BA - it was never the intention of USDA or our government to keep family farms alive, it was because of their policies that killed smaller farmers. Instead of sending our farmers to Siberia like Stalin did the Kulaks, they drove them to financial ruin, and cheap food policies where grain farmers were allowed a meager existence and received a payoff with Pik certificates, on farm storage fees, direct payments, CCC loans and Federal Crop Insurance.
If anything has destroyed family farming (which many consider "child abuse" if you try to keep a kid in farming", it was Federal Crop Insurance and CRP. Federal Crop has accomplished its objective, pushing up rents, enabling large farming operations to farm marginal ground that would not ever be farmed without that guarantee.
With the Federal Crop enactment, "risk of loss" was eliminated if one could configure their farming operation to break even and cover equipment leases or costs. After the farm crisis, the group of farmers that took over from those of us who went bust in the 80's, were a group among whom are many friends of mine now in their 50's, who decided they did not want to own land like my genertation did, they just wanted to control it.
All they needed was a new line of leased equipment, Pioneer financing on their seed, and a Co-op to finance the remaining inputs, and even the cash rent they needed to expand farming operations.
But . . . what happened to them . . . is what always happens to those "who do not know their limitations", they ended up in a "cost price squeeze", to such a point they even had to have living expenses included in the loan which financed inputs and land rents. Well as time went on, they found out that they were wearing out their equipment and paying off the land they found for lawyers and doctors to purchase so they could then lease it from them.
But the big thing that hit many of them was the low prices for the commodities, then the short crop years, where debt had to be rolled, and finally most of them ran into a problem with the USDA program designed to protect their farming operations . . . Federal Crop Insurance.
Most of the farmers I know who have gone bust over the past ten years, had Federal Crop Insurance denying claims on their operations, which placed them on the skids towards bankruptcy.
Many of them were big enough operations to take on the USDA drones sitting in Kansas City who they had to sue to get to federal court and maybe four years later win, and give a third of their judgement to their lawyer.
When an indemnity of $500,000 or more is withheld from a farming operation by Federal Crop and must be litigated, that farmer is effectively out of business and the only remedy is to jump into Chapter 11 for the protections its offers large farming operations during reorganization and during litigation. (see Grabanski North Dakota)
When grain prices fall (and they will) you may not see the loss of some land as we did in the 80's, but you will see a lot of green equipment being taken back to dealers, land leases being cancelled, and your "farmer owned Co-op (cough, cough) taking the hit for the in credit extended these operations.
But . . . there is one other event that could collapse this house of cards, drive down land costs, values, credit lines, and equipment purchases, and trigger a boat load of farm bankruptcies, and that is place a limit on land that can be covered by Federal Crop insurance like 500 acres or what ever number one wants to choose.
If that happens you will see the marginal land going unfarmed and returning to a use for which it is best suited, you will also see an opportunity again for younger farmers or anyone wanting to farm to get into agriculture which they are now prevented from doing because of the Federal Crop Insurance Guarantee's.
Of course, whe scenairo I have presented will never occur, because too many non farmers in high places benefit from the CRP which was never meant to benefit them but the farmers going down the tubes during the farm depression of the 80's.
The one other thing that needs to be eliminated, or restricted to "farmers only" is the CRP. If that program was no longer subsidized for non farmers, that land would return to its natural use, pasture, hay ground, or for use in a crop rotation.
But there are too many non farmers feeding at the USDA trough so most farmers are frozen out of programs or the opportunity to get started in farming.
Great rant! Adios Amigo. John
The only thing that will save the family farm is one day when corn does go back to $2 and the big shot is stuck with his $15,000 land that he is making payments on with after-tax dollars..the government needs to step back and let him take his medicine. Then perhaps small farmers will get an opportunity to start their own farms, `til then lay back and enjoy it.
