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Kay/NC
Honored Advisor

Re: Policies to benefit rural America

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The point about attrition is apt. We are a geberation of mostly program -dependent practioners of agriculture...either DP, CCP, insurance, or all three. We have built a huge and very efficient production structure, supported by fantastic transpotation infrastructure.

That last part is what had separated us largely from other areas where crops could be grown as well or even better, where livestick production usn't treated like some sort of crime. That type of added cost piled on in more and more watersheds will limit and begin to drive out producers, from the bottom up, sizewise.

When a few more countries catch up on rail and ports, I wonder how long it will be before we start talking sbout the good old days when American farmers fed the world.

And, at the same time, how much of our production will have fallen into foreign hands? How will it feel to subsidize Chinese farms with US tax dollars, when we are no longer stabilizing the American supply of food and fiber?
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BA Deere
Honored Advisor

Re: Policies to benefit rural America

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That`s not all Kay, we gotta get a Farm Bill passed so that Brazil can get their US sudsidies

 

http://online.wsj.com/article/SB10001424127887323838204578654452439798928.html

 

You really can`t make this stuff up

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r3020
Senior Advisor

Re: Recipe for cheap food, Nox.

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BA, the sad reality is everything you said is true. The other sad reality is that socialist system will destroy this country. Socialism always ends in failure. Why work when someone else can be forced to provide for your needs.

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rswfarms
Senior Contributor

Re: Policies to benefit rural America/ LIMIT CROP INSURANCE SUBSIDIES??? NO!!!!

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Look the taxpayer pays for 63% of our Crop Insurance. In Iowa this works out to a little over $48/acre for the Taxpayers share of our insurance. On just 2,000 acres it is close to a subsidy of $100,000 Dollars. $100,000 per year helps to lower our corn per bushel production costs by 25 cents per bushel. While 25 cents per bushel doesn't seem like much. it adds up quickly if you produce 250,000 bushels per year. Also, limiting the Crop Insurance to $20,000 per farmer will only cover 416 acres of dirt. Today 416 acres is small potatoes. Maybe a limit of $100,000 per farmer could work. but only $20,000 per year is way to small. It  will hurt the family farmer alot if it was only $20,000 per year per farmer.

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rswfarms
Senior Contributor

Re: Policies to benefit rural America/ LIMIT CROP INSURANCE SUBSIDIES??? NO!!!!

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I will also add to my other post on Crop Insurance. The Crop Insurance Subsidy is around $48/acre and the Direct Payment Subsidy is $20/acre with a limit of $40,000 per year for the Direct Subsidy, so there is already a limit on that subsidy. But again, add up $48/acre and $20/acre and you have a total of $68/acre for these 2 subsidies, On just 2,000 acres you are pushing a $140,000 per year subsidy. This total of the 2 subsidies drops our overall corn production costs by 34 cents per corn bushel. And with the tight profit margins in corn and soybean farming, depending on crop prices this 34 cents of subsidies could make the difference between showing a profit or going in the red. And if you are like me, going into the red is like farming for free. In the Farm Crisis years of 1981 to 1986, many, many, Iowa farmers were basically farming for free. And where did these Iowa farmers that farmed for free during the Farm Crisis end up at? Well, many ended up at the big Firestone Tire Company in Des Moines, Iowa making tires to support there family after the banks took all there farmland because it was impossible for them to make there Farmland Mortgage Payments. well, that's my opinion, but I sure as hell don't want to end up at the Des Moines, Iowa big Firestore Production Plant making tires to support my family!!!!!!

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kraft-t
Senior Advisor

Re: Policies to benefit rural America

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I agree! The evidence is subsidizing acres and bushels. They don't care whether Don kraft farms it or Joe Big shot. Acres are acres and bushels are bushels. Whether you get a large subsidy or small depends only on your ability to compete in the market place through management and acre accumulation.

 

Personally I don't care if others get more subsidy. If that is government's method to promote planting so be it. My objective has not been to be the largest farmer in Iowa though my diet  may suggest otherwise. Nor did I ever intend to be the Warren Buffet of agriculture.

 

My intention was to live comfortably and build some degree of security for my family and our heirs. One needs to recognize what are ones objectives and what are one's limitations, and act accordingly. We can always complain about someone else getting a better deal but that is mostly wasted effort.

kraft-t
Senior Advisor

Re: Policies to benefit rural America

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That is probably true but history has proven that it pays quite a toll when production levels fall to levels far less than demand.

