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ddgfs
Senior Contributor

farm policy on the fly

Farm Policy always fails under the weight of the market distortions that each iteration creates.

The underlying assumption- a good one based on history- is that there's always another one around the corner that will address the distortions of the previous one and keep most in the game.

In this case there are payments coming from the executive branch to offset trade losses and a reasonable guess was made as to how not to create excessive distortions i.e., spread payments out beyond soybeans so as to not encourage even more of the commodity in surplus.

But the arcane CCC title they found to make payments by executive fiat- without having to go through Congress- rules out payments on unplanted acres.

Decent guesses at the tie  but farm policy often gets trumped by weather. In this case there will be many millions of acres planted that are at risk of having net returns below the return to PP but farmers were afraid to leave the market payments on the table.

Somebody, maybe a lot, is going to end up with some unprofitable acres and a decent hit to APH.

Best case scenario for everybody- had they only been able to predict the future- would have been to let nature take its course and then come back with a modest bump- say 10-20%- of payment on PP.

Best case would have been a "natural PIK" rather than muddying the waters with many millions of questionable acres that are likely to lose money for the operators.

I still think a bump on PP is likely- I think it would go through Congress with fairly bipartisan support.

Although the owners of those many millions of very marginal acres may be a little unhappy over that.

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BA Deere
Honored Advisor

Re: farm policy on the fly

In the past, they`ve held "farm bill listening tours" and no one shows up, too busy spending their $7 corn checks.  Ask a group of farmers about farm policy and the consensus is "git the government outta farming!!" and how is that, be careful what you ask for?   Now I suppose bankers are asking on our (their) behalf so we get these emergency, on the fly programs.  

 

A guy the other day said something I`ve been pondering "We don`t have a cheap food policy, we have a abundant food policy" that equates into a cheap food policy same difference in low prices, but there are little differences that are significant.  For one thing a "abundant food policy" makes us much too dependent on free trade as our life blood.   Where as a true "cheap food policy" we`d get government checks to keep us in business and little new  80hp Massey Ferguson tractors to play with on our 100 acre farms like they do in Europe.

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