Farm subisidies

[3MR]

I was reading an interesting Thread in the Dairy group about falling prices of Milk and rising production cost. Someone mentioned the MILC program and joked about it being referred to as "Farmers Welfare"

Farm subsidies need an overhaul no doubt. But when administered properly they arent a hand out for the farmers. They are a hand out to the consumer who would never be able to afford the actual cost of production if it was passed on to them. Telling an American family they have to go without a good beefsteak is one thing, but consider the political ramifications if they were told they have to go without milk. Something that has become an icon of health in every developed or developing country I can think of.

This is unrealistic, but consider this scenario for a minute. The farmer demands his actual cost of production from the buyer, the buyer is then forced to pass this on to the distributor who then adds their own markup before passing it on to the consumer. How many Americans could really afford that gallon of Milk very often. The subsidies are actually a subsidy to the American consumer which allows them to continue to drink affordable milk.

It cost a lot less to give the dairy farm the subsidy than it would to subsidize it at the consumer level.

Just my opnion, I have lots of them so sharing one isnt a problem. :cboy:

 

[bigbull338]

ok ill jump in on this 1.the milk prices today are the same as they was 40yrs ago.an during that time cows went from $350 a hd to $2000.tractors equipment supplies feed hay an labor have all quadrippled.an milk is still at less than $10/100.the bottomline is the dairy are getting screwd.100lbs of milk is 12.5gal.an that 12.5 gal in the store sales for $37.50/100.not to mentipon what the rest of milks by products bring pre 100.if a dairy was getting paid fair he would be getting $25/100 but he isnt.we farmers have to produce cheap mass quanties of food to feed this nation an the world.all the while maintaining a high debtload.an alot of times barely getting by.how meny of the cattleman dould survive on $300 wean calves yr in yr out w/o getting a raise in price.not to meny i can tell you that.but farming dairing raising cattle wont make you rich.if you think that then your in the wrong business.we do all of this for the love of it.an being able to watch or kids grow up.an spend time with our families.

 

[Frankie]

I was reading an interesting Thread in the Dairy group about falling prices of Milk and rising production cost. Someone mentioned the MILC program and joked about it being referred to as "Farmers Welfare"

Farm subsidies need an overhaul no doubt. But when administered properly they arent a hand out for the farmers. They are a hand out to the consumer who would never be able to afford the actual cost of production if it was passed on to them. Telling an American family they have to go without a good beefsteak is one thing, but consider the political ramifications if they were told they have to go without milk. Something that has become an icon of health in every developed or developing country I can think of.

This is unrealistic, but consider this scenario for a minute. The farmer demands his actual cost of production from the buyer, the buyer is then forced to pass this on to the distributor who then adds their own markup before passing it on to the consumer. How many Americans could really afford that gallon of Milk very often. The subsidies are actually a subsidy to the American consumer which allows them to continue to drink affordable milk.

It cost a lot less to give the dairy farm the subsidy than it would to subsidize it at the consumer level.

Just my opnion, I have lots of them so sharing one isnt a problem. :cboy:

I agree with you that subsidies are for the consumer, as much as the rancher/farmer. Our government has always had a cheap food policy.

The problem today is that, in some cases, we can import our food cheaper than we can raise it. Do we want to do that?

 

[denoginnizer]

I think the farmer should get paid what it cost him to produce the milk and some profit on top of that. It has always seemed queer that the government supplements farming operations.
What is wrong with letting the market decide what milk, corn, beef, cotton etc should cost?

 

[3MR]

I think the farmer should get paid what it cost him to produce the milk and some profit on top of that. It has always seemed queer that the government supplements farming operations.
What is wrong with letting the market decide what milk, corn, beef, cotton etc should cost?

Because nobody would be able to afford the vast majority of American farmproducts at production cost. Like Frankie said, unless there are import taxes on ag products imports are cheaper.

If we took imports out of the equation; Nobody would be able to afford to eat so they wouldnt buy, thus lowering the market price. Pretty soon the farmers wouldnt be able to produce and agriculture would suffer.

Dont get me wrong, I dont think this holds for all products, but it does for some.

 

[denoginnizer]

I cant afford a new truck can someone subsidize the truck maker ?
If the subsidies were removed from farm products people would have to pay the actual price or do without . Who said its a right to have cheap food . Other countries dont subsidize there farmers wonder how they survive?

