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11/07/2002

The Farm Bill, Part II

Last week I noted some comments from politicians and
commentators on the recently passed farm bill, one that will cost
the American taxpayer anywhere from $170-$220 billion over
the next ten years.

Following are some other topics that amateurs on the topic, like
yours truly, should be aware of. [I can never pretend to be an
expert on this, but that doesnít prevent me from having an
opinion or two.]

-------

--Last week I spent some time in South Dakota and I can add
some insight with regards to the Tim Johnson (Dem.) Ė John
Thune (Rep.) Senate race. I was there when President Bush
made one of his stops for Thune and the locals were pissed he
never mentioned drought relief. As of this writing, Thune lost by
500 votes and we are headed for a recount.

There is a big difference between a subsidy laden farm bill and
simple drought relief for those who need it. President Bush got
himself in a box because he didnít want to be seen tacking on
any more obligations, but itís amazing to think that a mere
mention that he was aware of the severe problem facing some
small farmers would have helped Thune, yet he didnít see this.
I blame Karl Rove.

--Farming is expensive. For example, one dairy cow goes
through $1,000 worth of feed per year and the investment in
buildings and equipment is about $3,000 per cow. Pesticide
control costs are huge, and then you have the land issue. But
regarding the latter, everyone who is an owner has been raking it
in. Those of us who believe in a real estate bubble, though, note
that farm land prices are not immune.

--The 1995 ďFreedom to FarmĒ act was supposed to phase out
most commodity programs, many of which had started with the
Great Depression. In May 2000 Congress then approved a plan
to help out financially distressed firms. But now the latest
version of helping the farmer seems to do little more than
encourage growth in some crops without regard to market
demand. Or, as Senator Richard Lugar said, ďThese subsidies are
destroying small family farmers, not helping them. Weíve got
food coming out of our ears.Ē

--If family farms go broke, corporations move in and gain further
control in prices.

--In 1999 (latest data), farmers received 9% of their income from
selling grain and livestock, 48% from off-farm jobs, 36% from
government payments, and 7% from interest earnings and rent.

--Of 2 million farmers, 482,000 (less than one-fourth) receive
84% of federal subsidies (from 1996-2000 $60 billion out of
$71.5 billion). The subsidies are based on how much land
farmers own or the size of their harvest, so the payments favor
the biggest farms. The average payment for the top 1% of
recipients was $558,000 over the last five years, while the
average for the bottom 80% was $5,830. By one estimate, up to
60% of American farms actually receive no crop subsidies.

--President Bush has been asking other nations to knock down
trade barriers and to reduce their own subsidies, like in Europe
and Japan, but existing U.S. policy runs counter to this. It also
hurts developing nations who need the U.S. market most.

-----

Meanwhile

--The use of antibiotics in American livestock has skyrocketed
some 50% since 1985. This means the # of microbes resistant to
antibiotic treatments is increasing, stemming from overuse. For
example, resistant strains of salmonella are a major concern for
scientists.

--In Wisconsin, you may have noticed the problems with the deer
herd and chronic wasting disease (CWD). Experts keep telling
us that this one, related to BSE, or mad cow, is not harmful to
humans, but the fact is authorities have shut down some deer
farms (many used for hunting) and they are also carefully
monitoring the current hunt and testing the deer that have been
killed. [At least this was the case as of a couple of days ago. I
apologize if conditions have changed since then.]

Mad cow, which has killed hundreds of humans in Europe,
comes about from animals with infected brain matter (prion
proteins) that corrode the brain. Aside from through infected
feed, the disease has been passed to cuts of meat, either by
a butcher using the same knives or by cleaning with the same
cloth and placing it on the same cutting board.

CWD is scary because there is no actual guarantee it canít
eventually spread to humans, and itís why government officials
are keeping their fingers crossed.

[A somewhat related disease, foot-and-mouth, can be equally
crippling, commercially, because while itís not fatal to animals,
the weight loss and sickly appearance make them unfit for sale.]

--And then there is the bigger picture issue of population loss in
the farm belt. In the Great Plains states, nearly 60% of the
counties (250 of 429, according to U.S. News), lost population in
the 1990s. Thatís incredible. While I was in North Dakota over
the past two weeks, I learned of this firsthand, with some sad
tales. Voters were to decide on a ballot initiative to pay kids for
staying in state once they graduated from college.

-----

Finally, in the interest of fair play, here are ten reasons for the
farm bill, as spelled out by Bryce Neidig of the Nebraska Farm
Bureau Federation. [Source: High Plains Journal]

1. Food security for our country.
2. Environmental investment.
3. Economic stability. Farm subsidies reinvested in
communities.
4. Spending baseline remains flat. [Adding previous farm bill
and supplemental emergency payments of the last four
years.]
5. A safety net for farmers.
6. Farmers face large financial risks.
7. Export volatility foreign nations lock them out of viable
markets, because of political and social agendas.
8. Avoiding more food imports. [Ed. The strong U.S. dollar has
as much to do with this as anything.]
9. Reduce our energy dependence on foreign oil. [i.e., ethanol.]
10. A worthy investment until prices turn around.

---

Next week, back to normal fare and from Moscow.

