Kevin Drum >"...how would Archer Daniels Midland compete with the French if we did that?"

Well they could have Bush Handlers, Inc. declare the French terrorist supporters & freeze/seize all their assets

"Terrorists do not need pretexts for their barbarism." - Judge Alvin Hellerstein

Wait until the Republican debate in Des Moines on August 5.

Ron Paul is going to tell Iowa farmers that ethanol is exactly that, a big government welfare program. No other candidate will.

But then he'll tell them not to worry, since under a Paul Administration they'll be able to grow industrial hemp, a highly profitable crop the U.S. government unfairly bans. (George Washington grew hemp, as do Canadian farmers raking in the big bucks. The NYT reported last week that North Dakota farmers are petitioning the U.S. govt. to lift the ban).

If you want a principled politician, Ron Paul is your guy.

Things change somewhat hen the legislature subsidizes energy production. One fifth of our corn crop goes to ethanol, raising the price of every crop on the farm.

Kevin, I don't think farm subsidies were primarily intended to do the two things noted in the article: 1) Prevent food shortages, and 2) Prevent farmer poverty.

I believe the primary intent was simply 1 (one) thing only: To pay farmers for crops that they *didn't* grow (leave part of their acreage fallow on purpose) so that there would not be an OVERSUPPLY of crops resulting in a PRICE COLLAPSE which would lead to farmer poverty. I think the guy from the Heritage Foundation is creating a fallacious argument.

Doc: You're not going back far enough. The soil banking program was invented (I think) in the 50s. Farm subsidies go back way farther than that.

In any case, none of these things are really necessary any longer, and they certainly aren't necessary at the corporate farming level. We should get rid of them. But we won't.

It's clear from Doc's post that there is a linger misconception about who receives the lion's share of agricultural welfare, which would be major corporate agricultural entities, as Kevin points out, like Con-Ag and ADM. The next largest handout goes to people who we've foolishly allowed to dry land farm thousands of acres of a single crop.

Up here in the glorious PNW (as well as down in bad ol' California - see Joan Didion's Where I Was From) there is the added wrinkle of subsidized water, 70% of which evaporates in the 85+ degree weather typical of Eastern Washington from June-September as it courses through hundreds of miles of open irrigation canals or from overhead sprinklers run during the heat of the day. Fucking morons.

Let's also not forget that (1) any subsidy, no matter how good its INITIAL purpose, ends up being little more than a self-perpetuating welfare program for its beneficiaries (who end up being rather well-off, thanks to that very subsidy -- e.g., the railroads, prior to trust-busting) -- and (2) EVERY industrialized country has a large, and in most cases similarly distorted, governmental subsidy of its agricultural industries; we're no worse than any, and better than some.

These sorts of programs, by the way, are very good arguments for "sunset" provisions to be inserted routinely into major legislation.

I guess I'm confusing "farm subsidies" with "price supports"? It would be nice if someone can provide a link that explains the mechanics of the original programs and how they have been changed and clear some of the misconception. I've googled about and really can't find something that is clear and by example that explains the mechanics.

Would guaranteeing family farmers a living wage still enable them to conduct their business of farming? Sure, they could afford to put food on the table, but could they afford to put seed in the field? It's not just welfare to keep hard-luck cases from pleading poverty; it's intended to keep the base of the food chain intact even when farms can't pay for themselves.

Is it fair to say we have socialized agriculture in the US. And, if so, that the participants are socialists. (knowingly or unknowingly)

George Washington grew hemp.

Industrial, and the other kind.

And he bred it for potency.

And he documented it in his journal.

Doc at the Radar Station asked: "It would be nice if someone can provide a link that explains the mechanics of the original programs and how they have been changed and clear some of the misconception."

Here's a good overview of farm policy history from farming expert Tom Philpott at Gristmill.

Pelosi might have gone on record as opposing farm programs, but she has also gone on record as supporting the House Ag Committee's version of the legislation, which more or less keeps farm subsidies unchanged. There are little tweaks, like a $1 million income cap for recipients of subsidies, but not much improvement. The Center for Rural Affairs has been all over this subject.