 

[denoginnizer]

A handout is a handout. "Adiminstered properly" :lol:

 

[BA]

You can go across the north border and get the same chemicals for pennies on the dollar because of all of the US regulations, but we can't import it from Canada, we have higher inputs than other countries, true, but a lot of the reason for that is red tape. Would farmers rather take government money or make enough on their own, of course they would rather make it on their own, but in this area that is not possible at this time due to weather and other factors. Do you really want to rely on importing food from countries that aren't that fond of us? Did anyone ever think it could end up like oil and they would raise their prices once we couldn't produce enough to support ourselves? I don't think we want that! I will agree that there needs to be some fine tuning and it all doesn't get into the right hands, but at this time it is a needed evil and "who says it is a right to have cheap food?" The US Government says that, and it is a good policy. If you want to see caos, just let the price of food tripple. You would see the biggest mess you've ever seen with our economy!

 

[Chris H]

If we rely on imports then we are at the mercy of other countries whims.

People will eat no matter the cost, they may cut back on eating out, may learn how to cook instead of buying prepared foods, probably cut back on high dollar foods and high cost snacks. Total volume of raw product consumed will stay close to what it is now.
Who will suffer from cuts like that? Farmers, because the buyers will say 'tough times' and can get by with bidding less while charging more retail. Fast food restaurants may suffer from lack of business, and cut back on workers. School lunches are subsidized, they could be more expensive. Low income families will suffer because a higher proportion of their income goes towards food compared to higher income families.

Know what keeps this economy chugging along? Peoples belief that they can buy the necessities of life and still have plenty of money left over to buy houses, cars, and lots of other goods and services not necessary to sustain life. Upset that balance by making the necessities of life more expensive and they cut back spending elsewhere. That cutback on spending for unnecessary goods & services costs others their jobs, which forces more cutbacks on spending. It turns into a vicious downward spiral in the economy.

We all gripe about subsidies going to people like Ted Turner(pet peeve of mine). But if the subsidies are to keep farmers in business, how can the system distinguish between the full time farmer who farms 1,500 acres and collects the subsidies, and the land investor who collects the subsidies as part of his return on investment? Should there be a requirement to collect the subsidy the person must have ag production expenses at risk? (That still wouldn't eliminate people like Ted Turner).

 

[3MR]

I cant afford a new truck can someone subsidize the truck maker ?
If the subsidies were removed from farm products people would have to pay the actual price or do without . Who said its a right to have cheap food . Other countries dont subsidize there farmers wonder how they survive?

I've lived in some of those countries. Trust me on this, you dont want to.

 

[3MR]

My personal opinion is there needs to be a certification process. It would have an administrative expenss, but would probably pay for itself in the savings. Nobody should get paid for not growing crops. It should be based on your total family income including off farm income, allthough that might not be a good idea in the long run as it could encourage a certain class of people not to work like welfare does now. All subsidies should have a mandatory review and adjustment period every few years. You can choose to collect the subsidies, if you do you have to follow certain economic priciples and standards of farming goaled to increasign production and farm profit. If you dont like the Governemnt buttinskies, you do it yourself, but then you dont get the handout. Sort of like WIC

 

[cmjust0]

Newsflash, folks: The US is already a net importer of food.

By definition, that means that most of the food you buy at the store didn't originate in the US. Why? The simple answer is that our standard of living has gotten WAY too high, and it's cheaper to buy food from someone who can still afford to live off a farmer's income. We can't.

The good news is that the dollar's falling like a rock while other currencies are gaining, which means that, before too long, our standard of living will fall to a point where our farmers are competitive with foreign farmers, which means we'll grow more of our own food.

Of course, that might also mean that gas is $12/gal and we'll have to trade four or five times the number of dollars we do now to buy junk at Wal-Mart, not to mention the totally prohibitive cost of new cars and stuff, but hey.. We'll be competitive! If we play our cards right, we might even become so competitive that China starts buying things from *US* -- whenever we fall to the level to which they've risen..

Heck, if they keep going up and we keep going down, AND if we can get rid of all the legal red tape and constraints holding us back and allowing them to move ahead of us (things like mandated 40 hour weeks, overtime pay, disability, social security, child labor laws, etc) we could eventually have as many factories as they do now!

Sure, we'll be working 80 hours a week just to be able to fuel our cars, pay our utilities, and buy enough rice to survive, but what the heck.. There will be jobs EVERYWHERE!!!

Ahhh... Welcome to the "global economy." :shock:

 

[3MR]

But we are also a net exporter. The quality coming in is nowhere near the quality going out.

We cant be competitive on any foreign market until we start charging them the same import taxes they charge us.

 

[cmjust0]

But we are also a net exporter. The quality coming in is nowhere near the quality going out.

Net exporter of what? Food? We can't be a net importer and net exporter of food -- we either import more or we export more. From everything I've read, we import more.

