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Why Agricultural Subsidies Suck: Reason #583 (WP: Farm Program Pays Non-Farmers)


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http://www.washingtonpost.com/wp-dyn/content/article/2006/07/01/AR2006070100962_pf.html

Farm Program Pays $1.3 Billion to People Who Don't Farm

By Dan Morgan, Gilbert M. Gaul and Sarah Cohen

Washington Post Staff Writers

Sunday, July 2, 2006; A01

EL CAMPO, Tex. -- Even though Donald R. Matthews put his sprawling new residence in the heart of rice country, he is no farmer. He is a 67-year-old asphalt contractor who wanted to build a dream house for his wife of 40 years.

Yet under a federal agriculture program approved by Congress, his 18-acre suburban lot receives about $1,300 in annual "direct payments," because years ago the land was used to grow rice.

Matthews is not alone. Nationwide, the federal government has paid at least $1.3 billion in subsidies for rice and other crops since 2000 to individuals who do no farming at all, according to an analysis of government records by The Washington Post.

Some of them collect hundreds of thousands of dollars without planting a seed. Mary Anna Hudson, 87, from the River Oaks neighborhood in Houston, has received $191,000 over the past decade. For Houston surgeon Jimmy Frank Howell, the total was $490,709.

"I don't agree with the government's policy," said Matthews, who wanted to give the money back but was told it would just go to other landowners. "They give all of this money to landowners who don't even farm, while real farmers can't afford to get started. It's wrong."

(article continues at link)

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So do agricultural subsidies suck, or is it actually a poorly run federal program that sucks?

In my opinion, agricultural subsidies suck. They artificially inflate the price of food in America, and they adversely affect many developing-world economies by artifically depressing the price of American-grown food abroad. They are also enormously economically distorting. Corn subsidies alone cost US taxpayers more than $20 billion per year (the EU is even worse).

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About 15 years ago, The Economist did an analysis where they estimated agricultural subsidies worldwide cost consumers $300 billion annually in higher costs/taxes. The poor, who spend a disproportionate amount of their income on food are hurt the most, while the rich benefit the most (80% of US subsidies go to 20% of farmers, the biggest recipient is Archer Daniels Midland). Agricultural Subsidies SUCK, and were scaled back significantly in the 90s, only to have GWB sign new legislation raising them back and beyond to record levels.

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In my opinion, agricultural subsidies suck. They artificially inflate the price of food in America, and they adversely affect many developing-world economies by artifically depressing the price of American-grown food abroad. They are also enormously economically distorting. Corn subsidies alone cost US taxpayers more than $20 billion per year (the EU is even worse).

I'm pretty sure you could say, objectively subsidies suck. Of all the lame government programs, agricultural subsidies are the lamest.

Firstly, our government pays farmers directly for certain crops. This has two negatives. These direct payments skew the incentives for farmers to produce certain varities of crops. Obviously, farmers are going to produce more of what the government pays subsidies for. But having the government determine what crops ought to be produced is never a good idea. Also, these direct payments encourage (and allow) overproduction, which obviously lowers the price for these subsidized crops.

Secondly, our government has several price support mechanisms meant to counteract the effects of the overproduction. These price supports include the government's purchase of "excess" crops (which are subsequently given overseas as "food aid." These "gifts" often destroy the local agriculture markets). The government also pays people (as in the article) to NOT farm, which lowers the supply thus raising the price.

All of this of course costs the taxpayers in three ways. First we pay for the original direct subsidy. Secondly, we pay for the price supports. Thirdly, we are forced to pay higher prices at the store because of the price supports.

Incidently, agricultural policy in this country has been a mess since the twenties. During the Great Depression, I'm sure everyone has heard the stories of farmers being paid by the government to destroy their livestock (as a price support mechanism) when people barely had enough to eat. How can prices be too low when people are poor? Just ask the government.

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We all know they suck, but why do they still exist? Do these farmers have such a lobbying power that they can continue to pilfer our tax dollars?

My own personal theory on that question is:

Because 100 of 100 Senators, and (I'd bet) about 400 of 435 Congressmen have farmers in their districts.

That said, one of those things I enjoy is watching "conservatives" complain that welfare is unconstitutional, because "promote the general welfare" doesn't mean giving money to poor people, but they have no problem with a government program whose stated purpose is to make the price of food higher[/u].

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I'd like to see subsidies changed to encourage farmers to grow biofuel crops. We grow too much corn in this country. There are more efficient sources of biofuel that we could be using to lower our dependence on foreign oil.

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Sure they suck but farmers matter to voters. Remember the "lost their family farm" garbage they made up to push ending the "death" tax? The idea of farmers losing their precious farms seems to horrify Americans.

If you really want to help farmers push to enforce enviromental codes equally. Factory farmers get all kinds of special treatment. The pools of pig **** are a good example of a pass they get that has in the past turned into an enviromental nightmare. Allowing them to break the rules allows them to push smaller farmers out of the market.

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So,let's see, we've lost our electronics industry, we've just about lost our steel industry, we're losing our car industry, we've just about lost our textile industry to cheap foreign competition and goods dumping.

And now you all want us to lose the capacity to produce our own food if we need it?

No Thanks

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So,let's see, we've lost our electronics industry, we've just about lost our steel industry, we're losing our car industry, we've just about lost our textile industry to cheap foreign competition and goods dumping.

And now you all want us to lose the capacity to produce our own food if we need it?

No Thanks

Would you like to explain this rant or is this a post and run?

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Would you like to explain this rant or is this a post and run?

What's to explain?

I'm sure this being a government run program, it could be cleaned up.

But I have no desire to see all our farmers run out of business by cheap imports coming from ( post Turd World country here), nor do I have the desire to see us have to grovel to some nut job like Chavez when we become dependent on them for our food

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It's funny that people sit around and ***** about oil prices while we refuse to drill for our own oil, and yet people want to put us in the same predicament with food, being dependant on someone else to feed us

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It's funny that people sit around and ***** about oil prices while we refuse to drill for our own oil, and yet people want to put us in the same predicament with food, being dependant on someone else to feed us

We have agricultural resources here, we don't have petro here, not in adaquate supplies anyway. There is the difference.

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Hey, don't be messing with a good thing here.

I get paid a farm subsidy for NOT growing crops on my property. ;)

I also know a farmer on the eastern shore of Maryland (Dorchester Co.) and he has almost 1500 acres that he rotates his crops from year to year with corn and soybeans.

About 200 acres of his farm can't be used for his crops, so the goverment pays him for the loss of this use.

He sells most of his crops to Purdue Chicken in Salisbury, MD and without these subsidies, he would barely make ends meet.

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Hey, don't be messing with a good thing here.

I get paid a farm subsidy for NOT growing crops on my property. ;)

I also know a farmer on the eastern shore of Maryland (Dorchester Co.) and he has almost 1500 acres that he rotates his crops from year to year with corn and soybeans.

About 200 acres of his farm can't be used for his crops, so the goverment pays him for the loss of this use.

He sells most of his crops to Purdue Chicken in Salisbury, MD and without these subsidies, he would barely make ends meet.

Hey man, you better get with the "One Wolrd" program. Can't have Americans staying in business when there is some poor, deprived Turd Worlder that needs a job :rolleyes:

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