 

If we were government planners we would want to stimulate a bountiful harvest. Relying on the lord of capitalism to provide would be like depending on the capitalist to provide food for the hungry and health care for the poor. If there isn't a buck in providing goods or services, it simply won't happen.

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hardnox604008
Advisor

Re: Policies to benefit rural America

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I don't think anyone has made the case for why we should continue to subsidize large farmers to a greater extent than smaller ones. That being the case, the default, in the tradition of Burkian conservatism, is to not do so. And it will save money.

 

I don't have any big illusions about the future for smaller farms. What a CI limitation might do is give smaller and newer farmers a chance to hang onto a little bit of the commodity pie while they build alternative and niche farming enterprses.

 

Big ag needs that to happen too- because at some point in the future when there are three guys with GPS controlled 48 row planters farming a county, even in those rural counties a large majority is not going to be supportive of those businesses. The communities and the country need some diversity in agriculture.

 

Among those arguing in favor of we have RSW, who comes here to have somebody he tell about his good fortune. It is true that if his subsidy was cut his income might go down. Actually, not so much because if you look at his numbers, he is acting rationally in buying high coverage and maxing subsidy levels. Some farmers throw a hissy fit about how they won't participate if they don't get the full subsidy- the rational action would be that they would probably participate at a lower level of coverage.  RSW gets his $20 k, buys a lower level of coverage, pays some more out of pocket and assumes more risk. He can afford to take more risk.

 

Kay doesn't have a lot of direct interest in the matter but apparently finds the croppers as fellow travelers in the beseiged ag world and thus (I'm guessing here) is trading off for support against the enemies of agriculture. And she says if we don't do this we'll drive ag out of the US. I'll say this gently because I do admire people who have worked hard to build their place in ag but doesn't she raise pigs for a Chinese corporation?

 

As to BA's hypothetical 15,000 acre BTO who will be the future of farming with his robotic equipment, he may be the future but I don't want to be forced to subsidize him. That hypothetical guy should be quite well heeled by now and should be quite able to make decisions about how to go forward in a slightly altered policy environment. If not, if he's just one of those guys who only has a "go" button and expects that government is going to backstop him ad infinitum, too bad. There is plenty of capacity to take his place.

 

The folks who might be affected aren't really mentioned here. That would be the almost big, newer, growing guy who has done well in the boom but isn't set yet. He'll have to accept a bit more risk and/or pay a bit more out of pocket but he'll also get the benefit of not having quite as much pressure from the top side as the BTOs use the subsidy to try to beat him to death.

 

So I'm going to declare victory and go home.

 

hardnox604008
Advisor

Re: Recipe for cheap food, Nox.

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As to how ethanol got, as you say,  through the cheap food goalposts I've thought about that a lot.

 

I think you have to take a look at the GWB years and the penchant for wanting to do BIG things. It went, OK, we're conservative but we're going to push through the biggest increase in the social safety net in 40 years; we're going to take over 7 countries in the ME quickly and easily, turn them into democracies whether they want it or not and soon there will be McDonalds on every corner an NFL franchise in Tehran; we're going to turn social security over to Wall Street and call it "ownership society" etc.

 

Ethanol was one of those BIG things, 45 b/g/y at the end. Never mind that 2/3rds of it has fizzled completely. On the corn part, the Clean Air Act and failure of MTBE set the stage- you actually had Big Oil as a temporry ally.

 

But really, the bottom line was that in once again thinking BIG they simply got the numbers wrong and there is some considerable amount of devil in the details. We could have replaced MTBE with may 9 b/g/y and it wuld have been a very big deal for agriculture but they had to think BIG.

 

Also as a backdrop, they'd gone hell bent for leather to drive the dollar continuously lower in order to try to make the economy go and nobody considered the fact that particualrly post financial deregulation they just said up the mother of all carry trades as all the money in the world went short the dollar and long commodities.

 

As much complexity as there is in the world today, The Decider needs to be an exceptionally wise man or needs a couple of them around him. 

 

That's probably the scariest thought of all when you look at that crew, the current one and whatever is on deck or even on the bench.

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rayjenkins
Veteran Advisor

Re: Recipe for cheap food, Nox.

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Only took 3 billion gallons of ethanol to take care of MTBE

 

 

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