Would guaranteeing family farmers a living wage still enable them to conduct their business of farming? Sure, they could afford to put food on the table, but could they afford to put seed in the field? It's not just welfare to keep hard-luck cases from pleading poverty; it's intended to keep the base of the food chain intact even when farms can't pay for themselves. Posted by: Grumpy

If this were only so.

Because we have favored corporate behemoths for so long, it's damn near impossible for the "family farm" to compete in the commodities sector of agriculture. If they've gone organic or have specialized, they have a better chance. But anyone trying to stay in business growing corn, soybeans, wheat or cotton on less than 1,000 acres has trouble making ends meet.

To understand just how weird, distorted and illogical world agriculture is, think back to the tainted pet food from China. It came to light that we also import wheat gluten from China. All together now, WTF?

The U.S. is ranked third in the world in wheat production (China is, surprisingly, first, and we are way down the list in per acre yield), and yet we are importing that part of wheat from China that gets taken out of lots of products in this country to begin with because of wheat allergies?

Does anyone remember an elected official who took a strong stand against ag subsidies? Biggest disappointment I've had in years was in 2000 when Bill Bradley, who had long opposed ethanol subsidies, went to Iowa and took the ethanol pledge.

Kevin, there is more to this issue than you recognize --

The World Trade Organization has already condemned the US for its cotton subsidies and is looking to curb US subsidies for rice and maize as well. Earlier this month Brazil filed a new complaint with the WTO about US farm subsidies exceedindg WTO limits.

If the US wants to improve its image abroad and gain access to foreign markets like China we have to show leadership in all aspects of our economic policies. This should be a Democratic mantra. It appeals to a lot of free trade Dems, Republicans and Independents.

Doc/Meander: Philpott isn't bad, but supply management is another name for a cartel. We used supply management before, its effectiveness was always suspect because other countries could increase their production as we decreased ours.

Given that the "farm program" now encompasses many different programs, many different payments, many different interests, I'd recommend that Doc not waste time on understanding it--focus on something simple like nuclear physics. (However, this is an interesting blog: http://www.agweb.com/blogger/)

Jeff;
When the dollar index drops below 70, and oil hits $100/bbl, it will no longer be cheaper to ship wheat from China, than to grow it here in the US.

One of the happy, welcome side-benefits to the end of cheap oil.

It's just unfortunate that we'll end up continuing to pay through the nose for tractor-diesel to grow our own food, to whichever throat-cutter comes out on top on the last known productive oil reserve in the world (Iraq) - that is, if we can get it at all.

None of you are going back far enough.

The first farm subsidies go back to the Homestead Act of 1862 which gave away land and therefore increased farming. Direct subsidies occurred following WWI when farm prices collapsed.

But, of course, our current system grew out of FDR's Agricultural Administration Act, conceived under Henry Wallace, then the agricultural secretary,

The purpose of modern farm subsidies is inflation: that is, it seeks to create inflation.

The problem during the depression, of course, was that farmers could not sell their crops for the cost it took to produce them. taking acreage (or livestock) out of production brought up prices.

Though some of FDRs measures were later declared unconstitutional by the SC, other measures were passed during his administration.

Over time, as we know, the program became corrupted as agribusiness sought to get control of the programs. But this is the part that we all know.

These days lower prices are OK if demand rises. Look at corn -- alternative fueled cars are driving up demand, causing more corn to flood the market, driving corn per bushel prices down.

This is actually wreaking havoc in Mexico -- low-priced US corn is undercutting the price of native Mexican corn, driving farmers off the land, into the cities and then to the borders.

We strong-armed the Mexicans to open up their markets to the US and Canada with NAFTA, so what's sauce for the goose should be sauce for the gander.

