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hardnox604008
Advisor

Policies to benefit rural America

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One is happening, one won't.

 

First, The Affordable Care Act is a real boon to entrepreneurship. One of the reasons why the US lags behind other countries in that area is from tying health care to employment. It is a big leap to leave any job with health benefits in order to try a business. If you or anyone in your family had a pre-existing condition, fergeddaboudit.

 

Most small startups, whether they are in farming or elsewhere, generate modest taxable income in the early years and thus operators would likely gain some subsidy in insurance costs.

 

That part is happening, like it or not.

 

The other, which isn't going to happen, would be to severely cap crop insurance subsidies. It would be entirely "fair" to offer a subsidy of up to, say, $20K per famer, after that you are on your own.

 

It is a basic free market principle- if you want to help small farmers, quit subsidizing big ones.

 

Taken together they would increase the entry opportunites for young and new farmers. Which, by the way, would primarily be the sons and daughters of existing farmers.

 

Large operators, Deere, Monsanto, the CI industry etc. wouldn't like it but in the end they'll be just fine, really.

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BA Deere
Honored Advisor

Recipe for cheap food, Nox.

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or for this illustration "cheap corn" ...Ray Jenkins wants cheap corn, Don Tyson wants cheap corn, Joe Luter wants cheap corn, all the politicians from states that don`t start with "I" want cheap corn, the housewife in Seattle wants cheap corn/food...nothing against any of them personally, they are 99% of the population and have a vested interest in "cheap corn". 

 

First, the enemy of cheap corn (*any resembelance to persons living or deseased is purely coincidential 🙂  )   Meet Earl a Norwegian bachelor farmer from Thor, Iowa.  He has 160 acres and 40 ewes.  He has 40 acres in Timothy grass pasture, a grove with the old Woods Brothers pull-type combine Gramps used, his biggest tractor is a WD-45 Allis, all the tile on the quarter is 60 yr old clay dug in by hand.  There`s 80 acres in crop out of the 160, the 50 lambs he sells each year cost him actually $4/lb to raise.  But he has "old money" and is doing just fine.  He doesn`t use any of that commercial fertilizer or Roundup corn...."too high priced!".   Don`t get me wrong I love Earl, if I`m behind planting or combining, I can drive past Earl`s and feel good about myself.  Earl doesn`t contribute to the large corn carryover, if he has any extra ear corn to shell, it goes to town in a 100 bushel Monkey Wards flair box wagon.  Trouble is, there isn`t many "Earls" left anymore. 

 

Enter the Bigshot that takes over after Earl wraps his F-100 around a telephone pole on the way to a Buddy Holly show at the Surf in Clear Lake.  He takes Earl`s land and pattern tiles it, bulldozes the grove, has a junkman haul the Woods Bros combine and WD-45 to Behr Iron and Metal in Mason City, breaks up the Timothy pasture and after he takes out the fenceline to join the 480 acres he owns next to it, Earl`s old 160 now actually has 161.45 tillable acres.  It`s fertilized and planted to yield 250 bu/acre.  Now, the Bigshot is 62 yrs old, was a young tiger in the 70`s got $900,000 in debt written off in 1985.  And  has been buying, renting and expanding ever since. Now he has 15,000 acres spread out from Rake, Iowa down to Marshalltown.  The Bigshot knows every FSA trick in the book, how to tile and farm wetlands, maximize payments and programs.  He collects on crop insurance on at least one farm every year regardless of the growing season.

 

Now, the recipe for cheap corn is to by hook or by crook "get 96 million acres of corn planted" nationwide.  And the way the government does that is to guarantee fringe acres get planted through crop insurance, crop insurance makes big, 48 row farming viable in God`s country. 

 

Now that farms are already big, the Earls have died off through attrition, the Bigshot`s intimidating size alone keeps the maximum production on the maximum acres, thus keeping corn as cheap as humanly possible.

 

So, there is a benefit to the 99% of the population that doesn`t raise corn, but consumes corn products and to those that they vote for.

