Will farm subsidies go the way of the dinosaurs?

ABC news and it’s program, Good Morning America, is covering a story that we’ve heard before — members of Congress have received farm subsidies.  The news report specifically focuses on Tea Party candidates that have benefitted from the gov’t money.  SD Rep Kristi Noem’s picture was part of the story but in the GMA edition she didn’t get named — although in the transcript it does highlight the subsidies received by Noem — to be fair it was received not just by her personally but the entire farm operation owned by her family.

One of the House members who was on camera, Rep Marlin Stutzman, R-IN, said he favored eliminating all farm subsidies

Stutzman told ABC News that he is in favor of eliminating farm subsidies, including his own.

“Yes, I would vote to eliminate farm subsidies. It manipulates the market,” he said. “And that’s the problem here in Washington: The adult conversation, I think, has to be, ‘no.'”

According the ABC report, that could equal more than $16 billion…not just chump change.

So what would be the impact of eliminating farm subsidies on South Dakota and it’s agricultural base?  If Johnson, Thune or Noem voted to cut or eliminate the subsidies would that be the end of their elected career?

37 Replies to “Will farm subsidies go the way of the dinosaurs?”

  1. PNR

    I’m with Stutzman on the condition that federal interference in the management of farms also goes away. Beyond making sure the food supply is safe to eat, I don’t think they should be involved.

  2. Duh

    Farmers are in a quandary as far as the subsidies go. If you take them, you’re participating in a legal, well recognized program. If you don’t out of principal or otherwise, you’re putting yourself at an economic disadvantage compared to your farmer peers that do. I saw on this same interview this morning of a politician who was being paid over $125,000 per year in farm subsidies and the interviewer kept pressing the issue of whether he would voluntarily give up his payments and he kept saying “there are many problems with the farm subsidy program that we need to look into”. The reporter kept pressing and he kept repeating canned statements. Very transparent and didn’t look good for him.

    Bottom line, if you want to get rid of the subsidy program, fine. However, if it exists, farmers wouldn’t be very prudent business people if they didn’t take advantage of it. That should not be looked at it negatively. It’s business.

    As for our reps voting for it repeal of the farm subsidy program, they will have to take their lumps with the irate farmers.

  3. feasant

    I would be in favor of getting rid of farm subsidies. This will be similiar to getting rid of the current income tax code. I would be in favor of eliminating both and starting fresh. But entrenched Government involvement is tough to cut.

    Look at SD, people wrote letters, went to Pierre and whined up a storm, Don’t cut my program! It is tough to get rid of government programs, but the only way to get er done is, get started.

    I personally think there are areas to cut before Ag. First and easiest any illegal: they would not get one red cent, in fact get out now. How about the Energy Dept, their job was to lessen our demand on foreign oil. Complete failure. The Czars! And the list goes on and on.

    1. anonymous

      I guess in the primary and general Kristi always said to tea partiers that “for less Government involvement she’d take less subsidies.” She never said it as bluntly as the guy from Indiana but then again she wasn’t ever highlighted in a national news story.

      I would like to see her and other fellow farmers make a push to eliminate farm subsidies. I think they are the ones who can advocate it best to the farmers in SD because they are also changing their own lifestyle.

      1. Name

        I think a lot of farmers would be in favor of cutting out the subsidies. They take them now bescause, as stated previously, if it exists it is a good business practice to be in it. However, so many conditions on land use are tied to the payments that many would see it as a blessing to be rid of the farm subsidies.

        1. 73*

          What bothers me about farmers who take farm subsidies is the fact that they kill the family farms in their area and use the government money not to “Survive” but to have an unfair advantage over their smaller competitors that cannot compete.

          It gives the wealthy larger farmer an unfair advantage.

          1. Farm the system or the land

            Farm subsidies drive up land prices and allow the wealthy and large farmers to get bigger and force the smaller farms to find another form of work or income suplement at a Tractor Supply or part time educator.

            I a way we act like they are too big to fail and bail them out like the banks. No mroe Tarp no more Subsidies.

  4. Name

    This was interesting. Though I am pretty sure I heard Noem say she would encourage the demise of subsidies when she was asked about it at an event by a Ron Pauler.

    “I don’t think she was all that conservative when it came to farm program issues,” O’Connor said. “If you’re really a conservative, you don’t have to take those subsidies.”

    Indeed, Noem’s family operation benefited from subsidies, getting $3 million from 1995 to 2008. Noem had a 16.9 percent ownership interest in the operation until last year. Noem has defended subsidies because she said they support an industry that is vital to the nation’s security and because they hold down food prices for consumers.

    http://www.argusleader.com/article/20101003/NEWS/10030323/Candidate-profile-Kristi-Noem-identifies-ordinary-S-Dakotans

  5. true south dakotan

    Not only has Kristi taken in a boat load of cash from the federal coffers, she and her family are making a good income from selling FEDERAL crop insurance which is heavliy subsidized. If she were to stop signing up for the program ( I’m pretty sure you don’t get any checks unless you sign up for them at the FSA office) and stop accepting farm subsidies then she could talk about less government. Until then she looks a little hypocritical.

