Congress pay attention and save some money
By Joseph Parish
With an August 2nd deadline forthcoming for our nation’s debt ceiling decisions, there are a few straightforward approaches which congress should consider in order for us to save our country money. As a start towards offsetting the 2.4 trillion dollar anticipated budget we could start by elimination some high maintenance programs.
Being an apprehensive citizen, I am extremely concerned in balancing our deficit but I firmly believe it should be accomplished in a reasonable and honorable manner. There is simply no need to sell out our country to foreign interests if we allow a little logic to prevail. What I am about to propose may not make me the most popular person in my farming community however facts are facts and reason should triumph. Often times as we seek ways to cut our expenses we frequently overlook those that may be in front of our very face. With this in mind I propose that the subsidies currently paid to our farmers be eliminated.
Several congressional bills have previously been introduced to congress expressing similar opinions however each time this legislation is presented it unfortunately fails to be approved. Don’t misunderstand me as our farmers are “hard-working” people who are not lazy and believe in earning their way but when a gift horse is presented most people will graciously accept the offering.
Known officially as agricultural subsidies this program provides funds to area farmers intended to supplement their earned income, provide management of agricultural commodities, and worse of all to influence the cost as well as the supply of farmed produced commodities. As of 2008, America spends $20 billion dollars annually (Cohen, 2006) in direct monetary subsidies. These long-established programs tend to date back to the great depression era creating a long tradition in government farm support. It has been stated that .62 cents of every dollar earned by the American farmer originates from the U.S. government. When combined with other state and local subsidies this amount totals a staggering $180.8 billion dollars (McKenna, 2010).
These direct subsidies are by and large granted with no regard for the true economic needs of the farmer. The current program which was established in 1996 provides payments to the grower and was intended to assist farmers who were growing low-income producing crops. The program gave farmers money for their crops while guaranteeing them a stable price at the market place. As an example of this, in 2002 for each bushel of wheat which a farmer sold he was awarded an additional .52 cents with an ensured price of $3.86 to $3.92 per bushel (USDA, 2008).
It has been the case that in general these agricultural subsidies frequently end up being endowed to the large corporate farms which likely do not even need the assistance of federal subsidizing. So my question to our representatives is how does this program aiding the small farmer? Folks, it isn’t helping them at all, it is merely lining the pockets of the large corporate farms.
Let’s consider corn as an example. Corn tops the list for subsidy payments to our farmers. If we check the government ledgers we are likely to find numerous non-farming type businesses benefiting from these government handouts. We quickly discover companies and individuals which have no connections what-so-ever to the traditional farming community. These mega-businesses are being supplied with billions in government subsides. In this category we see companies such as major food conglomerates, manufacturers of sugar and even liquor distillers. And let’s not forget the gasoline industry also. Even though with the increase in ethanol production is obvious the need for corn is guaranteed to the farmer as yet another government subsidy. These subsidies paid out reach proportions of $5.5 billion to $7.3 billion annually. In addition, the producers of the ethanol will not only benefit from the elevating the price of the fuel at the pumps but also receive a federal subsidy of approximately 51 cents per gallon. With state and federal subsidies combined it can easily bring the price to 85 cents per gallon.
By revoking the farm subsidies we would not only save the government billions of dollars but perhaps allow the produce market prices to stabilize. In the long run it would be beneficial to the consumer with a more realistic supply and demand price. Not only do these events affect us directly at the market but at the butcher shop as well. Since corn is a federally sponsored product it is readily fed to our cattle in place of grass-fed. Research has indicated that corn-fed cattle often require antibiotics to prevent disease and the resultant beef is generally higher in fat content.
Lastly, the average farmer is not sitting in the web of poverty as often portrayed. During a 2006 review of the farmers income it was discovered that the typical farm household earns $78,000 annually which is actually 17 percent higher than the average American household income (Thompson, 2006). It isn’t necessary to pay subsidies to farmers as what is needed is to support them with higher tariffs on imported food products from foreign countries. In conclusion, I ask why we should pay a farmer all these benefits along with the option not to plant a specific crop and get paid for not doing so. Let the market function as it should and we can save billions in the process?
Copyright @2011 Joseph Parish
Cohen, S. (2006). Farm Subsidies over time. Retrieved from http://www.washingtonpost.com/wp-dyn/content/graphic/2006/07/02/GR2006070200024.html
McKenna, B. (2010). For U.S. Farmers subsidies the best cash crop. Retrieved from http://www.theglobeandmail.com/report-on-business/economy/economy-lab/daily-mix/for-us-farmers-subsidies-the-best-cash-crop/article1813425/
Thompson, W. (2006). Farm Household Income and Transfer Efficiency: An Evaluation of United States Farm Program Payments”. American Journal of Agricultural Economics 91.5: 1926-1301.
USDA. (2008). Farm Bill Resources ERS Research and Analysis. Retrieved from http://www.ers.usda.gov/FarmBill/