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Veteran Advisor

Why Not Just A Guaranteed Income?

The Farm Bill is one of the most dramatic soap operas one can imagine.  Only in Washington politics.  Now Congress wants to establish commodity prices.  Is this any different than being in a contract with ADM?

 

http://farmdocdaily.illinois.edu/2018/02/farm-bill-review-origins-fixed-price-policy.html?utm_source...

 

"

Concluding Thoughts

The return of cotton-based assistance to the farm programs in the Bipartisan Budget Act of 2018 serves as a reminder of the long-running disputes over assistance programs that use Congressionally-fixed prices. It is clear from the comparisons that Congressionally-fixed price triggers were not established on an equitable basis in the initial iterations of the policy; the support they provided to farmers would not have been equitable either. It may add to this conclusion to know that the Member of Congress credited with creating the target price policy in 1973 was Senator Milton Young (R-ND) who was known as "Mr. Wheat" (Coppess, 2018; Collin and Collin, 2010). Similarly, the 1981 Farm Bill was part of the infamous Boll Weevil Democrats' deal with President Reagan (farmdoc daily, March 16, 2017). Wheat and cotton received the most favorable target prices in those farm bills, respectively.

There are likely many other methods for measuring the fairness of target prices throughout the policy's history and those will be explored in future articles. All methods will be challenged by the lack of transparency involved in setting target prices. The design of farm policy has real-world consequences for the farmers of the supported commodities, as well as the taxpayers who fund the programs; relevant topics when Congress debates reauthorizing the programs and future articles will further explore the myriad issues involved."

 

Well, now we need price supports of some kind more and more because prices are so low.  Can't have any farmers going broke.  Next up will be dry-cleaners and independent print shops.  Hey, let's add the shade tree mechanic and the local car wash.  Wait - more later, it's time for my guaranteed mid-morning break.  I'm outta here.

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7 Replies
Veteran Advisor

Re: Why Not Just A Guaranteed Income?

Just who's side are you on anyhow. ???

The last farm policy initial sign up was plc, arc,
And whole farm income.

Ive never seen so many people want to see
Their neighbors suffer...are you people so nuts
To make a nickel per bushel, break and push
Your neighbor out of business so you can
Take them over and still not making more.

It's becoming nuts
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Senior Advisor

Re: Why Not Just A Guaranteed Income?

Jim - interesting  subject  for  sure,  and several retailers will be chiming in on this ---

 

El Cheapo - contact the former sec. ag    - he has a seat at the board on a major implement corp. , maybe some indications of how this will proceed ???

 

   

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Veteran Advisor

Re: Why Not Just A Guaranteed Income?

"Just who's side are you on anyhow. ???

 

I am not on the side of a guaranteed income.  I am not in the farm program.  I don't pay for crop insurance.

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Honored Advisor

Re: Why Not Just A Guaranteed Income?

Just my opinion, but either have a farm bill that works or forget about it entirely.  I`m afraid a farm bill that "works" would cost too much and would lack public support.   There are farmers that over the last 20yrs have been quietly and perhaps subliminally preparing for "this day". 

 

To understand what I`m talking about, take a tour of Martin county Minnesota, get off 1-90 and travel a few gravel roads, it`s common to see 3  hog finishers on each farmstead and 3 farmsteads on each section, it would be hard to sell commercial fertilizer in that area.  Figure they put on 3500 gal/acre manure, all they need is maybe 50lb of N for sidedressing...if that.  Then Sioux county Iowa they do the same with cattle feeding.

 

All this stuff is big, big, big these days, they buy seed at 30% less than the best price a small farmer can, go over the head of a company rep.  Then you have organic farmers that make it work.  

 

I don`t think any of those chime in on the farm bill or farm chat rooms.  The farm bill appears to be for those that can`t find a chair when the music stopped.  So to close as I started, probably don`t waste money on a farmbill, because it won`t be juicy enough to actually save anyone.

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Advisor

Re: Why Not Just A Guaranteed Income?

I generally do not follow the link’s posts.  Having been intimately involved in 2014 farm bill discussions, I can say unequivocally that corn, cotton and peanuts gets what they want in any farm bill.  The past bills all the way back through the last decade and half, this has been the rule.  

 

That said, the original cotton STAX proposal in the 2014 was cotton’s idea from the start.  It actually was quite lucrative, having been proposed by the commodity group and then they tried to sell it to their Growers, after passage.  It was a strange way of going about getting buy-in to begin with.  One component of the program was the grower needed to pay a premium to participate.  Not a huge amount, but they had to have skin in the game.  Farmers rejected it outright at signup.  Since implementation, Cotton requested to be rejoined into the general program, expecting the other commodities to relinquish a substantial portion of the budget to do so.  

 

As for for the notion that wheat is favored in target price settings, that ended a long time ago.  Wheat asked for higher support levels, but pretty much had to settle for leftovers after the numbers were set for other commodities.  

 

If you wonder why wheat acreage is declining, areas that can grow other crops are moving away from wheat, keep some acres only for rotational purposes. You also may notice that the bulk of the nation’s wheat production is grown in the northern states from Kansas on up.  

 

History behind the ARC/PLC options reflects a divide between growers, the former wanting to not fix prices but allow market forces to determine price levels, and the later wanting to return to the old days of guaranteed target prices and guaranteed payments.  It was primarily a North Versus South divide.  Southern states graze wheat and do not get the bulk of revenue from grain sales, but through livestock.

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Advisor

Re: Why Not Just A Guaranteed Income?

It must be nice going cold turkey.  Two years ago, a farmer with half of his acreage on bottomland said the same thing.  Then his area received a ton of rain, wiping out his just planted crops.  He became a believer overnight.  Neither program will make you rich.  But in the right circumstances, it may save the farm.

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Veteran Advisor

Re: Why Not Just A Guaranteed Income?

I got out of the farm program about 6-8 years ago or so when I figured out that the crop insurance premiums and the government dole were not working for me.  If I go broke, I go broke.  I've done better marketing without the insurance function figured in. 

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