  6. SD Common Sense

    If you want to end subsidies, then you want to pay more for your food at the grocery store. It’s that simple. Something a lot of folks outside of the agricultural community don’t understand is that farmers and ranchers who receive payments aren’t just raking in the money and buying mansions. They’re reinvesting that capital into their operation. Do any of you folks actually know how much money it takes to run a farm? Do you even have the slightest clue? I’m not a Kristi fan, but even $3 million over a five or six year period is tiny and quite laughable. They probably spent that much just to repair equipment and maintain buildings over that time. So I guess if it means we keep the safest and most abundant food supply in the world I’m all for giving farmers and ranchers a little back. Not to mention the $21 billion economic impact ag has on SD. If you want to shrink that number and see SD’s economy take a tumble, go ahead and end programs that bring money into our state.

    1. well said

      You said it well. Anyone who eats is helped by the farm program. It seems fine that school adminisrators can be paid six figure salaries, but reimbursing farmers for failed crops, down market, cost of production, people just don’t want to do it. Teachers can’t even do lunch room duty without extra pay, but let the US government base foreign policy on giving away wheat and no one wants to pay the farmer for raising it.
      If a farmer gets an $18,000 subsidy for the year, maybe that is all the money he has made. From that he has to pay out about $10,000 for health insurance, food, insurance, etc. Then next year go to the bank and go into debt and get additional money for operating the farm. Pray for rain and good growing conditions. Soon, the bank might say no more loans and foreclose. Farming is the biggest gamble this side of LasVagas.

    2. anon

      On a side not do you think it is fair for large farmers taking hundreds of thousands of dollars to bid up land prices so that smaller family farmers are not able to pay taxes or survive in the farming industry?

      If you support farm subsidies in any fasion you are advocating for greater Government control and asking the Fed to pick favorites and who wins and loses.

  7. Troy Jones Post author

    What this speaks to is the problem when the government gets into an industry (autos, banks, energy, insurance, health care, and agriculture which basically makes our country a hybrid of socialism, fascism, and less free enterprise than most imagine): They change the economics and rules of the game making the consequences of retrenching extremely painful.

    Now, here is what farm subsidies do and without them it will wreck havoc for a significant period of time:
    1) Food prices will go up.
    2) Small farmers will disappear for two reasons: They need the floor on farm income via the price supports, loan guarantees and crop insurance to get operating capital from banks.
    3) Because farms will get bigger faster, you will have less economic viability of a host of small towns who buy locally or semi-locally.
    4) With the flight from small towns, I suspect the population of South Dakota will drop 15% (100,000 people) before the next census with negligible population impact in Sioux Falls, Brookings, Watertown, and Rapid City.
    5) Over a 100 small banks will disappear in South Dakota.
    6) State Revenue will drop $150 million so fast it will make your head spin.

    I guess this is the price we must pay for supporting the idea of making the federal government our economic partner.

    So, tell me again why we want them to be in charge of our health care?

  8. GOPDAD

    It gets VERY frustrating seeing farmers, that you know get govt money, driving brand new Escalades, Corevettes, taking trips to Australia and Europe etc…How is THAT subsidizing farming? I remember seeing a letter to the editor a couple of years ago, where a woman talk of using their farm subsidy money to send their child to college? Why do WE have to pay for her kid to go to college?

  9. CaveMan

    SD Common Sense you are very close to the truth and I am right behind you in what you have stated here. (Only difference is I am a big “Kristi” fan and can see some great things happening for agriculture and SD with her positive persistance fanning the flames of Liberal Discontent!) What you missed though is the amount of subsidies given to imported food at the source of marketing which we buy every day at the grocery store. Canada giving shipping IOU’s, France and Germany blending a USA style farm program, SA with certain tax incentives for growing anything edible or burnable. The USA can do away with all agriculture and insurance subsidies and then import cheap food just like we do televisions, computers, DVD’s, IPOD’s, silicon chips, CD’s, TIVO’s, Automobiles, light bulbs, chairs, etc. including medicine. But what you watch, listen to or drive can make you sick if you misuse them; what you eat coming from countries with zero FDA approval in the chemicals used in production of their food will make you sick immediately if they are defective or poisioned. China has a terrible record in sending poison dog food, human drugs, and certain toys laden with heavy metals. Would you want to eat anything regulary from them?

  10. Name

    The people we rent our farm land to get millions of dollars also in subsidies. They drive up the price of land and pay very high prices when it is up for sale. I don’t think they would be doing that if they weren’t getting so much in federal aid.