USDA A paying the dead
Deceased Farmers Got USDA Payments
Study Faults Lack Of Case Reviews
By Sarah Cohen
Washington Post Staff Writer
Monday, July 23, 2007; A01
The U.S. Department of Agriculture distributed $1.1 billion over seven years to the estates or companies of deceased farmers and routinely failed to conduct reviews required to ensure that the payments were properly made, according to a government report.
In a selection of 181 cases from 1999 to 2005, the Government Accountability Office found that officials approved payments without any review 40 percent of the time.
The report cited a 1,900-acre soybean and corn farm in Illinois that collected $400,000 on behalf of an owner who lived in Florida before his death in 1995. The company did not notify the government of the death but certified each year that the dead shareholder, who owned 40 percent of the company, was "actively engaged" in managing the farm....
Sweet deal.

The Soil Bank Program goes back to the Eisenhower era

The funniest part about these subsidies is not only does the lion's share go to agribusiness, but the farmers regard themselves as tough, independent pioneer types, libertarians who sneer at government programs --- for other people.

"And he bred it for potency. And he documented it in his journal."

Let me move old GW up a notch or two on my list of greatest presidents.

JeffII: China is, surprisingly, first [in wheat production]

What's so suprising? 1.3 billion people can eat a lot of noodles.

These days lower prices are OK if demand rises. Look at corn -- alternative fueled cars are driving up demand, causing more corn to flood the market, driving corn per bushel prices down.Posted by: pj in jesusland

Nope. Prices are up. The ethanol thing really started to take off this last Spring. By that time corn was already in the ground for this year. Not only are supplies short, drought may reduce this year's crop overall.

Futures
Contract Last Change Percent
Corn
Sep '07(CU07) 310-4 +0-4 0.16%
Dec '07(CZ07) 326-4 +1-0 0.31%
Mar '08(CH08) 342-4 +1-6 0.51%

Futures prices provided by Barchart.com.

There was even an article on NPR this AM about the price of pop corn being up some 40%.

When the dollar index drops below 70, and oil hits $100/bbl, it will no longer be cheaper to ship wheat from China, than to grow it here in the US. Posted by: osama_been_forgotten

It's not that simple, as we are a wheat exporter as well, with some going to China!

http://www.fas.usda.gov/export-sales/wheat.htm

Again, all together, WTF?

The payment of farm subsidies is encouraged by the Constitutionally gerrymandered Senate. Since the Constitution requires two Senators from each state, every Senator has a substantial farm constituentcy. The total cost of the farm program is only $83.33 per capita. Only the farmers who are most affected will get up in arms about such a trivial sum, while the urban and suburban groups consider it another form of welfare.

"But like a zombie that can't be killed"

The only sense in which a zombie can't be killed is a semantic one -- you have to be living to be killed, and they aren't, so whatever is done to them, by definition, isn't "killing."

However, it is pretty accepted in zombie mythology that they can be "killed" (i.e., permanently stopped) with a massive head trauma.

Jeff,

You are correct. US corn has traditionally been relatively cheap in Mexico compared to native corn, but not this past year. From the British Independent:

How the rising price of corn made Mexicans take to streets
by Jerome Taylor
July 02, 2007

The Independent (UK) Printer Friendly Version
EMail Article to a Friend
Mexico was ablaze in late January. Just two months after the election of Felipe Calderon as Mexico's President, protests had broken out across the country.

Thousands of people were marching on the main cities calling on their pro-free trade businessman President to halt a phenomenon threatening the lives of millions of Mexicans.

In their hands the protesters clutched cobs of corn, the staple crop that makes tortillas and for many of Mexico's poor the main source of calorific sustenance in an otherwise nutritionally sparse diet.

Over the past three months the price of corn flour had risen by 400 per cent. Despite being the world's fourth largest corn producer and a major importer of supposedly cheap American corn, millions of Mexicans found the one source of cheap nutrition available to them was suddenly out of reach.

Poor Mexicans, who normally expect to set aside a third of their wages for corn flour, had always been particularly vulnerable to price fluctuations in the corn market, but a four-fold increase was both unheard of and potentially catastrophic.

