Tuesday, February 08, 2005

Schadenfreude Never Felt So Bad

Bush Is Said to Seek Sharp Cuts in Subsidy Payments to Farmers:

President Bush will seek deep cuts in farm and commodity programs in his new budget and in a major policy shift will propose overall limits on subsidy payments to farmers, administration officials said Saturday.

Such limits would help reduce the federal budget deficit and would inject market forces into the farm economy, the officials said.

The proposal puts Mr. Bush at odds with some of his most ardent supporters in the rural South, including cotton and rice growers in Alabama, Arkansas, Georgia, Louisiana and Mississippi.


Ordinarily, I'd laugh at reading of this knife in the back. Oh, I'm still chuckling, but this is tempered by the fact that I know if Bush's scheme passes, I'll probably have to quit college.

Every farmer I know back home save myself and one other voted for Bush; most, true, doing so because of religious-cultural or nationalistic reasons, but some because they thought for whatever reason that Bush would be better for farmers economically.

Hah. I knew better, called the ones I knew personally or am related to idiots, and said they'd regret it. But no: everything bad in farming was Clinton's fault, and Bush was gonna lower their taxes. Besides, hyuk, we gotta kill them ragheads and didn't I know that Kerry was for the queers?

Bush's first term was actually good for farming, at least comparatively speaking. Last winter, specifically, was phenomenal; the best since the 70s. But then everything tanked in July to the worst levels, pretty much, ever. Bush's weak dollar wasn't even enough to prop things up. Then after the election, at the last big trade conference -- I forget which but it was the one where Bush's picture was taken laughing with his fly undone -- the Chinese (our biggest soybean customer) told us to shove it and signed a deal with Brazil.

But never mind me, let's look at what Rich Lowry has to say about the Bush programme:

The Bush administration is set to take on one of the great scandals of American governance: a system of farm subsidies so perverse that it should get whatever the equivalent of an NC-17 rating is for a federal program. Decent people everywhere should want to avert their eyes. In seeking to cut and reform the subsidies, President Bush will provoke a fight every bit as fierce, in its own way, as that over Social Security, prompting opposition from the forces of greed and political cowardice.


Would Lowry say the same thing if Bush went after the subsidies given to the energy sector? Fortunately, the Bush family fortune is not based in farmland nor do Bush allies of the House of Saud owe their fortune to the cotton plant, sparing us and Richard Noggin, our columnist, such a scenario. Rich gets bonus points for the social security reference in his chosen context.

Farm subsidies as we know them grew up around the Great Depression, when they didn't work particularly well,


The weasel-word here is "particularly". We have to cut Rich a little slack since he's still bitter that FDR didn't follow the free market solution which would have ensured that all farmers perished in the dust bowl.

As the New York Times recently reported, farm income doubled during the past two years, and ? holy soybean! ? farm subsidies still went up 40 percent.


What does this mean? Aside that Lowry thinks 60s Batman catch phrases are still cool? Yes, commodity prices last year nearly doubled, but from what? Actually, the prices for bushels of soybeans merely rose to near their mid-70s level, and that's in unadjusted figures. Wheat prices are less than they were when I was a child. Rice prices likewise -- all not adjusted for inflation. And they've dropped since to below their levels of the year before. As for subsidies going up, which ones? The conservation allotments? Yeah. I know first hand that, yes, mine did go up for rice but not at all, that I could tell, for wheat and for beans seemed, actually, to decrease.

The system is supposed to help family farms ? but if this is a family-farm-friendly government program, what would a hostile one look like? Family farms aren't big enough to garner the largest subsidies and are squeezed by the way the federal payments increase land values and stimulate overproduction. "The subsidies reward the guy who gets higher yields with higher subsidies, and he's able to buy out his neighbor and get even bigger," says Dennis Avery, an agriculture expert at the Hudson Institute.


This is true though there are other reasons for overproduction aside subsidies. But, yes, land values have skyrocketed by my observation. Anyway, the irony of Lowry's piece thus far is heavy; his populist rhetoric wears about as well as a Halloween costume and considering the reactionary Corporate Whore he is, every bit as lurid. Since when have the Heritage and Hudson Institutes and Rich Lowry cared about over-centralisation of production under a corporate umbrella? Far from being outraged, this is the system they desire. But one thing at a time...