    I wouldn’t mind paying $2 for a double cheeseburger at McDonald’s. Get rid of farm subsidies.

  11. Name

    I thought that farmers only had to show that they made a profit 1 out of 3 years so it was more about write offs and cooking the books the other two years.

  12. Troy Jones Post author

    A couple of comments:

    1) I have a post stuck in moderation which would help makes some sense. I have no idea what I said wrong (besides Fleming is a bad singer).

    2) The entire ag industry is organized around the federal farm programs. To go cold turkey would make the housing crisis/financial meltdown look like peanuts. I used to serve on a bank board with a decent ag portfolio. Without the assurance of minimal cash flow, easily 30% of the farms would not get their annual operating loan approved. Only the largest would.

    3) Contrary to what is too often thought, the big and rich farmers might survive. The small and medium farms would be done immediately.

    4) Because of the uncertainty with regard to production levels, food prices would sky rocket.

    5) Land values would plummet to crash level prices (alot of sellers who would be mostly bankers selling foreclosed upon land and no buyers).

    6) People who depend on rental income would have it disappear.

    7) To extricate ourselves from this situation and end farm programs without triggering so many unintended consequences, it would take Congress to pass a 10-15 year program (vs. the current 5 yr. program) and great discipline.

    But, make no mistake, two consequences are for sure with a phase-out: Small farms will be decimated killing small towns and food prices will go up.

  13. Name

    Troy,

    Eventually farmers must stand on their own. We do not bail out every restaurant owner who doesn’t succeed and some farmers aren’t qualified to succeed without subsidies.

    Subsidies do not allow evolution to weed out the bad farmers and replace them with the good.

    Lets change the way we farm in this country.

    All I’m asking is that Kristi Noem propose an idea on limiting farm subsidies so that we can have a capiolist market regarding our food.

  14. duggersd

    OK, I will admit ignorance. I do not work in the farm sector and have no idea of how things work. I had been under the impression the farm subsidies came in the form of price supports. So if the government guarantees a farmer will get $2.65/bushel for corn and the selling price is $2.35/bushel the government steps in and makes up the other $.30/bushel. So to my way of thinking if the price of corn is at $2.95/bushel the government does not step in. Am I sort of correct in my understanding? If so, then who is getting any subsidy if corn is over the guaranteed amount?

  15. CaveMan

    Getting rid of subsidies will only work if every food product we can grow here which is subsidized by another country has a tariff applied to its importation exactly at the same cost of production we apply to our home grown product. To date our foreign trade delegations have not only been in bed with other countries; they have been whoring American made products!! It must be something in line with giving billions of our money away to countries who hate us and spit on our American Flag at every public event.

    1. Name

      Caveman,

      You make a good point. Why don’t we also subsidize manufacturing and put a terif on chinese imports?

  16. The Truth

    As a republican involved in agriculture (and…gasp…ethanol) I’d gladly exchange subsidies for greater market access any day.

    The government limits market access and paper speculators manipulate the market to the point that there aren’t any fundamentals left. The government has to remove a whole plethora of artificial barriers and only then will agriculture be just fine without false incentives.

  17. true south dakotan

    Druggsd, your example of corn subsidy is pretty close, I think. you are leaving out an important part of the whole picture and that is the federal crop insurance where farmers are manlipulating the output for one year and then if they don’t plant that acreage then next due to adverse weather, they get paid for huge dollars for not farming or planting other things.

    1. duggersd

      Thanks. Leaving it out was not my intention, it was my ignorance. As I understand it crop insurance is only available through the government, right? I thought it basically paid for the loss of the cost of planting the crop, not what the crop would ave been had it been planted and killed off in a hail storm. Ay! No wonder farmers have to go to college. It is not to learn how to farm, it is to learn how to do all of this other stuff.
      I am sort of reminded of Colonel Cathcart’s father in Catch-22. Or was it Major Major Major Major’s father? Anyway he made a great living off not growing corn. In fact he was somewhat of an authority on not growing corn. In fact when people wanted to know how to not grow corn they came to him because he knew all there was to know.

  18. Cliff Hadley

    Farm subsidies were created to mitigate the boom-bust cycles in agriculture, as well as provide reliable credit in such a capital-intensive business. Where things have gone a bit haywire — hey! what a great ag metaphor! never been used before! — is that now subsidies are an ingrained part of most farm business plans, even when they can make healthy profits without government money. Troy fears what will happen should subsidies be yanked away. I’m dubious. I think South Dakota farmers, no matter what size of their operations, are smart enough to figure out how to make a profit, especially when government isn’t controlling their behavior with the ever-popular carrot of free cash. And banks will loan as they always have — to those who’ve shown they can pay back what they’ve received with interest.