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  • U.S. Farmers Seeing Record Profits, Thanks to Taxpayers and Government

    The Financial Times reports that “U.S. farmers are heading for their most profitable year on record despite the worst drought in half a century as high grain prices and payouts from a federal crop insurance program compensate for a smaller harvest.”

    Higher profits are great—when they come from real market demand. But farmers’ profits are coming partly from government-directed schemes that have raised prices and partly from taxpayer-funded subsidies.

    Government mandates for ethanol production have twisted the agriculture market. Farmers plant more corn because there is guaranteed demand for it, but this demand is created artificially by the government. Higher demand means higher prices—which hit consumers as well as other farmers, like those who raise livestock and buy corn feed. As a result, everyone’s food prices are going up.

    Then there’s taxpayer-subsidized crop insurance, which the Financial Times notes could pay out $14 billion to farmers this year.

    As Heritage’s Romina Boccia explains:

    This lavish subsidy encourages farmers to over-insure and take excessive risks at taxpayers’ expense. In fact, when disaster strikes and crop prices rise as a result, those farmers whose policies are linked to the price of their crops at harvest time profit even more from higher insurance payments than if they had sold their crops in markets absent a disaster.

    Farming technology has made leaps in recent decades, enabling farmers to be more productive and efficient. That productivity can benefit consumers, too—if the market is allowed to work freely.

    LEARN MORE:

    The Farm Bill’s Secret Handout to Big Corporate Farms

    The Conservationist’s Case for Ending the Reign of Ethanol

    Farm Bill 2012: Agriculture Policy Ripe for Reform

    Posted in Featured [slideshow_deploy]

    9 Responses to U.S. Farmers Seeing Record Profits, Thanks to Taxpayers and Government

    1. Mike says:

      Quit lumping all farmers in together. My grandfather has owned a large cattle operation in Missouri for over 60 years (he's 92 and still not retired) and IS NOT seeing record profits due to the fact that fertilizer and corn prices are high – fertilizer is high because it is used in corn production. Beef and dairy farmers get screwed and LOSE money, suffer from droughts as well and then get lumped in with the crop farmers who get all the subsidies and benefits of the ethanol scam.
      I expect more from the conservative media, especially the Heritage Foundation.

    2. Tom Paine says:

      Ms. Payne's arguments on government's role in farming apply well to finance. When the government provides blanket insurance (bailouts) the role of risk in moderating prudent activities is erased.

    3. J Harman says:

      I work in serving agriculture, and right now profitability is hard to come by. Feed cost is pushing dairy operations out of business. The only profit area is actually going to the ethanol plants. Government subsidized and corn contracts area actually helping ethanol plants make some serious money without turning the key to open the doors. When the price of food goes up in dramatic way it will not be going into the farmers pocket, by rather the supermarkets. Currently politician in Washington have no idea what the lop sided aide has done to the farming community. We lose, and the world loses. Fertilizer bulk is coming from China and processed in the U.S. Why because the lack of local support has forced business out.
      When the U.S. farm stops producing the food, then who will? We supply 30% of the world's consumption of corn. Someone better check out their comments about profits.

    4. None says:

      Yep, as the largest farms are run by corporations, in-turn feeding Mansanto with profits, and the ill-concieved ethanol industry with subsides, all at the expense of the taxpayers; it's hard not conclude we're run by crooks and morons from both parties, in one big scam.

    5. Blair Franconia, NH says:

      Make farmers, who since the farm crisis of the 1980s, are no longer the political force they used to be, subject to
      the free market. Eliminate the farm subsidies. We don't need farmfare anymore.

    6. Dave says:

      As my Grandpa and his farming cronie used to say – "Farming is the only business where they expect you to sell your product for less than it cost you to make it!" …. Those gentlemen were spot on then and even more so today…..

    7. mef says:

      I am surprised that anyone would assume farners will even break even in a year such as this. We have been farming for more than 30 years but have not seen any drought year this disasterous. Even with crop insurance we are barely going to be able to pay our bills and stay in business to plant a crop next year. Yes, grain prices are exceptionally high. However, when you factor in the rising costs of seed, fertilizer and deisel plus wear and tear on equipment–prices that have escalated enormously the past ten years–there is no profit. In fact, most farmers–even the larger farming operations–have to scramble to make ends meet. The public really needs to understand…the farmer is the lowest on the totem pole. Everyone above us gets a higher profit while we do the majority of the labor. We are not paid for that and we do not get paid vacations or sick days. Plus, our living expenses come out of those 'so-called' government and insurance handouts. Keep in mind that subsidies for the drought of 2005 were not issued before 2008. Profit? That's a pipe dream to any real farmer.

    8. Although their is room for debate about Farm subsidies and government backed ethanol. (I personally believe there should be one or the other, not both.) Ms Payne misses the mark when she attacks crop insurance. What she misses is that it is insurance and Farmers pay into the pool, like any insurance and pray they wont need to collect. Believe me as a retired farmer who paid in more than I ever collected nobody is getting rich off crop insurance.
      Farming is a very risky business and many years farmers lose huge amounts of money and depend on the good years to carry them through. It distresses me to see it being attacked by the Heritage Foundation.

    9. Larry Liepold says:

      I need to echo the point that record profits are only equal to cost of production and cost of living. A point I have not yet seen anywhere except agriculture media is that in the years 2002-2011 the Federal Crop Insurance Corporation, which is the arm of the government responsible for managing the subsidy, profited 4.119 billion dollars. As you look at the years there were losses and gains in individual years, but over all US agriculture paid that to the government. I have contended for years that if the subsidy disappeared, crop insurance would be more competitive. If you look at the premium cost per cost of coverage it is geater than health insurance, auto, and home owners insurance.
      DO NOT lump all farmers together.

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