We cant be competitive on any foreign market until we start charging them the same import taxes they charge us.

We did that back in the '20s, and it got us the Great Depression.

If we did it today, foreign nations would have no reason to continue loaning us money like they do today -- which is the only way we're even able to pay INTEREST on the debt we already have.. They'd just start collecting to offset their export losses.

If that happens, taxes and interest rates skyrocket, and the Treasury sets the presses for the biggest bill and runs three shifts a day, printing money out of thin air... The value of a dollar, of course, would plummet..

Not good.

We could try to force them into lowering their own tariffs for US goods, but if you look hard enough at the case laid out above, it becomes abundantly clear that we're not really in the driver's seat anymore...

Sad, huh?

 

[BoumaticWonders]

they better smarten up on milk or china will be booming shipping powdered milk in cans to america because there is no local whole milk being produced. But I think that is what the god darn government wants. They can make a helluva more profit on imported cans of milk rather than picking up local milk. They almost make me want to start dumping milk.

 

[bigbull338]

dumping milk will do no good. when i was milking cows they wanted the dairyman to band togather an dump 3 days milk.claimed it would shut the milk plants down.but we all know every dairyman wont dump milk like that.if they did the milk plants wouldnt buy their milk no more.an force them to sale their cows.a friend of mine told me a bunvh of dairies dumped milk in the 60s.an their milk companies refused to pick their milk up.after that forcing them to sale their cows an quit milking.said he bought alot of good milk cows real cheap b/c of what they did.

 

[3MR]

But we are also a net exporter. The quality coming in is nowhere near the quality going out.

Net exporter of what? Food? We can't be a net importer and net exporter of food -- we either import more or we export more. From everything I've read, we import more.

We cant be competitive on any foreign market until we start charging them the same import taxes they charge us.

We did that back in the '20s, and it got us the Great Depression.

If we did it today, foreign nations would have no reason to continue loaning us money like they do today -- which is the only way we're even able to pay INTEREST on the debt we already have.. They'd just start collecting to offset their export losses.

If that happens, taxes and interest rates skyrocket, and the Treasury sets the presses for the biggest bill and runs three shifts a day, printing money out of thin air... The value of a dollar, of course, would plummet..

Not good.

We could try to force them into lowering their own tariffs for US goods, but if you look hard enough at the case laid out above, it becomes abundantly clear that we're not really in the driver's seat anymore...

Sad, huh?

You have to divide the agriculture product into catagories, we are net importers of some and net exporters of some. Lumping all aggricutlure catagories together tell you nothing about any of them. It would be like averaging out the income of people livng in India and then stating most were middle class. It totally ignores the fact that middle class in India is almost non-existent. People either have lots of money or none.

Have you ever been to a foreign country. I suggest you go to any major market in Asia and look and see where their rice is grown. That is just one example.

Their is a deminstration in Seoul Korea scheduled for tomorrow, Korean farmers are complaining about the high amount of U.S. ag imports.

I also think your Foreign economics concept is flawed. We borrow money from foreign sources to fill the gap between payments to and receipts from the rest of the world.

As long as foreign countries continue to artificially manage their currency value, China for example, we cant compete on an equal playing field.

Your argument for collecting interest could just as easily be applied by us to other countries.

To blame the great depression on import taxes is totally missing the picture about the casues of the great depression, ie: artificially raised gold value in Europe, income tax inception The Pittman Act, etc, etc, etc. Not only that, it would insinuate the great depression was only in America rather than the entire industrilized world.

The bottom line is we dont demand the same courtesy from other countries that we give them. Thats how we got here now.

As far as taxes and interest rates sky rocketing and the value of the dollar plummeting; Rising interest rates will raise the value of the dollar, not devalue it. If you doubt this I suggest you research the relationship and timline between (1) demand, (2) inflation, (3) Increase in interest rates, (4)inflation slows down or stops (5) rise of the currency value). For the most part all developed countries regulate inflation in this way.

Im done discussing the economics of this. Your arguments sound good, but wont hold up to the facts if anybody checks them out or basically understands world economics.

Continuing this we would just be going back and forth. I think we have both made up our mind and it wont go anywhere of any consequence.

 

[cmjust0]

You have to divide the agriculture product into catagories, we are net importers of some and net exporters of some. Lumping all aggricutlure catagories together tell you nothing about any of them. It would be like averaging out the income of people livng in India and then stating most were middle class. It totally ignores the fact that middle class in India is almost non-existent. People either have lots of money or none.

Have you ever been to a foreign country. I suggest you go to any major market in Asia and look and see where their rice is grown. That is just one example.