 

Ethanol somehow slipped past the cheap corn goalie, I think corn was so ridiculously cheap 10-20 yrs ago that Ethanol and corn stoves became viable.  Now to everyone`s surprise the efficiency gains in Ethanol kept it in the game even with $7 corn....it`s became almost a byproduct of the cattle feeding DDG production ...Gasoline would be over a buck a gallon higher without Ethanol.  The miltary doesn`t have to guard Ethanol plants.  We keep Ethanol money here, instead of sending money to camel jockeys that want to kill us.

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63 Replies
Packard27
Senior Contributor

Re: Policies to benefit rural America

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Hardnox,

 

I am detecting a tad bit of class envy in your posts for all of those "stupid conservatives" who are now residing in the top 7%. The delicious irony of our spendthrift President and congress is that the rich have indeed become much (much) wealthier these past years while the bottom 93% have seen their standards of living either stagnate or fall.

 

It would seem that "rent seeking, crony captialism" does indeed have its fans in this country. News flash: None of those fans appear to be living among the ignorant rubes who five years ago bought into the fashionable nonsense of Hope & Change or free lunches.

 

But we are all patriots here...right?

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BA Deere
Honored Advisor

Re: Policies to benefit rural America

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Bringing back small farmers, hasn`t that bird already flown?  With 48 row planters and EZ-steer and the "$20 million ante" to start farming (I know I`m speaking in hyperbole, but ya`ll git the idea).  Basically farming is a heck of alot of fun these days and even a 80 yr old farmer can be as much or little involved as he wants.

 

Payment limitations aren`t even on the docket these days, us little guys are as nervous as a cat in a roomful of rockingchairs.  Back when corn was below the cost of production, that`s when there should`ve been meaningful payment limits ($1.40 corn and 50¢LDP rates). 

 

Even a good old farm crisis and depression couldn`t bring the small farms back, because where would be the farm sales with cheap 8 row planters and 4400 combines these days?   The way things are, there`s either going to be 96 row planters steered by robots or gardens that`s worked with hoes, not much inbetween  🙂

hardnox604008
Advisor

Re: Policies to benefit rural America

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And thus there would be no benefit in subsidizing that structure.

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hardnox604008
Advisor

Re: Policies to benefit rural America

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I'll stand 100% with the previous statement- what is the public benefit to subsidizing that structure?

 

And as I've also said many times, I don't think it is good policy to try to take back what has been gained through what has been inprovident public policy. I think it is good policy to end it.

 

Although I'll admit that there is something to be said for people who can unflinchingly advocate for anything that benefits them.

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sw363535
Honored Advisor

Re: Policies to benefit rural America

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Subsidized crop insurance has nothing to do with benefiting individuals or a certain size of farm.  It has everything to do with insuring planting and production.

If a person thinks the subsidy is to help save farmers, stop listening to congressmen and usda employees.  No one up there has shed a tear for the 60% of farms that have been squeezed out of production in the last 50 years.  All programs are designed to keep a food supply in the system--------- that's it.  Since when has a federal expenditure been made that didn't benefit one more than another.

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hardnox604008
Advisor

Re: Policies to benefit rural America

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Acres get planted until the return to land is negative over an extended period.

 

If it requires insurance to make the return to land positive then they don't need to be planted.

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hardnox604008
Advisor

Re: Policies to benefit rural America

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Ya know, I'm not so sure of that.

 

If a young person has say, a $40 acre subsidy on 500 acres versus $4 for the 5000 acre farmer , and has some access to modest scale like sharing equipment with his father/relative, I'm not sure that the larger producer's scale offers much more advantage than that, if any.

 

If the larger farmer has the financial muscle to make sure the younger farmer doesn't get it even if it isn't profitable for himself, that is his problem, and possibly a real problem for him in the longer term. 

 

The younger farmer will need to have other enterprises, probably mostly of the niche variety.

 

As much of that as can practically be encouraged will go a long way toward keeping rural communites alive and healthy as compared to 3 guys with 48 row planters. Which I'm not suggesting be outlawed, merely that there is absolutely no public benefit to subsidizing them. But actually you would be- they'd be getting exactly the same subsidy.

