Time to lose Farm Subsidies?

[Bubba]

http://www.heritage.org/press/dailyb...52DC1851F15FBB

Life After Subsidies

12/19/05 01:48 PM
New Zealand scrapped agricultural subsidies in 1985. All at once, farmers were forced to go cold turkey, many reporting 40 percent drops in income.
So how have they fared over the 20 years since? The Associated Press reports:

Twenty years later, as the World Trade Organization heads toward an apparent stalemate at its summit in Hong Kong over plans to reduce agriculture subsidies, the message from New Zealand's farmers to their counterparts in the United States and the European Union is: There's life -- in fact a better life -- after subsidies....
Since the government's momentous decision to abolish all 30 agricultural subsidies, their productivity has grown, farming's share of gross domestic product has risen as has the rural population, and family farms have survived and are thriving.

And now even the farmers are grateful:

Pedersen, now 48, believes the government was acting "from a social conscience rather than from an economic plan," and indeed, there are indications the authorities themselves weren't sure cold turkey would save agriculture. Pedersen remembers Finance Minister Roger Douglas telling a farmers' meeting as late as 1989 that theirs was "a sunset industry. Agriculture will never again be the major contributor to this economy."
Instead, farming today is 16.6 percent of total gross domestic product, up from 14.2 percent in the late 1980s, and in the year to April 2005 it racked up exports worth $12.7 billion, more than half of all New Zealand exports....
His message to subsidy-rich farmers in the Northern Hemisphere if they lose their supports: "Agriculture will become a net contributor to their economies, farming will become more vibrant and farmers will be doing a real job again. Now, they're peasants."

Note that conferees for the now-pending budget reconciliation bill couldn't agree to trim subsidies by just a couple percentage points over the next five years.

Maybe it's time for our government to stop subsidies, it would make our tax money go farther, maybe even help lower our tax burden.

[lurker]

Originally Posted by Bubba

Maybe it's time for our government to stop subsidies, it would make our tax money go farther, maybe even help lower our tax burden.

Boy Howdy Bubba, I wish it was that simple.

Farmers are only pawns in the economics and pollyticks of Global Commodities trading. Fact is that very few farmers 'own' the grain they are harvesting and have no control over the prices they are paid (other than hedging) for their work.

The most striking example is the little-talked-about effect of Katrina. The Gulf port in New Orleans was closed, so those exports ceased to move and sidelined loaded barges. FEMA ordered thousands of tractor-trailers into the area; for who knows what.... they just sat and waited while being paid by FEMA. They weren't available to move our grain. Additionally, grain rail cars were sidelined with nowhere to go except the ports in Texas that were waiting their turn for a hurrycane washing.

This had the net effect of plugging the system, yet OUR farmers were harvesting corn, milo and soybeans with the only option of self-storing or taking the grain to the elevators. The problem with taking it to the elevators was/is that the elevators weren't taking grain for storage. So, the farmers were forced to sell the grain for the price quoted that day. Care to guess what happens to grain prices when the distribution line is plugged up?..... The price goes down where the grain is and UP where the grain isn't.... and OUR farmers are powerless to benefit in the profits garnered by the traders and shippers who will profit by bridging this gap.

All of this is but a snapshot of a local weather-related event that severely depressed the prices paid to OUR farmers. What's UN-natural is the politics of grain trade. An example:

The United States sometimes departs from its general policy of promoting free trade for political purposes, restricting imports to countries that are thought to violate human rights, support terrorism, tolerate narcotics trafficking, or pose a threat to international peace. Among the countries that have been subject to such trade restrictions are Burma, Cuba, Iran, Iraq, Libya, North Korea, Sudan, and Syria. But in 2000, the United States repealed a 1974 law that had required Congress to vote annually whether to extend "normal trade relations" to China. The step, which removed a major source of friction in U.S.-China relations, marked a milestone in China's quest for membership in the World Trade Organization.

There is nothing new about the United States imposing trade sanctions to promote political objectives. Americans have used sanctions and export controls since the days of the American Revolution, well over 200 years ago. But the practice has increased since the end of the Cold War. Still, Congress and federal agencies hotly debate whether trade policy is an effective device to further foreign policy objectives.

Source: http://economics.about.com/od/foreig...nton_trade.htm

And another link not quoted: A Chance to Rethink Sanctions