The reason for such a substantial increase in the price lay north of the border. In order to wean itself off its addiction to oil, the US was turning to biofuels made from industrial corn like never before. Farmers in Mexico and America had been replacing edible corn crops with industrial corn that could then be processed into biofuels, leading to a decrease in the amount corn available on the open market.

As corn imports and domestic production dropped, greedy wholesalers in Mexico began hoarding what supplies they could get their hands on, forcing the price of corn to rise astronomically. Eventually tortillas became unaffordable, so people took to the streets.

President Calderon found himself caught between a rock and a hard place. On the one hand were the corn importers and major multinationals who would not look kindly on any government intervention on the free market. On the other side were Mexico's teeming poor, the vast majority of the population who already viewed Mr Calderon as a discredited pro-business leader that ignored the needy.

In the end, Mr Calderon compromised. He capped the price of flour at 78 cents per kilogram but made the scheme voluntary for businesses. So far the price has largely stabilised but many are becoming increasingly concerned that Mexico's tortilla wars were simply the sign of things to come. "Recently there's been a huge increase in the demand for industrial corn for the production of ethanol which inevitably pushes up the price of food stuffs," says Dawn McLaren, a research economist at the W P Carey School of Business in Phoenix, Arizona. "But if we get a particularly bad harvest or if a weather system like El Niño strikes we could be really stuck."

Mrs McLaren says that as the West looks to replace its oil, poor people will pay the price. "It doesn't strike me as a very good idea to start using yet another vital and limited resource to wean ourselves off oil," she said.

Grumpy:"It's not just welfare to keep hard-luck cases from pleading poverty; it's intended to keep the base of the food chain intact even when farms can't pay for themselves.

Keeping the base of the food chain intact seems to me like a very good national goal. Do we really want to give up our ability to feed ourselves?

However, what we seem to have accomplished instead is the following: corporate farms that produce substandard food thousands of miles from the food markets, foods that are overprocessed, incentives to hire cheap labor who cross into the US illegally, and farming in marginal regions (growing corn, eg, where it has to be irrigated.)

As with Health care, so also with food. I have heard that the French government subsidizes 70% of the income of French farmers. The result is a supply of food that is simply of higher quality and greater variety than anything I have ever seen in US markets. And the majority is produced close to home. (Just as we print the nutrional info on food, the French tell you where it came from.) And the wines...! While some of it is the earth and the benign climate--there are reasons why humans have lived in this part of the world for 30,000 years-- the French government has developed a structure that produces food that is well worth paying for. Eating well is the French national pastime.

KDrum has really drunk the Kool-aid on this one.

End the farm subsidies quickly and the control of our agriculture, and probably our economy, passes into the hands of the commodity brokers.

Not a good idea.

All of the cheap shots come nowhere near describing realistically programs that have reduced family farming to almost zero, and the black farmer to an actual zero as a result of illegal discrimination during the Reagan years.

Farming has become an industry in which the taxpayer pays for the physical plant (roads, irrigation, elevators, port facilities) and the money from the sale of the commodity is handed over directly to the people who sell fuel for the tractors, fertilizer, and seed.

Do the math.

No responsible government of the US is going to abruptly end subsidies. Whether we have a responsible government may be up to us. It probably depends in part on how well educated we are about stuff we like to talk about.

Yes; ethanol demand will drive up corn prices - until idiots realize that corn is a stupid way to produce ethanol, and we look for other plants.

In any case - our economy has been grossly out of whack for half a century (or longer) due to cheap oil, and we're in for a huge re-alignment.

Anything we can do to replace petroleum as an energy source will soften (but not eliminate) the blow.

Osama - not just tractor diesel, commercial fertilizaer is a petroleum product.

it's going to be an interesting year. one of my business profs says that with acreage being switched to corn from soybeans (because ethanol has raised corn prices) we're going to be importing a lot of soybeans this year to feed the country's livestock. soybeans from brazil are being processed in cafta countries and then imported.

pj in jesusland: If the US wants to improve its image abroad and gain access to foreign markets like China we have to show leadership in all aspects of our economic policies.

