Are 'Entitlements' Healthy For Farmers?

Nor' east Thinkin'

Are ag subsidies and commodity payments just another form of welfare?

Published on: August 13, 2010

 Several weeks ago, a learned gentleman pointed out to me that most Farm Program payments go to farmers who raise commodities that aren’t profitable. And he suggested that those farm products that are profitable aren’t “on the take” from Uncle Sam.

In short, he alleged that farmers are welfare recipients as much as those who live via food stamps and unemployment benefits. Are your “juices” boiling yet?

Over the last 75 years, agriculture has become increasingly dependent on farm program benefits. No one can argue that point.

And too many have lapsed into adding to farm income the easy way – accepting Uncle Sam’s check – as opposed to creating new business ventures and products. In fact, a substantial number of Northeast and Mid-Atlantic farms have been bought by non-farmers with the expressed purpose of taking conservation program payments and building nest eggs – the financial kind.

The bigger question with longer-term implications is: Is this reliance on commodity program payments healthy?

Somehow, in my opinion, we must consider commodity support programs separately from conservation programs designed to improve soil productivity, reduce erosion and improve water quality. There’s a larger public benefit to encouraging such best management practices.

In our upcoming September issue, the Profit Planners panelists will take a forward look at whether farmers should start “weaning off the government teat”. In brief, they suggest that it’s far better to do it on your own than to be forced off by massive federal budget cuts – which, incidentally, must be made if America is to avoid a far more serious economic debacle.

So what do you think?

Your comments are welcome and wanted. Just click on “Add a Comment”.

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  1. K. Forman says:

    I disagree with what the "learned" gentleman told you about government subsidies and their being welfare payments. In a way I suppose one could call them that, because the payments tend to encourage overproduction and hence, low prices. Then farmers need the money to survive. On the other hand, if the government stops making the subsidy payments, some farmers inevitably stop growing a particular crop and supply drops relative to demand. Hence, prices go up and the need for a farmer welfare check goes out the door. Case in point, awhile ago there was a writeup in the Wall Street Journal about a farmer in southern Illinois, who got into the tobacco growing business when the government stopped making subsidy payments. The reason? When other farmers quit growing it, the price, for the particular kind of tobacco he grew, went up and he did really well. One could confirm this or dispute the subsidy effect by checking with someone who really understands basic economics.