Obama called for something in the State of the Union that numerous others have called for before - and all have failed. He said he wants to "end direct payments to large agribusinesses that don't need them."
Let me explain WHY this is so important (start thinking environment, energy, and global warming) and why it's so difficult to get through Congress. In short, the Big Ag lobby is going to be going bonkers over this, lobbying against this. What if the citizens of America - the VAST majority of this country - told Congress that WE WANT them to keep Obama's promise.
The bottom line is that our votes matter more than agribusiness's dollars in the end (dollars are nice but they are only useful if they buy you votes... and we are the ones who vote). So let's wield our power to help Obama.
I think it's intuitive to everybody that it's a good idea to give subsidies to farmers who need them, but it's wasteful to give money to farmers who have enough money already. Yes, we need a stable domestic food supply. No we don't need to give taxpayer dollars to rich farmers just to be nice.
In that sense Obama has a brilliant idea - let's stop wasteful spending if we're already in debt - and I think it's obvious why agribusiness is going oppose such a move. They like free money. And it's obvious why the majority of Americans who pay taxes but don't receive farm subsidies want to stop handing out cash to people who don't need it.
But what about my earlier mention about global warming? Well, the devil's in the details of HOW the subsidies are structured. The true "subsidies" go to farmers who grow commodities (mostly corn, soy, wheat, rice, and cotton). There are "direct payments" (more on that later) which are NOT based on current prices, and then there are payments you get if the prices go below what the government thinks is a fair price.
THEN, there are conservation programs. There are programs where you don't grow on fragile land (like wetlands) and the government compensates you (to make up for what you are losing by not growing there and wrecking valuable wildlife habitat). Then there's the Conservation Security Program (CSP), which pays you for using good stewardship practices on land where you are growing crops.
The major thing to know about this is: most money goes for the subsidies, and the conservation programs are miserably underfunded. In 2007, farmers received nearly $8 billion in government payments. However, only $1.7 billion went to conservation programs. And whereas over 800,000 farms received government money (out of a total of 2.2 million farms in the U.S.), only 350,000 received conservation money.
Many farmers aren't even eligible for conservation money right now. That means that if the conservation programs are intended to motivate those who aren't good stewards of the land to change their ways in order to get some government cash, it can't do that. The low participation in conservation programs isn't because farmers aren't interested in conservation or in money for conservation - it's because they aren't even eligible.
Back to the direct payments - these are something put in place in 1996. They are payments that some farmers get automatically. If you own land where commodities were grown (not even necessarily by you!) recently, the government calculates a running average of your yield and based on that, gives you a check. The check comes automatically. It doesn't matter if prices are high and you're making a killing and don't need help. It doesn't matter if you GROW NOTHING. You could build a Wal-Mart on your land and you'd still get a check. THIS IS STUPID.
So - the no-brainer idea? Take the money from the direct payments to people who don't even need them, and put it into the underfunded conservation programs! This isn't taking from the payments that go out when farmers get low prices, payments that potentially save farmers from losing their land because prices are below the cost of production. This is ending the practice of giving out free cash just to be nice to those who don't need it, and instead giving it to those who need it so badly they are willing to improve their treatment of the air, water, and soil.
For family farmers, in the past few years (2003-2007) their average overall income has gone up (details here). However, this increase was from OFF-FARM income. Prices went up, which meant more revenues from sales (even after you consider rising costs). But government payments went down more than income went up. For a family farmer, average farm sales went up $5,508, but average government payments went down $8,741 - COMPLETELY wiping out their increase in pay. Only the really, really big farms (those making over $500k) actually did better despite the drop in government payments:
They jumped from $130,263 to nearly $189,547, easily compensating for their $12,196 drop in government payments between the two years.
Why not have a system that offers all farmers a chance to make more money by taking better care of the land - and stops handing out the freebies to those who don't need the help (or those who aren't willing to conserve)?
Yet - here's what Big Ag says about this:
The Reuters article added that, "Eleven farm groups wrote Agriculture Secretary Tom Vilsack last week to argue against any cuts in farm supports and particularly direct payments. They said direct payments ‘are the only component of the farm safety net currently helping every farmer’ deal with rising costs of production and a slump in crop prices since record highs last year. (Source)
A separate Reuters article from yesterday, which was posted at DTN... reported that, "Still, in key farm states in the U.S. Midwest where wheat, corn and soybeans are king crops and cattle run the range, and across the nation’s farm country, the prospects of Washington cutting into direct payments for farmers was roundly attacked.
"‘The goal of farm programs is not to make farmers rich,’ said John Thaemert, a Kansas wheat farmer and a past president of the National Association of Wheat Growers. ‘The goal of farm programs is to make sure our country has access to an abundant, affordable, convenient and safe supply of food.’"
The article added that, "Cutting subsidies is also touchy topic with non-grain crops from sugarbeets to rice, cotton and many others.
"‘It is a hot issue particularly in crops such as cotton and rice where operations tend to be extremely large, where the value of those crops are quite large and the payments tend to be quite large,’ said Otto Doering, professor of agricultural economics at Purdue University." (Source)
Notice how the farm groups are whining about removing their safety net? Obama said nothing about taking away a safety net. He's taking money away from farmers who are doing just fine without government help and don't need taxpayer dollars to survive. And it's going to be THESE farmers that are lobbying Congress against Obama's idea.
On the House side, the Ag committee chair is Collin Peterson, and he's from a sugar beet growing district that loooooves its subsidies. He won't be for Obama's idea. On the Senate side, you can bet Sen. Kent Conrad will oppose this very strongly. So this WILL have strong opponents in both Houses. We need to get it some allies.
ACTION: Write your Congresscritters and ask them to support Obama's plan to "end direct payments to large agribusinesses that don't need them."
Talking points:
- The National Farmers Union said direct payments were "indefensible in good times and insufficient aid when markets slump." (Source)
- The new Deputy Secretary of the USDA Kathleen Merrigan testified to the Senate that the Conservation Security Program works, but its main problems all revolve around under funding. She notes CSP's intent to "reward the best and motivate the rest" and its inability to do so due to lack of funding.
- While some subsidies are necessary in order to ensure an abundant domestic food supply, the direct payments going to the wealthiest farmers (particularly to land owners who don't even farm the land themselves) bring the entire subsidy system under criticism.
- Because direct payments go to land owners even if they do nothing on the land, when a farmer leases land often the landlord pockets the direct payment, leaving the farmer who actually works the land with only the remaining subsidy that is based on the actual amount harvested and the current price of the crop. In this way, direct farmers do not even work to ensure a stable food supply.
- With a high national debt and two current wars, it is difficult to find extra money to fund conservation programs. Yet headlines warning of melting ice in the Antarctic and dying oceans make it clear that conservation is crucial to the survival of our species. Direct payment money going to those who do not need help is essentially found money that can be easily re-appropriated into conservation programs without increasing the national debt.