LOL! Maybe China could start by not manipulating their currency to the tune of being 30-40% cheaper than it would be in a market that isn't rigged. As a token gesture, they could start by removing their 30% tariff on car parts and machine tools. Oh, we could talk about their food tariffs and subsidies too, and India's average 100%+ tariff on food, and EU price supports (as mentioned by PTate in FR above), or the EU's subsidies (loan guarantees) to Airbus, etc., etc., etc.

When it comes to low trade barriers, the US is one of the world's leaders. Maybe it's time for some of the other countries to pony up.

osama_been_forgotten: When the dollar index drops below 70

It will be a good thing. We can't sustain a $600B/yr trade deficit forever.

and oil hits $100/bbl

It will go a long way towards reducing the over-reliance on oil that you rightly complain about.

Of course in both cases the idea is to have the change come over a period of a few years, rather than as a sudden shock.

Incidentally- $25 billion for farms, $648 billion for the military.

What we're spending on farms isn't the source of our problems.

End the farm subsidies quickly and the control of our agriculture, and probably our economy, passes into the hands of the commodity brokers.Posted by: serial catowner

I guess you kind of missed the gist of this thread not to mention the kind of "discussion" we've (sorta) been having about this as a nation for at least 20-years now. You seem to be suggesting closing the barn door after that spilled milk has already flown under the bridge.

Farm subsidies have been paid overwhelmingly to agri-business for a couple decades now. The honest, but losing, discussion about this is not ending subsidies all together, but cutting them to agri-business, which already controls probably 90% of the food supply in the U.S.

As someone up thread claims, as a part of the national budget, ag subsidies may only be $83.33 per capita per year. But probably $81.33 of it is being paid to companies like ADM who don't need the help, but would love them some more "free trade" agreements.

Incidentally- $25 billion for farms, $648 billion for the military. What we're spending on farms isn't the source of our problems. Posted by: serial catowner

It is the source of our problems, but around $20B of it is part of our problems. Imagine that money spend on education, health care, transportation or energy research.

alex >"...Maybe China could start by not manipulating their currency to the tune of being 30-40% cheaper than it would be in a market that isn't rigged..."

You are joking correct ?

No currency exists that ISN`T manipulated on a daily, if not hourly or minute by minute, basis including the dollar. As long as currencies are divorced from reality (the laws of physics etc) there will be manipulation. In economic jargon the problem is externalities, those things that are not measured. You know, like the real world where the oil is created, the soil is created & maintained by natural processes etc (There Is No Such Thing As A Free Lunch !). Oh and how about that free air you breathe ? Not worth anything is it ?

Ignorant charlatans you are

How about FAIR Trade instead of FREE Trade (you know, trade that is free to be manipulated by the most powerful). How about using actual/real numbers in place of made up ones ?

Can`t have that now can we ? It might just upset someone`s stock portfolio cause fair markets can`t be manipulated by power worshipers (can you say The Powers That Be ?).

Grow up & quit supporting the systems that are destroying the planet we all live on.

"Enlighten the people generally, and tyranny and oppressions of body and mind will vanish like evil spirits at the dawn of day." - Thomas Jefferson

daCascadian: No currency exists that ISN`T manipulated on a daily, if not hourly or minute by minute, basis including the dollar.

Including the dollar? Especially the dollar! That's why it's unsustainably high. With China's near peg to the dollar, they can't manipulate the yuan without also manipulating the dollar.

As for the "they all do it" argument, you're right. But the extent to which they do it varies dramatically. Nobody else comes close to China and Japan (each about $1T in forex).

In economic jargon the problem is externalities

A very important issue, but separate from currency manipulation. It is though why environmental matters should be a key part of any trade agreement.

How about FAIR Trade instead of FREE Trade

Both fair trade and free trade are slogans devoid of essential detail. While I'm sympathetic to the fair trade ideas, you have to give some details in order for it to have any meaning.