Ten percent of farms ? i.e., the biggest ones ? receive 60 percent of the subsidies. According to Brian Riedl of the Heritage Foundation, giant Riceland Foods got $110 million in federal largess alone last year. By his calculation, the feds could guarantee every full-time farmer an income of $35,000 a year at a cost of "merely" $4 billion. Subsidies now run roughly $15.7 billion annually.


This is where it starts to get silly. I am a member of Riceland. It is a co-operative, not a corporation. I am a farmer in the smallest way possible. What is paid to Riceland Foods is not pocketed or sent out in a dividend check but is paid out to members on a per bushel basis, i.e. if the "market" price of a commodity does not reach the government's "targeted price", the government pays the difference to Riceland who in turn pay the members. I suspect, though, that this is not as fairly done when the subsidies are paid to a corporation like, say, Cargill.

If it sounds like I'm being a little vague, it's because I don't know what I'm talking about -- I know, a not unusual happenstance. But thing is, neither does Lowry nor do the authors of some of these studies. The whole thing is a mess and I suspect the only people who know all of it are the ones bilking the system. Case in point can be found in Lowry's next paragraph:

American agriculture has its share not just of welfare queens, but welfare cheats. Federal subsidies are technically designated only for those who actually work in farming. But that restriction is evaded, sometimes by people occasionally participating in farm-related telephone conference calls. Dubious partnerships are a way to get around restrictions on how much any one operation is supposed to get in federal payments. As a result, some agriculture businesses are little better than Enrons with tractors.


No, it's not designated for such. Or put another way, it depends on what you mean by "work". Going back to the Times:

In setting a firm overall limit of $250,000, the president's plan would tighten requirements for the recipients of such payments to be "actively engaged" in agriculture, and it would generally prevent farmers from claiming additional payments through multiple entities.


What is the definition of "actively engaged"? This is the rub. Is someone "actively engaged" who rents out farmland? The average landlord is not a farmer per se: he does not drive a tractor nor pull a plow. Yet his rent is a percentage, usually a quarter, of the crop; as such he is also entitled to the same percentage of direct payment subsidy. His business is not farming but something else; the farm is usually an investment or an inheritance which supplements his income. Where I'm from farmland, when not farmed by owner-operators, is owned and rented to farmers by, mostly, little old ladies who have a 40 acre patch here or an 80 acre one there. Ballpark rent figures for a rice-rotated 80 acre farm is 8K, of which about 1K is subsidised in direct payment, and maybe a half-K though indirect subsidy a la the Riceland payments. Ignoring the probable doctrinaire nutjob libertarian argument, do Lowry or any of the rest of these suddenly populist conservatives want to take that away?

Lowry might also like to research the amount of farmland owned by churches as an investment; all in all an under-reported scandal but then probably a fact that a conservative might wish to bear in mind for other reasons. Anyway, I wish someone would cover it.

And there are other entities that collect a lot of money. Here is the Heritage Institute's list of leading offenders. Number 6 on the list is the Ducks Unlimited organisation, which apparently buys rice farms to conserve habitat along the Mississippi flyway. Number 10 is the Bureau of Indian Affairs. These organisations are not exactly what comes to mind when one thinks of corporate welfare weasels.

But then the Times and Lowry are also talking about something that is a huge problem, and one I hope is stomped out of existence: the Ol' Dummy Corporation trick which means that one person, one farmer, may set up however many "entities", enlist the help of a hired-hand or family member, and draw payments accordingly. Said entities then lease tractors, buy fertilize, etc -- and take the maximum amount of direct payments; hence a partnership farm of, say, a husband and wife, each taking the capped amount per person, is at a disadvantage to someone who in effect invents, through corporations, several partners making all beholden to his single operation. At least, that's what I can piece together from bits here and there; no one really talks about it beyond whispers (small wonder). But everyone knows it happens, suspects certain people, can do the rough figuring in their heads enough to determine who has extra cash flow, etc. I can remember reading my first county land map and seeing the corporate names here and there, matching them up in my mind with who I knew to farm what. Ah, so Mr Soandso is Acme! Oh, but he's also Farm Co. And so on. Inevitably, these are the folks with a fleet of the newest tractors and combines. As an added bonus, a single operation with multiple entities (could this be called a micro conglomerate?) also avoids the magic ten employee threshold, though farmers are immune from many of the over-ten requirements anyway.

Also, it's pretty funny that Lowry would find anything unsavory about Enron.

