May 25, 2018

Farm Subsidies and the Farm Bill: Truth vs. Fiction

Farm reform will never get up without "adjustment" assistance.  The government will have to offer something to help farmers adjust to new realities.  If use of corn alcohol in motor fuel no longer becomes compulsory, for instance, something will have to be offered to make use of now surplus ethanol. 

One idea that might not be too wild would be to go to amateur distillers worldwide in search of several new forms of corn spirits for human consumption -- several new types of corn whisky, for instance.  Maybe even a corn liqueur. A liqueur called "Moonshine" should be attractive if only because of the name

The government could then sponsor a big advertising blast to get people to try the new product. Success would all depend on attractive products being devised but that should not be beyond the wit of man


Like immigration, health care and other seemingly endless legislative quarrels, agriculture is a highly contentious issue every time Congress grapples with it. So this week’s House farm bill is simply par for the course. The Heritage Foundation’s Daren Bakst has produced an excellent compilation of critical amendments that should graduate to the finalized bill. Unfortunately, these amendments — just like past reform proposals — will be in the crosshairs of subsidy-obsessed special interests.

As Bakst explains in a Daily Signal op-ed, “Agricultural special interests try to make it sound as though touching even one farm subsidy — regardless of how unreasonable the subsidy is — will be the end of agriculture as we know it. Using scare tactics, they will assert wild claims without any support, or they will cherry-pick data to provide a misleading picture.” Sound familiar? That’s because global warming scaremongers apply the same tactic.

The truth is less menacing. For example, while special interest groups assert that farmers are financially strapped and therefore require subsidies, Bakst points to the opposite: “Farm households have far greater median income and wealth than non-farm households.” This means that, as of 2016, 70% of farm households reported higher earnings, and farmer wages averaged about 29% higher. In terms of aggregate wealth, farmers’ average of $897,000 dwarfs that of other households, which stands at a relatively paltry $97,300.

Another farce revolves around the supposedly deteriorating economy. While the agriculture economy is admittedly off its peak, Bakst notes that “key financial indicators such as debt-to-asset ratios are near historic lows.” Besides, he reminds us: “What other sector of the economy expects regular taxpayer handouts when things aren’t going well? The very assumption that taxpayers should protect farmers from competing in the market like every other business shows the egregious nature of the current subsidy system.”

A few additional pointers: The rural economy’s troubles have little to do with farming — “only about 6 percent of rural jobs are in farming,” says Bakst — and subsidies are disproportionately divided among small family and commercial farms (guess which one profits the most?). This contradicts the narrative that subsidies are primarily needed to propel small family farms. The number of family farms, by the way, is not in a tailspin, as special interests claim.

Believe it or not, there’s even a national security angle when it comes to subsidies. But as Bakst points out, “There are no national security problems for almost all commodities that receive little to no subsidies,” which happens to be most agricultural commodities.

Let’s also not belittle the most important fact — taxpayers are on the hook for every subsidiary element. Even with crop insurance, taxpayers foot 62% of the premium bill. And when it comes to sugar, the economy takes a $3.7 billion hit annually despite the special interest groups’ laughable claim that it’s a financially neutral program. The reality is that the poor are hardest hit. The farm bill is currently constructed in a way that ignores these realities. It can, however, be amended. We’ll soon see how Congress considers a priority — special interest groups, or taxpayers.

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