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 doesn’t 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.) – 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 didn’t want to be seen tacking on any more obligations, but it’s 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 didn’t 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 “Freedom to Farm” 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, “These subsidies are destroying small family farmers, not helping them. We’ve got food coming out of our ears.”
--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 can’t eventually spread to humans, and it’s why government officials are keeping their fingers crossed.
[A somewhat related disease, foot-and-mouth, can be equally crippling, commercially, because while it’s 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. That’s 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
|