Big owners of farmland get subsidies from taxpayers, rent from little tenants
Farmers got it rough; farm owners got it easy, thanks to taxpayers
Its 2007 and seventy-year old subsidies are still bleeding us while missing the poorest farmers. We abridge Harvest Season in Washington by G. Tracy Mehan, III, who served under two governors and both Presidents Bush and teaches at George Mason, in the American Spectator (9/24); and Its time to negotiate land rents by Gary A. Hachfeld, agricultural business management educator with University of Minnesota Extension, in the Hutchinson (MN) Leader (9/20).
by Jeffery J. Smith
It’s another harvest season, not in the fertile fields across America but in Washington, DC (Mehan).
It’s time for another Farm Bill complete with subsidies, supports, and Rube Goldberg programs to layer on top of other tariffs, preferences, and perks in the face of what health officials call an obesity epidemic.
This periodic spectacle of rent-seeking and fleecing of taxpayers is pure irony. Most farmers — hard-working, family-oriented Republicans — express nothing but disdain for taxes and regulations. This is a monumental case of collective cognitive dissonance given that the American farming “way of life” is dependent on others paying taxes.
This federal money creates incentives for exploitation of natural resources. The ethanol boom is entirely a creation of the federal government. Acres and acres of additional corn will be planted, accompanied by tons and tons of chemical application and inputs, including nutrients, which will aggravate the already ballooning “Dead Zone” in the Gulf of Mexico, not to mention local rivers, lakes, and streams.
In the west, subsidized water for subsidized crops as well as subsidized, below-cost grazing and timbering on federal lands degrade watersheds.
Most economists and ecologists who have looked at the plight of Florida’s Everglades blame tariffs imposed on imported sugar which, if lifted, would help the environment and the consumer by removing this incentive for unsustainable sugarcane farming.
There are millions of “conservation” dollars available in farm programs. But it would be hard to argue that their environmental benefits come close to offsetting the harm that massive farm subsidies generate.
There are equity issues, too, since subsidies are not means-tested; rich and middle-class farmers get these federal payments. So a wealthy farmer is entitled to a subsidy, but a working-class auto mechanic is not. Does that sound fair to you?
These unnecessary, protectionist farm subsidies and tariffs in the US, France, Switzerland, and other developed countries are a real blow to destitute, developing countries which are in dire need of access to markets, such as ours, in which their low-cost goods would benefit consumers.
If you withdrew federal subsidies you would have fewer, more efficient, more productive farmers — not less food. The government of New Zealand in the mid-1980s canceled handouts to farmers. There are still more sheep and cows than people; their meat, milk, and wool provide the country with its biggest source of export earnings. New Zealand farmers now use sound business and scientific approaches to achieve financial success in a global market.
The end of federal subsidies does not mean the end of farming, just the end of the federal gravy train. Simply put, there is no justification for continuing a Depression-era subsidy program for tobacco, corn, soybeans, or sugar, to name just a few of the usual suspects.
This writer would like to report that congressional Republicans have stood on their free-market principles and resisted this ongoing raid on the Treasury. But I would be lying to you. Farm subsidies are bipartisan sins that reflect a deep corruption in our body politic.
JJS: And not even all farmers get them. Only the biggest ones do who are more farmland owners than actual farmers. The actual farmers often are tenants. For them, its a different story.
Fall is generally when many land rent negotiations take place (Hachfeld). If a landowner utilizes a flexible lease based upon the tenants yield and price received, the landowner is eligible for a portion of the commodity payments. This can be troublesome for both landowner and tenant.
Tenants need to take care of the land that the landowner has loved all these years. That means keeping the fertility up and the weeds down. Tenants need to pay rent on time and in the event of a good year, perhaps make a gift to the landowner.
Tenants may want to share how costs have changed over the past three years via a newsletter to their landowners. Landowners need to look not at how much rent they can get but rather at the character of their tenant and the nature of that relationship. Does the tenant pay the rent on time, take care of the land, send a present when they have a good year, and share some of the challenges in raising crops?
JJS: Gee, its like the state university puts out instructions on how to be servile. Does rural America need to be a two-class society? No. Farmers do need an income supplement, but so do workers in other productive fields. Society could support everyone fairly by redirecting all the rents, not just for farmland but also for city sites and oil fields, to everyone. Its society, not owners, who generate the value of locations. By sharing rent, we can lose all sorts of subsidies not to mention counterproductive taxes.
Jeffery J. Smith runs the Forum on Geonomics.
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