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Veteran Advisor

Re: Simplify the issue

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One other thought smokeyJay............ without those huge subsidies that kept livestock in business I submit that we wouldn't  have mega hogs and chicken, and dairy,, beef farms.

 

Why?

 

Cause it would have been more expensive to buy it than grow it!

 

Therefore it would be most cost effective to have had a small farm with land base large enough to maintain your animal units.

 

Big livestock is a direct result of big farm subsidies!

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Senior Advisor

Re: Simplify the issue

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The soup lines in the 1930's  " were not "  due to  " Lack  of  Commodities " if one examines history  ---    

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Advisor

Re: Simplify the issue

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Well, maybe.  However, the economics of it may have only slowed the inevitable as the laws of economics applies regardless of mandate.  They work with great efficiency and effect our decisions whether we like them or not.  There have always been big farms and small farms, big ranches and small ranches.

 

It's the saga of the Old West story that Westerns used as a major theme.  How often have we cheered on the John Waynes of the world as he fought against the cattle barons in these movies? 

 

The Chisolm trail moved cattle from ranches in Texas to Abilene, KS where they were loaded on trains for a trip to the stockyards in Chicago and Kansas City.  I'd say it is a safe bet the primary beneficiaries of this age were the large cattle barons and owners of the stockyards and slaughterhouses.  There were no USDA subsidies helping them then.

 

If and when subsidies go away, there will always be the mega farms and mega ranches, and then we'll have to find another reason to rally the masses.

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Senior Advisor

Re: Simplify the issue

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Hey Smokey. The old chisholm trail came through my neighborhood here in Bixby Oklahoma. Evidently they crossed  the Arkansas river south east of Tulsa. There is a new housing development going in less than a half mile from me that states that is where the drovers came through.

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Contributor

Re: $6 inputs?

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A farmer's worst enemy may be his tendency to minimize taxes.  The past six years gave large numbers of farm folks a rare opportunity to book incomes above the social security maximum if only they didn't go wild with immediate tax write offs for capital buildings and equipment that they may be still paying for.  Instead of residing in the sweet spot for income tax for the self-employed which is the range between the social security maximum and the exlpiration of the 28% bracket at roughly $200,000 of income; too many have lived on income that will be taxed later, as indicated by the previous blogger.   When they liquidate inventory to keep afloat in later tax years with less juicy or non-existent margins, they will also be taxed on income they consumed in the past; and wonder why  (While paying self-employment tax on 100% of it, that could have been avoided by paying the income tax in previous tax years).  The 500 acre farmer can be in as deep doodoo here as the big guy.

Re: Agricultural stabilization and conservation service

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As things stand today there is no compelling interest for spending public money on supporting large farms. Food security will not be in the least bit compromised by ending subsidy payments at this point, it is just an aveolution of the same 'ol of regional commodity politics bringing home the bacon.

 

There may be a moral obligation to phase that support down since the moral hazard associated with the expectation of a government safety net most certainly helped create them and encourage people to lend money to them.

 

If there is any lesson from the financial collapse it is that government should not create moral hazard and I'll suggest that 10 years down the road we will look back on this period in agriculture with a very different view than we currently have.

 

Of course we tried to do that in F2F but took one step toward the edge- didn't even get close- and immediately reversed the decision.

 

As to whether there is a compelling public interest in supporting or promoting smaller farms, I don't know, but the first thing to do is quit subsidizing the larger ones.

 

Of course what will happen will once again be a glaring example of how broken our politicla system. The most obstreperous fiscal conservatives from the south will be at the table to protect subsidies for cotton, rice and sugar interests.  Monsanto, DuPont, Syngenta, ADM et al will be very happy to support this status quo.

 

I'm guessing that in the end we'll get a sharp cut or elimination of the DP and token cuts to the crop insurance subsidy.

 

No skin off my nose, really.  Probably more than anything else I am just sick and tired of hearing guys who are pulling in 100K plus in government support bellyache about de gummint.

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Veteran Advisor

Good post

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I agree 100% with your views and I believe the majority, by actual number not acres, of farmers have agreed with your views too, even during the 90's when F2F was not followed and the phaseout never happened.

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Veteran Advisor

Crop insurance and mega farms

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Maybe you want to study up on the mega farms of 100 years ago, the bonanza farms, and why they went away. If there would have been no limit crop insurance back then, the farms would have just kept on growing in size, like today.

 

Granted, farms may breakup in size due to bad management , divorce, lack of heirs, but one of the historical checks to how large an operation could grow to was the uncertainties of price and yields. Once government gives a guarantee, there is really no check or balance anymore.

 

I would much rather see many diversified farm operations in America, many farmers, than 20,000 BTO's . That is my opinion, others may have their own views. Whatever you think, it is impossible  to justify having the American taxpayer pick up the tab for basically changing the structure of American agriculture to one where just a select few operations thrive.

 

If farms can succeed and prosper without government subsidies, so be it.

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Honored Advisor

Re: Crop insurance and mega farms

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Exactly.  There is a economic component to 'fascism`, we have seen it from FDR to the current administration.  Obama bailout of car companies is touted as a "success", today`s BTOs that have a 1980`s debt write-off are considered successes today, many more examples over the years on both sides of R and D.  Don and Smokey have positioned themselves in such a way they feel that they must defend this "partnership with the government".  The reason many of us don`t like this policy of gov`t picking winners and losers is we aren`t good squealers, I can`t even ask for the salt shaker when it`s at the other end of the table at family dinner, if at a restuarant I`m missing a spoon, I won`t bother the waitress, I`ll make do with a fork I just wasn`t raised as a begger. So I`m at a distinct disadvantage in this form of "economics".  What`s kind of funny Red is that the forum`s Hobbyfarm should be all over this thread...I`ll bet he`s read this thread, but won`t reply to any of it because he would be disagreeing with Don.  Now if this tread was on the forum page, Hobby would be saying essentially what we have and Don would be patting his back...Strange bedfellows.    Jim Meade is saying "this whole site will go to heck if they can`t contain those forum goofs back in their room"  Smiley Happy  

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Senior Advisor

Re: Crop insurance and mega farms

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I agree but we should consider that the young starting out will not get financing without adequate coverage. Plus quite a few current operators may have the same trouble borrowing working capital. That is why t is a good idea to become self financing on operating capital.

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