Tuesday, May 03, 2011

Weekly Address: Taxpayer Subsidies for Farms are Neither Right, nor Smart, and They Should End

Here's a weekly presidential address I'd like to see, based on President Obama's address last week on "Taxpayer Subsidies for Oil Companies Farms are Neither Right, nor Smart, and They Should End."

WASHINGTON – "As oil and gas companies U.S. farms make tens of billions in profits and the government scours the budget for savings, President Obama called on Congress to stop handing them $4 billion $12 billion annually in taxpayer subsidies.

After the worst recession since the Great Depression, our economy is growing again, and we’ve gained almost 2 million private sector jobs over the last 13 months. But I also know that a lot of folks aren’t feeling as positive as some of those statistics might suggest. It’s still too hard to find a job. And even if you have a job, chances are you’re having a tougher time paying the rising costs of everything from groceries to gas. In some places, gas ground beef is now more than $4 a gallon $3 per pound and milk is more than $3.50 per gallon meaning that you could be paying upwards of $50 or $60 to fill up your tank  $500 or $600 per month to feed your family.

Of course, while rising gas food prices mean real pain for our families at the pump grocery store they also mean bigger profits for oil companies America’s farms. This week, the largest oil companies U.S. Department of Agriculture announced that they’d made more than almost $25 billion in the first few months of 2011 – up about 30 20 percent from last year.

Now, I don’t have a problem with any company or industry being rewarded for their success. The incentive of healthy profits is what fuels entrepreneurialism and helps drives our economy forward. But I do have a problem with the unwarranted taxpayer subsidies we’ve been handing out to oil and gas companies farms – to the tune of $4 $12 billion a year. When oil companies farmers are making huge profits and you’re struggling at the pump supermarket, and we’re scouring the federal budget for spending we can afford to do without, these tax giveaways to farmers aren’t right. And we need to end them.

That’s why, earlier this week, I renewed my call to Congress to stop subsidizing the oil and gas industries America’s farms.  Understand, I’m not opposed to producing oil agriculture, but taxpayer subsidies to farmers when they're making record profits are neither right, nor smart, nor fair, and they should end."

MP: Data on farm income and farm subsidies are available here from the USDA. The USDA is projecting $94.7 billion this year in "net farm income," and government payments to U.S. farms have averaged more than $12 billion per year for the last four years.

30 Comments:

At 5/03/2011 9:45 AM, Blogger VangelV said...

Subsidies show just how difficult it is to cut programs in a social democratic system. Most of them have been in place since the Great Depression and have nothing to do with agricultural earnings or family farms.

 
At 5/03/2011 10:05 AM, Blogger Buddy R Pacifico said...

Riceland Farms and Producer Rice Mill are the #1 & #2 recipents of USDA subsidies over the last fifteen years. They are both based in Stuttgart! No not Germany, Stuttgart, Arkansas -- the rice capital of the U.S.

 
At 5/03/2011 10:31 AM, Blogger Hydra said...

In my area the local government states that farms pay twice as much in real estate taxes as they cost in services. While we are ending subsidies, lets end the many subsidies that farms provide to other citizens as well.

 
At 5/03/2011 10:37 AM, Blogger Hydra said...

Family farms have almost nothing to do with agricultural earnings. The ernings belong to a relative handful of large operations, only a few of which are family owned.

Although the smaller farms work mainly on a break even basis, as far as the owners go, and often require outside income to help support them, they are still huge mainstays of the surrounding economies.

 
At 5/03/2011 10:40 AM, Blogger Buddy R Pacifico said...

It's mostly the large Ag businesses that take farm subsidies. The biggest 20% of Ag recipients take 80% of the subsidies.

The EWG.org webside lists these two enterprises as the largest subsidised from 1995-2009:

Riceland Foods, Inc at $554,343,039

and

Producer Rice Mills at $314,028,012.

 
At 5/03/2011 10:52 AM, Blogger morganovich said...

"In my area the local government states that farms pay twice as much in real estate taxes as they cost in services. While we are ending subsidies, lets end the many subsidies that farms provide to other citizens as well.'

things like this will always be the case so long as you base taxes on property value.

if my house costs twice as much as the one next to me, i'll pay twice the taxes for the exact same services.

what are you going to do for me if you want to stop paying more than you use?

if you tax all the people and that tax revenue = the cost of services, many will be paying more than they use. if property values follow a bell curve, half of them will be.

 
At 5/03/2011 10:57 AM, Blogger Benjamin said...

Actually, farm subsidies are but the tip of the iceberg of the annual Niagara of subsidies for our federally dependent rural economy.

