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Honored Advisor

Re: Simplify the issue

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I haven't really been following this thread, due to lots going on here this week: however, given the origin of farm programs, which was in reaction to widespread siuffering of farming and rural families in the Great Depression, I think we need to be cautious about dismantling the mechanisms of at least soem safety net for American agriculture. 

 

Granted, lots of families basically were subsistence farmers back then, and so failures - in either production or price - could mean true starvation.  I recall the old acronym for FSA...ASCS.  It was menat to be a stabilzation program in its beginnings.  In all honesty, many farmers in recent years would have been out of production without direct and counter cyclical payments. 

 

I dont' think we can afford ot allow ag to fall out of widespread practice, or we risk food insecurity.

 

Advisor

Re: Clarification needed....

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Nox, if you also agree that you believe in means testing for all other federal programs, ie., sociat security, medicare, tax credits, etc., then I would say you have a consistant philosophical perspective. 

 

Is that correct?  if not, then you have a problem convincing me of the rightness of that argument.

 

 

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Advisor

Re: Philosophical question on crop insurance subsidies

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If you remember the last time the ag budget was cut (two years ago), Congress cut 4 billion from the crop insurance subsidy, the portion given to insurance companies, plus an additional 2 billion in cuts elsewhere.  So, your assumption that the insurance companies will demand to be fed is not how it should be looked at.  It's a margin of profit issue, one that Congress cut from, I believe, 19% to a lower figure.

 

Also, one must remember that no crop insurance product is actuarially sound without a government subsidy.  And if there were no subsidies on it, no farmer could afford the cost of the program. 

 

Perhaps a better way for "well heeled" farmers in the corn belt to do would be to "self insure".  According to majority opinion on th web site, their risk is much lower than everywhere else.  However,  I don't believe most actually believe it is true.  All farmers are but one or two crop failures away from disaster, and that's why I suggest to you most farmers in the corn belt will choose to continue paying for and supporting the crop insurance program as it is administered.

 

 

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Advisor

Re: How any capitalist

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If I remember a post elsewhere in this chat room, I think Jim Meade wrote about the average farmer's income exceeding more than $45-54K per year.  Are you saying your little farm receives that much in crop insurance subsidies?  I find that hard to believe.

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Advisor

Re: Simplify the issue

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I think most of us forget how easy prices can collapse and how quickly financials bleed red ink when inputs stays high while the prices for crops drops.  It need not fall to 2 bucks anymore for most of us to bleed red ink so much that people will be crying for a transfusion.  Yes, let's not reward managers for taking unreasonable risk and paying too much for land or rents, but let's not punish those who are watching their numbers and managing risk.

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Honored Advisor

Re: Clarification needed....

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Something just to throw into the mix. My crop ins agent sez that farming is thee only business where you can insure a profit ..."no other business, not the corner shoe store".  Now today there are farms that probably own 10,000 acres(I personally don`t know of any) that are worth $10,000/acre, their networth would be well north of $100 Million, can anyone make the case why the government should give someone like that a break on insurance? On the reverse side I supose they would say "why should us, the real producers have our tax dollars subsidize hobby farms that aren`t really serious producers?"  ...If cheap insurance is available I`ll continue buying, but I`ll put a pencil to it if the subsidy went away.  I`ve only collected a couple times on revenue when prices went down, neither made or broke me, 20 yrs ago I never carried crop ins and I`m still here.  

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Veteran Advisor

Re: Clarification needed....

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Cause the 10,000 acre farmer wants Mommy to treat him fairly, BA. Is that so much to ask for? I don't normally agree with Hardnox, but he really nailed the crying BTO well..."Mommy...Mommy....Mommy!!!"  I think the public should be allowed to see the light of day on this...how some very wealthy entities are getting a lot richer at American taxpayer expense.

 

I agree about the need for crop insurance for smaller farmers, too....I went without any crop insurance for the first two decades of my farming career, and with a lot of success. Crop Insurance helps to inflate land rents, land costs, and input costs. Take it away, and all the expenses come down, and the opportunity to hit some home runs gets a lot higher.

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Veteran Advisor

Re: Philosophical question on crop insurance subsidies

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Getting the pigs away from the trough should be the goal of any conscientious reformer. And the louder the squeal, the bigger the pig/

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Veteran Advisor

Re: Clarification needed....

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Spoiler
 

So as with most-maybe all - farm subsidies, the benefit ends up with the landowner in the form of higher land prices.  And the local gov. entities -higher property taxes.  But does not the consumer also benefit from lower food costs?

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Honored Advisor

Re: Clarification needed....

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interesting thoughts.

 

While I generally agree that there was and is a reason for federal involvement,  we all live it town now we really don't care about farmers anymore.  This is america and we can just borrow money and buy all the food we want.  Then we will pay the money back with dollars we save by not subsidizing agriculture.--Smiley Happy  Smiley Happy

 

Seriously, we all know why usda has chosen to support crop insurance or support ag in general-------financial stability on the farm.  As much as we want to talk about starting young farmers,  we don't really want to see millions of new farmers starting out every time we have a drought or early freeze because a million current farmers failed that year.

 

But this thread points out what always goes wrong with federally financed social programs------it encourages us rate our own success and that of the overall program by reading someone elses balance sheet.

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