Lefebure.com / Articles / Agriculture is not special
We are an industry that produces a product. We have global competition, and we have to be innovative and efficient to stay globally competitive. Our input costs fluctuate due to supply and demand. The price of the product we produce also varies due to supply and demand. We run into unexpected problems and have to find ways to resolve those problems. Our industry requires a workforce with a wide range of skills, and those people have to work cooperatively to achieve a common goal. That workforce wants good schools for their children, a wage they can comfortably live on, and a sense of accomplishment. From a high level viewpoint, our industry has the same challenges as every other industry.
We are the American farmer. The product we produce is food, and I believe we're pretty damned good at it. We take seeds, then add sunlight, water, nutrients, and time. The result is many more seeds, which become the raw ingredients in the food we all eat.
The first farm bill was passed by US Congress in 1933 in response to a massive oversupply of grain during the Great Depression. Over the decades its scope has expanded. As usual in politics, unrelated items get tacked on to bills that are likely to pass. Now, in 2013, approximately 80% of the farm bill money goes to non-farming items such as the Supplemental Nutrition Assistance Program, more commonly known as food stamps. Politicians say that food stamps are related to farming because they consume our products, but that argument is invalid because everyone consumes our products. Thatís like saying that baseball stadium tax subsidies should be in the farm bill because the people attending baseball games will consume food.
As for the money that does go to farmers, it will generally end up being re-invested in the business. In agriculture, that means either more land or newer equipment. In some instances, government assistance for farmers can also be viewed as an indirect subsidy for grain processors, due to it having the effect of lowering the cost of grain production. The increasing price of land is the most significant problem because it inhibits the next generation of farmers from getting into the business. Instead of each farmer owning the land they tend, we are becoming a nation where the land is owned by venture capital firms, and the farmers merely rent it. Today there are two ways to get into farming - be born into it, or marry someone that is. The barrier-to-entry for someone without a family link to farming is simply too high to overcome unless you have wealth via other means. If you think $200,000 of student loans for college is daunting, imagine trying to get a loan for $3M to buy enough land and equipment to start farming.
Having discussed this topic with non-farmers, their most common statement is that the subsidies are not mandatory, so if you donít like them, donít accept them. This is true, however, it puts you at a disadvantage to your competition. In agriculture, the competition is other farmers, your neighbors. If your neighbor accepts a subsidy and you donít, theyíll be in a better financial position to buy land at the next auction. Thus their business grows while yours doesnít. We all hate playing the game of subsidies, but if anyone plays the game, we all have to.
In my opinion, the farm bill should be completely scrapped. Let it expire and forget about renewing it. Weíll survive, weíll have less paperwork to do, the nation will have a smaller deficit, and the ag industry will be stronger in the long run. Agriculture is not special. We donít deserve subsidies any more than the people that produce toys, clothing, or software. As for food stamps, they have a valid purpose and should exist as a stand-alone bill.
Last updated: December 28, 2013