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BA Deere
Honored Advisor

Recipe for cheap food, Nox.

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or for this illustration "cheap corn" ...Ray Jenkins wants cheap corn, Don Tyson wants cheap corn, Joe Luter wants cheap corn, all the politicians from states that don`t start with "I" want cheap corn, the housewife in Seattle wants cheap corn/food...nothing against any of them personally, they are 99% of the population and have a vested interest in "cheap corn". 

 

First, the enemy of cheap corn (*any resembelance to persons living or deseased is purely coincidential 🙂  )   Meet Earl a Norwegian bachelor farmer from Thor, Iowa.  He has 160 acres and 40 ewes.  He has 40 acres in Timothy grass pasture, a grove with the old Woods Brothers pull-type combine Gramps used, his biggest tractor is a WD-45 Allis, all the tile on the quarter is 60 yr old clay dug in by hand.  There`s 80 acres in crop out of the 160, the 50 lambs he sells each year cost him actually $4/lb to raise.  But he has "old money" and is doing just fine.  He doesn`t use any of that commercial fertilizer or Roundup corn...."too high priced!".   Don`t get me wrong I love Earl, if I`m behind planting or combining, I can drive past Earl`s and feel good about myself.  Earl doesn`t contribute to the large corn carryover, if he has any extra ear corn to shell, it goes to town in a 100 bushel Monkey Wards flair box wagon.  Trouble is, there isn`t many "Earls" left anymore. 

 

Enter the Bigshot that takes over after Earl wraps his F-100 around a telephone pole on the way to a Buddy Holly show at the Surf in Clear Lake.  He takes Earl`s land and pattern tiles it, bulldozes the grove, has a junkman haul the Woods Bros combine and WD-45 to Behr Iron and Metal in Mason City, breaks up the Timothy pasture and after he takes out the fenceline to join the 480 acres he owns next to it, Earl`s old 160 now actually has 161.45 tillable acres.  It`s fertilized and planted to yield 250 bu/acre.  Now, the Bigshot is 62 yrs old, was a young tiger in the 70`s got $900,000 in debt written off in 1985.  And  has been buying, renting and expanding ever since. Now he has 15,000 acres spread out from Rake, Iowa down to Marshalltown.  The Bigshot knows every FSA trick in the book, how to tile and farm wetlands, maximize payments and programs.  He collects on crop insurance on at least one farm every year regardless of the growing season.

 

Now, the recipe for cheap corn is to by hook or by crook "get 96 million acres of corn planted" nationwide.  And the way the government does that is to guarantee fringe acres get planted through crop insurance, crop insurance makes big, 48 row farming viable in God`s country. 

 

Now that farms are already big, the Earls have died off through attrition, the Bigshot`s intimidating size alone keeps the maximum production on the maximum acres, thus keeping corn as cheap as humanly possible.

 

So, there is a benefit to the 99% of the population that doesn`t raise corn, but consumes corn products and to those that they vote for.

 

Ethanol somehow slipped past the cheap corn goalie, I think corn was so ridiculously cheap 10-20 yrs ago that Ethanol and corn stoves became viable.  Now to everyone`s surprise the efficiency gains in Ethanol kept it in the game even with $7 corn....it`s became almost a byproduct of the cattle feeding DDG production ...Gasoline would be over a buck a gallon higher without Ethanol.  The miltary doesn`t have to guard Ethanol plants.  We keep Ethanol money here, instead of sending money to camel jockeys that want to kill us.

hardnox604008
Advisor

Re: Recipe for cheap food, Nox.

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I don't buy the argument. 

 

The markets will take care of getting crops planted, now we're just talking about protecting the balance sheets of owners and operators if there is a downward adjustment in crop prices.

 

Which the government has always done and continues to do but it is a good reason why crop farmers and landowners  are the last people who should be complaining about government programs, not that it is even going to slow them down a bit.

 

I also don't see anything at all unfair about capping each entity at something like $20k subsidy. Particularly as to your argument- if somebody decides to not rent the ground without the subsidy there is oodles and oodles of capacity out there ready to step in and plant a crop.  

 

 

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