Farm subsidy - how is it different for a crop farmer compared to a livestock farmer?

Question

Is all the talk & debate over farm subsidy directed at the whole agricultural feild or are there differences between farmers who grow crops & farmers who produce livestock? Does one qualify for more help than the other, etc. etc.

Answer 1

In addition to subsidies, you likely want to consider tariffs (negative subsidies), and insurance (paid for by the farmer, but subsidized).

One of the oddest subsidies that has lasted for decades is subsidies for tobacco, but those subsidies were further subsidized with funding for cancer and the "moral hazard" of smokers' lives.

Almost all the subisdies go to crop farmers,

so ranchers (livestock farmers) get hardly any subsidies.

For this disparity, there is a good reason.

Crop farming has much more risk --

a drought on non-irrigated land would leave the farmer with no revenues to pay off expenses;

hail would knock grain off the plant resulting in a harvest reduced by perhaps 80 percent;

and the crop farmer can also get insects, fungi, mold, or floods.

Keep in mind that crop farmers need revenues to balance their expenses.  They have high costs for seed, irrigation ($5000 a month for 80 acres in summer), and rent of the land ($130 per acre per year in Iowa or $10,000 for 80 acres).

In contrast to crop hazards, the rancher's biggest problem is the possibility of high feed prices; ie, crop prices, which are exacerbated by crop subsidies or legal distortions of the market (eg, subsidizing corn through ethanol subsidies).

While the crop farmer might have a 20 percent chance of crop failure, the rancher only very rarely gets an infection that destroys the heard of animals.  Although, if chickens get a contagious disease, then government will require their destruction (as happened in southern China and Hong Kong).  A farm in western Wyoming saw all its cattle die from a nearby mine polluting toxins into the water and air.  Public opinion could harm ranchers by reducing meat prices, as when the consumer fears Mad Cow disease, so the consumer substitutes chicken for beef.

As an exception to ranchers smaller risk, a severe drought can kill whole herds of cattle, which are usually instead sold off way before the cattle get much meat on their bones.

Conditioning the variables often reveals something interesting, though not necessarily causal. Almost all the subsidies go to farm operators who are men, not women.  I know a woman who is a horse rancher, who says of course, she wouldn't drive a tractor but she'd care for animals.  However, what's odd is that there are perhaps 300 types of crops grown in the United States -- those crops dominated by women are virtually never subsidized.  Orchard fruits/nuts with mostly male operators are sometimes subsidized and sometimes not subsidized, but orchard crops with mostly female operators are virtually never subsidized (I forget, maybe one of those unsubsidized orchard crops was peaches).  And I believe women are usually the operators of herb farms, but they don't get subsidies.  Possibly these farms operated by women are smaller (I didn't look at the data that way) -- again, conditioning on variables is important and I didn't do this conditioning.

Tariffs:

The United States has a very high tariff on sugarcane, so it imports relatively little from places like Brazil.  With no tariff, the United States would probably grow no sugar and the United States subsidy for ethanol would support not corn ethanol but sugarcane ethanol imported from Brazil.

The United States also has tariffs on peanuts.  Virginia peanut farmers fear any reduction in those tariffs, because Africa (specifically Senegal), from which peanuts originally came to the United States,

would take much of the peanut market.  By the way, peanuts are native to countries in South America, from which peanuts were introduced into west Africa, from which peanuts were finally introduced into the United States.

What do we call payments to farmers to not grow crops ("set assides" actually)?  A subsidy, I suppose.  Those subsidies are ruses deceptively justfied as conservation of land, or

reduction of over-planting, but such payments "to not be a farmer" do not seem justified or as justified as reducing risk from nature's hazards.

Government subsidies in the form of  INSURANCE against nature's hazards seem justified, since that insurance is usually designed to not encourage farming on marginal land or other "moral hazards" (as economists call such externalities).

Whether its called "subsidy", "insurance", or "tariff", such government programs are almost always for crop farmers.

Curiously, farming represents almost "perfect competition" in economics, yet that so holds down the price of their crops and livestock that profits ensue mostly from government welfare (a balance to free competition).

This might be a general theme in our society:  for best profits, don't seek out the "perfect competition" of capitalism, but seek out a monopoly for a business, and if you can't get a monopoly then seek out government market restrictions or government welfare.

If you've ever followed a Congressional lobbyist's bribery with contributions for a political party's election,

then you've seen that $1 of contributions generally gets them government contracts, government tariffs, or other government laws worth $1000!

Answer 2

Yes.   The farmers that have the senators that have the most seniority help the farmers in their state the most.  So if Iowa has the senior senator (which they do in Harken), they get the greatest benefits from the bill.

Answer 3

the only subsidy for livestock would be a dairy subsidy.  there are many different crop subsidies and different set aside programs for many different reasons.  you really cant compare the two.

Answer 4

On the whole subsidies are geared more toward crops.  They vary over time taking circumstances into consideration.  This year, for example, there was a lot of aid to livestock farmers to help with the losses of feed and stock due to the drought.  Subsidies are geared to keep the farmer in business when he is faced with large losses from whatever the reason.  Farm subsidies have gotten completely out of hand and become politically motivated more than looking after the farmer. Farmers would be better off if the government stayed out of the free market.  But it is at a point now that most farmers would be out of business if the subsidies were suddenly removed.  There needs to be a system where farm subsidies could be gradually removed and farm products be subject to free market prices.  It is the only what farmers will ever get paid what their produce is worth, and not what the government will pay for them.

Answer 5

you have to sit down with them at the right office and fill out all the papers and they tell you step by step. take a thermos of coffe and settle in. repeat each year.