Their is a deminstration in Seoul Korea scheduled for tomorrow, Korean farmers are complaining about the high amount of U.S. ag imports.

Did I say we're a net importer of ag products? No. I said we're a net importer of FOOD.

And we are.

I also think your Foreign economics concept is flawed. We borrow money from foreign sources to fill the gap between payments to and receipts from the rest of the world.

Is English your second language, by chance?? Somehow or another, I'm pretty sure you've managed to combine the trade deficit with the national debt, and call it a "gap." What you just said doesn't make sense -- and I don't mean that from a conceptual standpoint.. I mean, it just plain doesn't make sense. It's gibberish.

The gap between what we bring in and what we ship out is the trade deficit. The amount of money the Treasury has borrowed is the national debt. The US Treasury sells T-Bills and T-Bonds to foreign governments (and banks, and people, etc..) and promises to repay them with interest. That's a loan. Currently, we have trillions of dollars in loans out there -- fractions of which are coming due every second of every minute of every day.. The Fed cannot afford to pay the ones that come due, so they borrow more money to pay back the money they've already borrowed.

That's how it works. It's not SUPPOSED to work that way, and was never intended to work that way, but, nonetheless, that IS how it works.

As long as foreign countries continue to artificially manage their currency value, China for example, we cant compete on an equal playing field.

Well, I got news for ya... The general concensus is that the problem is not with the RMB being so much undervalued as it is with the dollar being OVERvalued -- even now. Even after it's dropped like a rock for the last five years..

I agree that we're not going to be able to compete with China until our currencies are closer in value, but I don't think that's gonna happen by forcing China to revalue.. They're forcing US to revalue, downward, by buying so much of our debt.

To blame the great depression on import taxes is totally missing the picture about the casues of the great depression, ie: artificially raised gold value in Europe, income tax inception The Pittman Act, etc, etc, etc. Not only that, it would insinuate the great depression was only in America rather than the entire industrilized world.

You're right about the fact that the import tax wasn't the only contributing factor, and I didn't mean imply that it was.. Upon re-reading my post, it's clear that I did.

My bad.

As far as taxes and interest rates sky rocketing and the value of the dollar plummeting; Rising interest rates will raise the value of the dollar, not devalue it.

You might want to revise that to "should," as in, rising interest rates should help the dollar..

If you were paying attention, you'd realize that a few short days ago, interest rates went up and the dollar got SOLD.

Why? Because traders saw a 1/4pt increase in rates, and knew it wasn't enough to keep the Fed from creating too much new money.

Whether it's a .25 point increase or a *25* point increase, if traders don't believe it keeps the Fed from making too much money, the dollar *will* fall in value.

Bank on it. I will.

If you doubt this I suggest you research the relationship and timline between (1) demand, (2) inflation, (3) Increase in interest rates, (4)inflation slows down or stops (5) rise of the currency value). For the most part all developed countries regulate inflation in this way.

Yep, that's how it works -- when it's not mismanaged.. The dollar, however, is being, and has been, mismanaged. We got demand, massaged CPI/PPI figures, halfassed interest rate increases as a result, a drop in the dollar value, more demand, more inflation that didn't show up due to more heavily massaged CPI/PPI figures, more halfassed increases as a result of 'low' inflation, more drop in the dollar, more demand....... Repeat ad frickin nauseum.

If you have any doubt about that, take a look at what the dollar's been doing for the last five years.. Or, better yet, take a look at the price of gold, oil, silver, copper, blah blah blah have been doing since then.. Our dollars have been getting HAMMERED, in case you haven't noticed. :roll:

Inflation is high, and interest rates are low. You might not know it, or maybe you do but don't want to accept it, but that's all immaterial. The MARKET knows, and the market told us all the truth after the last increase.

Im done discussing the economics of this. Your arguments sound good, but wont hold up to the facts if anybody checks them out or basically understands world economics.

They held up on the 28th, and yours FAILED.

You'd have known that, if you followed economics. I did.

 

[BAGTIC]

"we farmers have to produce cheap mass quanties of food to feed this nation an the world."

Not exactly. Lincoln freed the slaves. It is a choice.Likewise people would be able to afford higher food prices. Most developed countries spend a much higher percentage of personal income on food than we do. How do they do it? They do it by rearranging priorities. For example, doing without something else (second ATV, bigger boat, junk food, overindulging brats, etc.) There are a lot of optional non essentials in most family budgets, even those of the poor.

Lastly, this country doesn't subsidize agriculture for the benefit of the farmers. There simply aren't enough of them to matter any more. It is done to buy votes from the consumers.

 

[3MR]

Sorry, double post