I can't answer all of Ann's questions, but I can give some idea of the
nonsubsidy subsidies involved. I own about 35 tillable acres that I rent on
50/50 shares to a brother, so effectively this is about 17.5 acres for me
and under this rental arrangement I am defined as a farmer. About half this
land was planted to corn and the other half to soybeans (I don't know much
about government programs for other crops). I would like to thank those of
you who are U.S. taxpayers for generously providing me with roughly $1,450
in various direct payments & subsidies on that 17.5 acres (or about
$80/ac). This is perhaps a small price for being enabled to buy cheap food
at supermarkets and for the comfort of knowing that we have a "free market."
About 50% of the total amount was loan deficiency payments (LDP) based on
the prices of the respective commodities at the time I applied for the
payment. This is roughly the quantity of the crop harvested multiplied by
the difference between a target price/bushel and the market price per
bushel on the day of application. For me this year that was worth ~$.45/bu
for corn and ~$.90/bu for soybeans. About 25% of the total was for
participating in the program (production flexibility contract) and was
based on acres. About 25% was for "market loss assistance" which I don't
remember the basis, but I would guess that it would be acres. I also added
in the few dollars that were part of indirectly subsidizing the basic crop
insurance contract. I would expect that most producers participating in
this program would have netted similar amounts per acre (more or less,
depending on the commodity prices on the day they applied for their LDP
payment). Of course, the prices for the commodities I sold were lousy
(partly as a consequence of the government policy package), so don't think
that I became rich from this. If, however, the average large farm nets
$21/ac, then you could imagine that the government program would be a key
source of profit for farms producing corn and soybeans. I am sure that this
also helps to make U.S. commodities more competitive in world markets.
As I recall, stewardship is involved to the extent that producers cannot
grow crops on highly erodable land and receive payments under the program.
I agree with Greg Gunthorp in his assessment of the commodity programs
making production less risky and therefore the subsidies lead to higher
prices for rent and for land. Despite the miserable prices for corn and
soybeans, farmland in Northwest Iowa seems to be increasing in price (based
on informal and nonsystematic reports) and is approaching the levels before
the crash in the 1980s. I don't think that the government program is the
sole cause of this, but it must be one factor.
>X-Authentication-Warning: shasta.ces.ncsu.edu: majord set sender to
>email@example.com using -f
>Date: Tue, 02 May 2000 11:08:57 -0500
>X-PH: V4.firstname.lastname@example.org (Cornell Modified)
>From: "E. Ann Clark" <email@example.com>
>Organization: University of Guelph
>X-Mailer: Mozilla 4.05 [en] (Win95; U)
>Subject: Re: Farm revenues/supports
>Michele: very interesting, as usual. Now, let me make sure I'm understanding
>1. "direct government payments" - this is money that actually goes from gov
>farmer hands? Not entitlement stuff (like for lower interest loans) or
>funding or whatever, but outright cash payment? Is this systematic money, or
>one-off type money as for disaster relief? I'm a bit confused on this,
>had thought that the whole point of all the hoopla with the OECD, Canada, US,
>etc. was to "reduce" government payments. You know, that free market thing.
>indeed, the OECD figures up through 1995, if memory serves, showed such to
>case. Have I misunderstood something? What has happened since 1997?
>2. If %change in total farm income (incl. gov pay) since 1997 is -1%, then I
>take it the gov payments have effectively counterbalanced the loss in
>value (yield x price) since 1997? How much of this loss in commodity
>due to human-induced problems (e.g. Asian crisis; ill-conceived gov policies
>promoting hog output etc.) vs. weather (e.g. midwestern drought).
>3. How is this loss in farmgate receipts (if I am understanding this
>and gain in gov handouts distributed across farm sizes? Are the gov payments
>based on acres? yield? stewardship? Pardon my ignorance, but I have not
>up with these strategies since the base acreage program was dismantled (or was
>supposed to be - was it?).
>4. If teeny weeny farms gross $1900/ac and megafarms gross $21/ac (e.g. 2
>of magnitude difference??? is this a typo??), is this a function of commodity
>type (e.g. strawberries vs. coarse grains)? Any basis in that dataset for
>comparing apples with apples (or strawberries and strawberries) across farm
>sizes? Any sense of "net" vs. "gross"?
>> Can someone explain to me why destroying years of agricultural research
>> is a terrorist crime, while destroying billions of years of evolutionary
>> research is Progress???????
>Love it. Just love it! Ann
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