Brian Trumbore





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11/07/2002

The Farm Bill, Part II

Last week I noted some comments from politicians and
commentators on the recently passed farm bill, one that will cost
the American taxpayer anywhere from $170-$220 billion over
the next ten years.

Following are some other topics that amateurs on the topic, like
yours truly, should be aware of. [I can never pretend to be an
expert on this, but that doesnít prevent me from having an
opinion or two.]

-------

--Last week I spent some time in South Dakota and I can add
some insight with regards to the Tim Johnson (Dem.) Ė John
Thune (Rep.) Senate race. I was there when President Bush
made one of his stops for Thune and the locals were pissed he
never mentioned drought relief. As of this writing, Thune lost by
500 votes and we are headed for a recount.

There is a big difference between a subsidy laden farm bill and
simple drought relief for those who need it. President Bush got
himself in a box because he didnít want to be seen tacking on
any more obligations, but itís amazing to think that a mere
mention that he was aware of the severe problem facing some
small farmers would have helped Thune, yet he didnít see this.
I blame Karl Rove.

--Farming is expensive. For example, one dairy cow goes
through $1,000 worth of feed per year and the investment in
buildings and equipment is about $3,000 per cow. Pesticide
control costs are huge, and then you have the land issue. But
regarding the latter, everyone who is an owner has been raking it
in. Those of us who believe in a real estate bubble, though, note
that farm land prices are not immune.

--The 1995 ďFreedom to FarmĒ act was supposed to phase out
most commodity programs, many of which had started with the
Great Depression. In May 2000 Congress then approved a plan
to help out financially distressed firms. But now the latest
version of helping the farmer seems to do little more than
encourage growth in some crops without regard to market
demand. Or, as Senator Richard Lugar said, ďThese subsidies are
destroying small family farmers, not helping them. Weíve got
food coming out of our ears.Ē

--If family farms go broke, corporations move in and gain further
control in prices.

--In 1999 (latest data), farmers received 9% of their income from
selling grain and livestock, 48% from off-farm jobs, 36% from
government payments, and 7% from interest earnings and rent.

--Of 2 million farmers, 482,000 (less than one-fourth) receive
84% of federal subsidies (from 1996-2000 $60 billion out of
$71.5 billion). The subsidies are based on how much land
farmers own or the size of their harvest, so the payments favor
the biggest farms. The average payment for the top 1% of
recipients was $558,000 over the last five years, while the
average for the bottom 80% was $5,830. By one estimate, up to
60% of American farms actually receive no crop subsidies.

--President Bush has been asking other nations to knock down
trade barriers and to reduce their own subsidies, like in Europe
and Japan, but existing U.S. policy runs counter to this. It also
hurts developing nations who need the U.S. market most.

-----

Meanwhile

--The use of antibiotics in American livestock has skyrocketed
some 50% since 1985. This means the # of microbes resistant to
antibiotic treatments is increasing, stemming from overuse. For
example, resistant strains of salmonella are a major concern for
scientists.

--In Wisconsin, you may have noticed the problems with the deer
herd and chronic wasting disease (CWD). Experts keep telling
us that this one, related to BSE, or mad cow, is not harmful to
humans, but the fact is authorities have shut down some deer
farms (many used for hunting) and they are also carefully
monitoring the current hunt and testing the deer that have been
killed. [At least this was the case as of a couple of days ago. I
apologize if conditions have changed since then.]

Mad cow, which has killed hundreds of humans in Europe,
comes about from animals with infected brain matter (prion
proteins) that corrode the brain. Aside from through infected
feed, the disease has been passed to cuts of meat, either by
a butcher using the same knives or by cleaning with the same
cloth and placing it on the same cutting board.

CWD is scary because there is no actual guarantee it canít
eventually spread to humans, and itís why government officials
are keeping their fingers crossed.

[A somewhat related disease, foot-and-mouth, can be equally
crippling, commercially, because while itís not fatal to animals,
the weight loss and sickly appearance make them unfit for sale.]

--And then there is the bigger picture issue of population loss in
the farm belt. In the Great Plains states, nearly 60% of the
counties (250 of 429, according to U.S. News), lost population in
the 1990s. Thatís incredible. While I was in North Dakota over
the past two weeks, I learned of this firsthand, with some sad
tales. Voters were to decide on a ballot initiative to pay kids for
staying in state once they graduated from college.

-----

Finally, in the interest of fair play, here are ten reasons for the
farm bill, as spelled out by Bryce Neidig of the Nebraska Farm
Bureau Federation. [Source: High Plains Journal]

1. Food security for our country.
2. Environmental investment.
3. Economic stability. Farm subsidies reinvested in
communities.
4. Spending baseline remains flat. [Adding previous farm bill
and supplemental emergency payments of the last four
years.]
5. A safety net for farmers.
6. Farmers face large financial risks.
7. Export volatility foreign nations lock them out of viable
markets, because of political and social agendas.
8. Avoiding more food imports. [Ed. The strong U.S. dollar has
as much to do with this as anything.]
9. Reduce our energy dependence on foreign oil. [i.e., ethanol.]
10. A worthy investment until prices turn around.

---

Next week, back to normal fare and from Moscow.

Brian Trumbore