a certain percentage of ethanol, it's a certain percentage of an oxygenate, of which ethanol is one. Well, at the federal level. I'm sure there are some states that mandate ethanol in gasoline.

[heironymouspasparagus]

It has been direct, conscious, government policy since the fifties to pursue policy that leads to cheap food, by whatever means necessary/possible.
Part of that is the subsidies to ADM and Cargill and the large corporate farms.  Practically none of which are 'family' farms. 

Lived in Iowa for a few years and there was/is some soybean up there and a little bit of dairy, but LOTS of corn.  Pretty crazy.  There is plenty of stuff that would grow there.  Almost anything, except okra.  Okra needs too hot a weather.  Or pecans.  (Oh, yeah.  All that corn you eat is genetically modified by Monsanto with BT DNA and a little sprinkling of frog DNA.  I like frog, so I guess that is ok.  BT is bacteria thurengiesis, something that infects and kills bugs.  An "insect world" bubonic plague.)

The ethanol mandate was 10% overall average for quite a while (not sure in the last couple years).  Kind of like a CAFE standard for fuel production.  The way it is fulfilled in this country, it is beyond ignorant.  It takes more energy to make that gallon of ethanol than you get out of it when you burn it.  And the mileage is less.

Now, if we used a different feedstock than corn to make it, then it could be viable.  I can't imagine us ever doing that, though.  How would the "capitalists" make their billions?  Oh, and by the way, we don't have capitalism in this country except on the smallest scale (small business).  Corporate America is capitalistic monopolism.

Rather than a couple hundred bushels per acre to make ethanol, we need many tons of organic matter per acre, with little/no fertilizer requirements, no need for insecticides or herbicides.  And dramatically less water.  There is only one choice.  Well, two.  Switchgrass is good.  Marijuana is better.  And easier to grow anywhere across this country, on the worst land, using the least resources.

Corn is what?  Less than 1 ton per acre?  250, 56 lb  bushels.  Yeah, that's a clever way to make fuel...

Switchgrass - about 4 tons per acre of comparable quality feedstock for ethanol production.  Hey, now there is progress!!

Marijuana - about 10 tons per acre of comparable quality feedstock for ethanol production.  Various estimates ranging from "High Times" type estimates to USDA based calculations say roughly 6% of our agricultural land would make enough biomass for ALL of our oil and gas needs.  Eliminating the need for OPEC.  Or Saudi Arabia.  Or Venezuela.

Add another couple percent and you would also have all our paper needs.  Hemp paper lasts 50 to 100 times longer than most preparations of papyrus and is a hundred times easier and cheaper to make. It also does not yellow with age like acidic paper made from tree pulp.  And it would resonate with our "patriotic roots" fervor of recent years - George Washington was one of the largest commercial producers of marijuana the world has ever seen. 

Hemp oil, for example, has the highest percentage of usable essential fatty acids of any plant, period.

By far, hemp is Earth's premier, renewable natural resource. The hemp plant can single-handedly reverse the Greenhouse Effect, purify our air, water, & soil, and clothe and shelter us in a sustainable fashion.

Hemp stems are 80% hurds (see bast and hurds - pulp byproduct after the hemp fiber is removed from the plant). Hemp hurds are 77% cellulose--a primary chemical feed stock (industrial raw material) used in the production of chemicals, plastics, and fiber.  An acre of full grown hemp plants can sustainably provide from four to 50 or even 100 times the cellulose found in cornstalks, kenaf, or sugar cane--the planet's next highest annual cellulose plants.

And it makes a nice mellow evening of tv and munchies!!  Bonus!!

But, then that would make too much sense, so we won't be doing that.
How's THAT hopey/changey thing working out for ya'??