Environmentalists hate the subsidies because they maximize the land under cultivation, therefore increasing the use of pesticides and fertilizer.


All true.

And they unfairly disadvantage third-world farmers.


Uh, no. They, like all American farmers, do compete with others around the world, but when Lowry says "third-world farmers", he's not talking about the subsistence peasants whose economies and cultures his heroes dash about gleefully destroying, but rather the plantation farms in countries like Brazil and Argentina which employ at pathetic compensation the former owners of its land and which are as often as not owned by multinational corporations who employ as managers a growing number of the American farmers they have put out of business. As such, they are the true competitors, and are about as "third-world" as that Wal-Mart store being built in Mexico that will visually pollute one of the most awesome vistas in the world (third or first). Lowry's advocacy of the third world would be touching were it not so obviously fake.

Agricultural production has doubled in the United States the past half-century. At the same time, the number of farms has dropped by two-thirds. That is a textbook case of a productivity revolution, and it has been driven by agribusiness.


First he deplores the centralisation of agriculture in America and the loss of family farms. Now he lauds it. I think he's being honest this time.

Turning around and subsidizing it is a little like putting the giants of the Internet revolution on the federal dole. How big a check would you like, Messrs. Gates and Bezos?


Oh, really. Well, the structure upon which Gates and Bezos have made fortunes was indeed subsidized by the government, which in the Lowry world can do nothing right except bomb people in the third world, which Lowry of course thinks it does flawlessly. But, yes, there's no reason for the government to support giants and bazillionaires.

Indeed, roughly half of American agriculture ? fruits, vegetables, nuts ? is not subsidized and does fine, thank you very much


No, it doesn't.

What exactly are the subsidies good for? "You don't accomplish anything but buy votes," says Avery. At that, the program is quite efficient. A 1996 overhaul was slowly unraveled by ravenous farm-state politicos. The administration now wants to save nearly $6 billion in payments in the next decade, cap annual payments to individual farms at $250,000, and generally rationalize the system.


I seriously doubt the vote-buying power of the Cargills, et al, will be compromised by Bush's plans. "Generally rationalize the system"? Fine. But I doubt the people who need subsidies will be saved. Since they voted for the man who will stick the economic knife in their back (as I knew he would), I don't have too much sympathy. But not all did. I may be screwed along with them, and be yet another of the "dynamic economy's" casualties. Lowry and others, not caring about specific natures of farming will argue in principle that those who are stressed by the plan should just learn to be "flexible", yet couldn't be bothered to take into account that the state of farming infrastructure makes it difficult and often impossible to switch from one set of crops to another. Then comes the social-darwinist lecture about inefficiency, a hearty pat on the back, and an offer for a ride to Wal-Mart to fill out a job application.

Reference: Oligopoly Watch is essential reading for those who wish to understand the stupidities of the "Free Market" technocrats who sit their fat asses in Aeron chairs and casually recommend the destruction of various peoples' livelihood.

The Big Is Bad argument is carried out in-depth here.

Technocrat meddling with Iraqis farmers' traditions is instanced here.

Here's the Heritage Institute's study of farm subsidies.

*Edit -- Actually, Lowry did have a point with overproduction, and I've amended the post to account for it.

*Edit 2 -- Representative Marion Berry (D - AR)'s argument is also worth mentioning: that it is in the interests of national security that America guarantee a domestically produced food supply.

*Edit 3 -- Matthew Yglesias agrees with Lowry on subsidies but insists that Bush's plan is a stunt.

Also, in order to avoid confusion, I wish to say that I don't mind "free trade" between nations when it is done through legitimate means. But the gun-barrel-to-the-head agreements with many third world nations do not qualify. These things were sold to American farmers under the guise of "new markets" yet few appreciated how short term the benefits would be (which turned out to be minimal, anyway), and frankly it was never worth it to me because I knew what it would do to manufacturing here and the farm sector there. What happens is basically this: barriers open, American agri products pour in, native agri dies and people are dispossessed, Western or native elites rebuild native agri on the cheap, native agri then is competition for American agri, and everyone but the elites and multinationals are worse off than they were. But precious principle is served, meanwhile the casualties here should be happy with the shit jobs they are then forced to take in the service sector and the casualties there get to labour on land they formerly owned or get to enjoy the friendly confines of the local sweatshop. Thanks, bitches.

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