BankerGirl

Posted by Heidi on May 18th, 2008 in Uncategorized

I am BankerGirl.  I write about my finances and my career (and occasionally, my students) and try to stay out of dabbling into things too far outside of those categories.  I like to write short, concise pieces that inform and entertain without requiring too much research or legwork on my part (mostly because I’m very busy and fairly lazy, and it’s difficult to be both at the same time).  Today I’m going to break with convention and write a bit about political topic that is both complex and controversial - the Farm Bill.  As a farmer’s daughter, farm subsidies, ethanol, and the cost of food are topics near and dear to my heart - so, in honor of my father, I give you the following rant:

The (farm) bill, which is renewed roughly every five years, is a huge piece of legislation that contains not only aid for farmers and other agriculture policy, including land conservation and rural development, but also energy provisions related to biofuels and aid for major nutrition programs, including food stamps, which account for about two-thirds of spending in the bill. - The New York Times

Before I get too far gone, I feel that I need to say something about ethanol and its impact on our food supply.   Some claim that biofuels (including soy diesel and ethanol) are responsible for the recent increase in food prices.  I believe that this Chicago Tribune op ed does a nice job of putting that argument to bed. 

While biofuels and food stamps account for the majority of appropriations in the bill, a portion of the bill also addresses concerns around the $5.2 billion in direct payments made to land-owners.  Many of these payments are going to wealthy individuals who may not even use their land for farming.   To read about where these payments are going and get some history on the Farm Bill, check out this 2006 piece from The Washington Post.

It’s my feeling that the Farm Bill that was passed by the House last week is an abomination.  It was passed by a bunch of Representatives and Senators that are more concerned with getting re-elected in November than with real reform.  The $300 billion version of the bill was passed by a veto-proof margin and continues to prop up special interest and subsidize large farms, while small independent farmers continue to struggle.  Over the past ten years, the largest 10% of “farmers” (agribusinesses) received 70% of subsidies paid out.  Clearly, subsidies are making big farmers bigger - driving up land prices so that only the wealthy can afford to purchase an acreage.  Farm land in my area is going for $4200 an acre - if a young man or woman wanted to start out with just a 60-acre plot, they would need to come up with $252,000 to make it happen.  At that rate, it nearly impossible for a recent college graduate to start up a small farming business on their own, which means farming is something you can only do if you’re born into the business or already have a lot of money.

For me, the most humbling part of all of this Farm Bill business is that it’s given me cause to actually agree with President Bush about something.  I never thought I would ever make such an admission in print, but I think he’s on target when he says that subsidies should be limited to farmers with AGI’s at or under $200,000, not the $750,000 stated in the new bill.     

Further, subsidies need to be rolled back and eliminated because of their impact on free trade in developing nations.  Because the United States subsidizes farmer so heavily and produces so much, Americans are making it impossible for developing nations to become self-reliant. The US and EU are both guilty of subsidizing farmers then dumping heavily subsidized cotton or grain on underdeveloped countries at prices far below the cost of production.  The WTO has declared this practice illegal, but it continues to occur. 

People get bent out of shape because corn and wheat prices are nearing record levels - but to them I say, “It’s about time!”  Until recently, it cost more to put a crop in the ground and harvest it than a farmer could possibly make on the free market.  Farmers had to be subsidized or they would get out of the business, which wouldn’t sit well with anyone in Washington (American’s need their our own, safe, food supply - after all), so this whole big, bloated bill, which is typically packaged up with all of the imagery of “Americana” is passed.  Now that growers can actually make a profit on their product, the government should step aside and let the free market work.  The reason that this farm bill has passed as written is that there are a bunch of yahoos in Washington that are more concerned with re-election and the power of the agribusiness lobby than real change. 

Stumble it!