Beginning under FDR (LBJ then in Congress), our federal government began subsidizing rural power and water systems, then later telephone systems (now alone an $8 billion a year subsidy). Roads and highways subbed too, rail stops, airports.

Without federal subsidies, much of rural America would depopulate, likely. There is even federal subsidy of rural medical clinics. By choice, most doctors would not locate in rural areas for lack of business.

The USDA has 109,000 employees, many of whom are ag. extension agents--free business advisors--for farmers. There are special USDA loans, including housing loans, for farmers.

Defense bases have become a form of rural patronage.

Steeped in federal lard, the 24 farm state Senators form the backbone of the Red State Socialist Empire. It is a major reason why federal budgets are eternally red--as in red ink, that is.

 
At 5/03/2011 12:07 PM, Blogger morganovich said...

ps.

hydra-

does you farm pay the same water rates as a nearby home? i'm guessing not.

did they include that subsidy in your "service costs"?

 
At 5/03/2011 12:30 PM, Blogger Eric H said...

Wheat is up 60% compared to a year ago. Corn is up 90%. Since inflation is "only 2.1%", I'd say those farm subsidies were a great investment in our own economy.

 
At 5/03/2011 12:51 PM, Blogger James said...

Do not forget that there are indirect subsidies to farms also. The subsidies for ethanol and other foolish alternative energy sources often end up in the pockets of farmers. The government also looks the other way to allow farmers to hire illegal aliens and also allows legal temporary foreign labor. When illegal aliens get sick or hurt the public picks up the bill for their health care. In California that is at least $5 billion a year. But hey, our credit is still good enough so we got lots of borrowed tax money to waste out here.

 
At 5/03/2011 3:18 PM, Blogger randian said...

Although the smaller farms work mainly on a break even basis

I hear this claim often, but it's a big "so what?" I'd be happy to "break even" while getting all my living expenses paid for and owning a few million dollars of land.

 
At 5/03/2011 3:27 PM, Blogger Paul said...

Benji,

Thanks for the quick tutelage on farm subsidies and the Red State Socialist Empire. I missed it the first 6 thousand times you wrote the same exact post.

 
At 5/03/2011 3:35 PM, Blogger Benjamin said...

Paul-

Just waiting for it to sink in.

I suspect that you could probably read 6,000 times how urban welfare queens are soaking taxpayers, and ask for the 60001st serving.

The right-wing never tires of its set pieces, such as the need to voucherize public schools. But voucherize the VA?

I am tiresome if I mention that too often.

 
At 5/03/2011 7:48 PM, Blogger Richard Rider, Chair, San Diego Tax Fighters said...

There are more harmful government programs and policies, but none with less justification, or redeeming value (I include the ethanol madness in this "farm subsidy" category). For government to intentionally jack up the price of food products to provide windfall profits to wealthy farmers and agri-corporations is truly reprehensible.

 
At 5/03/2011 8:37 PM, Blogger Milton Hayek said...

Hyrda confuses tax receipts with "supporting" the local citizenry. I don't know about you, but I'd rather see money spent by the people who earned it so that it can be used in the most productive way.

 
At 5/03/2011 9:10 PM, Blogger Hydra said...

So 15% of net farm income comes from subsidies.

Lets get rid of subsidies and watch farm production drop 30%, and groceries go up 60%.

 
At 5/03/2011 9:12 PM, Blogger Hydra said...

Buddy is 100% correct. In my county eight farms get 95% of subsidies. There are about 2000 farms, all if them smaller than those eight.

 
At 5/03/2011 9:13 PM, Blogger VangelV said...

So 15% of net farm income comes from subsidies.

Lets get rid of subsidies and watch farm production drop 30%, and groceries go up 60%.


Just let imports come in duty free and you will not have to worry about price increases, particularly if the ethanol and biofuel subsidies are cut. New Zealand cut its subsidies and farmers became much more efficient. The market works. Subsidies don't.

 
At 5/03/2011 9:23 PM, Blogger Hydra said...

Hyrda confuses tax receipts with "supporting" the local citizenry. I don't know about you, but I'd rather see money spent by the people who earned it so that it can be used in the most productive way.

=======================

Huh?

2000 fauquier farms are paying twice as much in taxes as they receive in services.

You don't think that this lowers
the taxes for the other 60,000 residents? Who apparently get more services than they pay for?

Does this sound like a policy you would put in place if you wanted to save "our" fauquier farms?

Hey, lets save our farms: charge them twice what they cost us.


Good, I like that slogan.

 
At 5/03/2011 9:55 PM, Blogger Hydra said...

Randian:

If it is farmland it is typically around $4000 an acre. A few million implies 750 acres. If you want to take care of 750 acres to break even, you have rocks in your head.

