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Ag economists take jabs at farm subsidies

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Several ag economists came out strongly against ag subsidies as legislators began work on a new farm bill.

One thing many fail to consider is the high level of skill of the American farmer. He's not that easy to replace.

Among those taking jabs at farm subsidies is Barry Goodwin,an agricultural economist at North Carolina State University.

Goodwin writes, “The U.S. Department of Agriculture estimates that farm income in 2013 will be more than double what it was in 2009. The nation’s farmers are enjoying the benefits of high crop prices, massive crop insurance subsidies and technological advances that have made crops more resistant to drought.

“As a result, farming’s record level of income far surpasses that of comparable non-farm sectors. Yet much of the debate over new farm legislation seems oblivious to these facts. The latest farm bill would give farmers even greater subsidies.”

While basing farm policy on a one-or two-year snapshot of farm values is hardly fair, it wouldn’t really matter if farm policy went Goodwin’s way.

Business is business, you know.

“Business failures are a reality of living in a market economy,” Goodwin says. “Those that do a poor job of managing risk are replaced by those that are superior, and society as a whole benefits through a more efficient allocation of resources.

He doesn’t think much of crop insurance subsidization either.

“Subsidizing risk allocates resources inefficiently because it encourages people to take more risks, since they don’t bear all the costs of their actions.  Farm businesses exercise less care in their decisions when they know the taxpayer has to step in with subsidies if output or prices turn downward.”

Agreed, U.S. producers do need to do a better job of managing risks, but every farmer I know thinks carefully about each decision he makes. A hasty one can put you out of business in a heartbeat, subsidy or not. And the idea that a farmer who goes out of business would be replaced by a “superior” one is silly.

Each and every American farmer is a rare individual, skilled and experienced. To underestimate or ignore the contributions of this essential 2 percent of the population is a grave mistake.

Another economist suggests that farmers who deal with weather volatility are taking unnecessary risks to put in a crop, and should not be compensated when a crop fails. This economist even suggested that farmers facing high weather risks should not plant a crop at all.

Now that’s a concept, especially when you consider that every farmer in the world has experienced a catastrophic year or two when weather went haywire. If planting or not planting a crop depends on what the weather did the year before, we’ll sooner or later be serving up tree bark salad and road kill sandwiches, perish the thought.

The eventual beneficiary of the farmers’ risk-taking venture is really not the farmer at all, but the American public. Americans demand a safe, stable supply of food produced sustainably by a highly-skilled and experienced steward of the land.

Hopefully, our farm bill legislators will get the point.

 

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