No currency exists that ISN`T manipulated on a daily, if not hourly or minute by minute, basis including the dollar. Posted by: daCascadian

True. However, it's at the margins, as international currency markets have become so large in the last 15 year or so that there isn't a single national treasury/central bank, including the U.S., that has the reserves to dramatically affect let alone sustain any changes in exchange rate for the currencies of the largest economies. Even when working in concert, Japan and the U.S. cannot significantly affect or sustain a change the position of the yen or dollar because neither country has currency controls.

China still controls it currency, which is why it never should have been allowed to join the WTO, for that's worth. If the U.S. wasn't so dependent on Chinese transfers, but was just some punky market we wanted access to, we'd take them to and win a judgment at the WTO.

Did I miss something? Or do the massively underpopulated farm states still have 2 Senators apiece?

Oh, they do? Ok, well look forward to this never changing.

> All of the cheap shots come nowhere near
> describing realistically programs that have
> reduced family farming to almost zero,

Technology and the lure of gay Paree (and I don't mean Paris, Illinois) have reduced family farming to almost zero. My grandfather replaced 40 horses, 20 hired hands, and 3 itinerant steam theshers with 8 gasoline tractors; my couin has replaced those with 2 diesel combines and one diesel megatractor. Hired hands are down to 2 and they farm 20x the acerage their grandfather did.

This is admittedly another issue like the structure of the Senate/Electoral College that we are never going to get past, but let's be reality-based.

Cranky

Bill Harshaw: Given that the "farm program" now encompasses many different programs, many different payments, many different interests, I'd recommend that Doc not waste time on understanding it--focus on something simple like nuclear physics.

You must have missed Doc's excellent article in Nature. I didn't think anyone would so soon solve the Theory of Everything.

Can't believe it was 42 all this time.

Modern farm policy goes back to the New Deal.

This history, and the importance of the bill now being drafted, is emphatically, clearly exlained by Dan Imhoff ( http://www.ecoliteracy.org/publications/rsl/dan_imhoff_farm_bill.html ).

How about having a minimum wage that people can live comfortably at?
Then everyone could afford food sold for unsubsidized actual market value. Then farmers could get paid for their product, as opposed to being subsidized.

The problem during the depression, of course, was that farmers could not sell their crops for the cost it took to produce them. taking acreage (or livestock) out of production brought up prices.
Posted by: Dicksknee on July 24, 2007 at 1:33 PM
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Thanks for that response. I understand what I was thinking about now. My Mom grew up during the Depression on a farm and they struggled a lot.
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However, it is pretty accepted in zombie mythology that they can be "killed" (i.e., permanently stopped) with a massive head trauma.
Posted by: Joe on July 24, 2007 at 2:00 PM
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An alternative method to kill a zombie I heard about once, was to fill their mouth full of salt and sew their lips shut. Now I'm curious where I heard that before..

Doc at the Radar Station: "...fill their mouth full of salt and sew their lips shut. Now I'm curious where I heard that before.."

...is it an "enhanced interrogation technique" approved by Bush & Company?

LOL. The "stitching" would leave scars-they would have to use super glue! The fish-eating "torture" scene in "A Fish Called Wanda" now comes to mind. Maybe to completely finish off a zombie you need to stick "chips" in their nose.

I got an idea, for all of you out their bashing farm subsidies and think thier research is right on. Lets do an expereiment. Find 150 acres, buy it (just in theory, make sure you do your research on land prices in that area, now by your tractor and implements, and you thought land prices where high). lets figure out what we are going to grow. Now research what that land should average production should be. Now sell your grain unsubsided. You got your check, wow. Now check you mail box. Bill time (fuel bill, seed cost, fertilizer, insurance, land payments, tractor cost, house bills, family bills). I bet your not thinking about becomeing a farmer any more. Just to top it off, what a about disaster subisity, well you can't have that either its a subsitiy and is part of that big number up there. Did you get to much rain, did it hail, drought, fire, to much wind. You can count on 8-10% loss of a total crop every year. Not bashing anyones opinion, that big number is scary, but find the other side of the story. Then make your opinion