And when I say break even, that means on farm operations. Living expenses come out of profits or pay to the operator, if there is enough to pay with after farm operations.

Remember the laughter when Amazon announced a "profit on operations" ?

And that doesn't include anything for land rent: that comes under capital not cash flow.


It sounds like you think the farm can be sold for true market value. Usually that is not true, because of zoning. Restrictive zoning on farms amounts to a price subsidy to residential areas. One that probably more than offsets the (misdirected) agricultural subsidies.

TC = PC + EC + GC

It is a true example, if you can define the system boundaries, price the externalities, and allocate the government costs.

By the time you get done, you may conclude that what goes around comes around.

When I'm out working the farm, I can watch town house dwellers heading to the river with a kayak on the roof. I have never been, but I can imagine how nice it is to enjoy the natural waterfront. Waterfront owned and tax paid by farmers, but prohibited for farm use.

 
At 5/03/2011 10:02 PM, Blogger Hydra said...

ust let imports come in duty free and you will not have to worry about price increases, particularly if the ethanol and biofuel subsidies are cut.

=================

I'm ok with that. Just change my zoning so I can put a truck stop, next to the highway they took a hundred acres of land for.

Btw. NZ may have reduced subsidies, but it is my understanding they are leaders in paying farmers for previously unpriced environmental services.

 
At 5/03/2011 10:10 PM, Blogger Hydra said...

It is my understanding foreign tomatoes have pretty much wiped out Florida tomatoes.

Would you argue the same for foreign oil, or do you support energy security?

We sell flowers, but mostly we can buy them flown in from Ecuador cheaper than we can grow them. We are required to grow something and sell it.

Profit in doing so is not a requirement, so Ecuadorians do that for us.

 
At 5/03/2011 11:53 PM, Blogger Hydra said...

I hate subsidies, too. But let's start a campaign we might win. Do away with negative subsidies and tax expenditures first. Force them to be on the books where you can see them. You want to subsidize something, fine. Propose a tax increase that will take the money out of your pocket to pay for whatever it is You want more of.

 
At 5/04/2011 1:45 AM, Blogger Fort said...

Kids die because of rich white welfare kings in Iowa.

This is known, and has been, for many years. The information is there, google it.

Life is cheap, compared to fat, rich, white, welfare-king subsidies at least. And that's in America, though not visible. But still known.

What happens in those other countries?

 
At 5/04/2011 7:38 AM, Blogger Paul said...

Benji,

"The right-wing never tires of its set pieces, such as the need to voucherize public schools. But voucherize the VA?"

Never in your own moronic "set pieces" do you appear to understand your boyfriend and the other leftist filth you vote for oppose vouchers of any sort. Your boyfriend has recently been lying through his teeth about the plan to turn Medicare(far more ruinous than the VA) into a voucher system.

 
At 5/04/2011 9:42 AM, Blogger juandos said...

Oh dear! We have another socialist whiner: "Life is cheap, compared to fat, rich, white, welfare-king subsidies at least. And that's in America, though not visible. But still known"...

Got something credible to back up that bizzare statement fort?

 
At 5/04/2011 9:47 AM, Blogger juandos said...

"Corn is up 90%"...

Well Eric H couldn't the reason corn being up 90% is due to the inane fed regulation of putting corn (methanol) into our gas tanks?

Could the rising price of wheat be due in part to the rising prices of fuel which are again due in part to the fed policies?

 
At 5/05/2011 12:17 AM, Blogger Hydra said...

Gee fort:

Tell us what you really think.

Corn is high enough I may plant this year. If enough people like me do it, the Iowa corn barons will take a beating.

If too many people like me do it, we will all take a beating - and the barons will win again.

 
At 5/08/2011 9:53 AM, Blogger moonbird said...

and we have the likes of Stewart Resnick (he's just bought the movie "Pom Wonderful") who parties with our Ca. senators and , is putting the small organic sustainable Ca. farmer out of business, sprayed us here in Central Ca. with his pesticides, who continues to get the Ca. Dept. of Food and Ag and taxpayers to pay for his businesses.

 
At 5/09/2011 12:58 PM, Blogger Cash212 said...

Why no Twitter or Facebook feed?

I fully support ending all subsidies but also would support ending the punitive taxes on undeveloped farmland. I know tax policy in CO makes it difficult to preserve farmland as/is because it is taxed at it's "development value," despite not using anywhere near the same services that a similar developed property would use. If you factor in the inflated RE values driven by a plethora of warped housing finance policies then that penalty is quite significant for farmland holders who wish to preserve the land. What do you think?

 

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