Farm Subsidies

[hayray]

I am just going to take a wild guess here and say that the larger farms get away with a lot less then the smaller farms do. Smaller farms still confine and feed animals, still use petro for fertilizer and planting. All the large CAFOs in my area are on nutrient management plans and all have the spotlight on them as far as regulation goes. And you have to be aware of who is really driving that type of rhetoric, it is the animals rights and environmental wackos. They really don't care about what size of a operation you run, just it is easier to pick on the big CAFOs first.

 

[ChrisB]

I agree. I would be willing to bet that smaller farms have more ground water pollution per animal/acre than large farms. I'm not saying either one is intentionally polluting, but a small producer may be feeding 20 steers on a hillside and when it rains the water runs right through the pen into a nearby stream. Larger operations have a lot of safequards to help minimize runoff and what little there is has to go into a catch basin.

I'm not saying I'm a big fan of mega sized operations, but I think they are unfairly criticized a lot of the time.

 

[robert]

I really don't think it has anything to do about wanting cheap food. A politician is buying votes by keeping the lobbying groups happy. You really think that the politician is thinking about we need cheap food, that sure does not explain the dissproportionate cottom subsidies.

how much cotton have you eaten lately?

cheap food policies helped drive the expansion of the US and western economies post WWII, the lower the % of disposable income you pay for food and fuel the more you have to spend on all the other goodies we want, not need, want.

 

[hayray]

That was exactly my point about the cotton. There used to be tobacco subsidies also.

 

[Jogeephus]

how much cotton have you eaten lately?

You have eaten more than you realize. Read your food labels and you might be surprised.

I'd like you to explain more about these cotton subsidies and how they differ from other crop subsidies. I must be missing something.

 

[Alberta farmer]

In regards to cheap oil: Enjoy it while you can, because it isn't going to last. The price last summer was too high, driven by speculation, and the price is now too low, driven by speculation! The speculators make money on the upside and the downside(through shorts).
The best cure for low prices...is low prices! The exploration and production drilling is way off this year because the price is too low to take the risk? In Alberta several oil sands project have been scrapped or put on hold.
President Obama has effectively killed expansion of off shore drilling and has scrapped a lot of proposed shale drilling in the USA? He has been making noises that will make further coal projects much more difficult?
When the economy turns around and demand for energy ramps up all over the world we will be facing a shortage and then watch the price go up!

 

[hayray]

ok so what is a speculator? Is that just anyone who plays the market or is that a person who is connected directly to the floor at the trading boards? And why are these people so bad?

 

[Jogeephus]

ok so what is a speculator? Is that just anyone who plays the market or is that a person who is connected directly to the floor at the trading boards? And why are these people so bad?

The speculators trade commodities like oil, cotton, soybeans and corn. They can run the price up irregardless of the actual true demand or supply of a product just depending on how much money they toss into a commodity. I don't fully understand how it all works but I'll give you and example which relates to the original post. This info is based on what my cousin told me happened this year - he is a cotton farmer. Speculators ran the cost of cotton to $1.00 a pound. Manufacturers who needed cotton had to pay this price to get it. Growers, like my cousin, offered to sell the cotton at this price but no one would buy it. However, there is also contract cotton in which you agree to supply cotton at a set price. These contracts are supposed to be guaranteed and you fullfill your end of the bargain. However this year, some buyers refused to pay this amount even though it was contracted. Why, I don't know. How they got away with it, I don't know. But they did. So as cotton prices fell, it left the farmer with cotton whose value was less than the input costs. This is where the gov't steps in and fills the price difference between a breakeven and a lose your farm price. So in other words, if I promised to pay you $80cwt for 800 lb heifers delivered in September and you did all this but I renigged on the deal because the market was only $70cwt the gov't would pay you may $2 cwt to pay you the difference between what a breakeven price and a losing price would be. But if the market was $90, I'm sure they would have taken your cattle.

So to answer your question as why they are bad, I think if they want to run the price up on something they should also have to buy it with real money if someone is willing to sell it at that price. But they never touch it. They just let the price fall once they collect their money then the gov't has to step in and fill the difference. Seems to me anyhow.

Personally, I would like to see all these programs stopped if it meant that they were going to lower our taxes. I think they would first have to correct the unfairness in the way commodities are traded. But if they didn't do this and I had the choice, I'd rather see the gov't helping someone who works than someone who doesn't. Most of the cotton farmers I know are good people and are far from rich even though they have a fortune invested in equipment. JMO

 

[Dave]

Stepping into this discussion late. But Jo very early on you said, "is welfare the cheap rent those in the west enjoy with their long term leases on gov't land?" Do you realize that study have shown that the actual cost to those western ranchers with "cheap" government grazing permits is actually higher than renting private land? The rent paid to the government may seem low but the other cost involved sky rocket.
Not wanting to high jack this thread but the whole idea of cheap government grazing is not understood by those who are not involved with it.

 

[Jogeephus]

Not wanting to high jack this thread but the whole idea of cheap government grazing is not understood by those who are not involved with it.

I agree but that doesn't stop people bashing the policies such as this or the farm policies. This is one of my points cause I actually could care less if there are subsidies or "cheap" grazing rights cause they don't directly concern me. However, indirectly it does as I see it as part of a full fledged attack on agriculture by the green movement. So while I don't have any particular steak in either of these policies I will stand firmly beside those other producers who do - unless I have full confidence that the money not spent on these programs will lead to lower taxes for all concerned.

JOE IT SOUNDS LIKE YOUR FRIEND WANTED FUTURES MARKET MONEY BUT PLAYED IN THE CASH MARKET IF HE WANTED THE DOLLAR HE COULD HAVE GOT PAID IT NEVER SEEN A FUTURES CONTRACT NOT HONORED

Sounds like it but its not. This was contract cotton.

 

[hayray]

The grazing lease that Dave is talking about show higher cost per AUM based on what the goverment cost are but they are no where near the cost to the producer in comparison to private land leases. Cost such as full time Forest Service range managers, cross fencing, impact statements, cattle guards, water developements are usually more over-head expensed then private land mangement. Most of the initial argument against the prices of grazing leases on public land were brought on by graziers who were paying much higher on private land, most times 5 to 6 times pe AUM more. I did a report years ago on this when I was in college and remember a little about it. The public graziers justify the low lease rates based on the increased cost and taxes associated with the homesteads that come with the leases, so there is a much higher initiation fee to get into it whereas private land cattle grazing homesteads sell on the average alot cheaper.

 

[Jogeephus]

Couldn't answer your question cause I don't know. Subject came up last night at a meeting and I asked a few people some more questions about it. Seems there are several people who got bit by this thing and it sounds like they are getting attorneys to go after the folks. But it sounds like it was a domino affect with the producer - as usual - taking it on the chin.