Setting the Record Straight

For those of you who know me, most understand that I have never been a supporter of direct farm subsidy payments to farmers.  It's a complicated issue, but in a nutshell I have always felt it is a poor use of taxpayer money.  Nevertheless, farmers like me have received them for years as an inducement to enroll in the federal farm program -- which has significant controls on the manner in which I operate my farm.  It is a carrot and stick approach to land management and food production -- and one that I feel I must participate in in order to stay competitive with other farmers also receiving subsidies.

However, given the recent budget battles I think it's time to help non-farm folks understand something important.  Eliminating farm subsidies are a red herring when talking about meaningful deficit reduction in the federal budget.  Here are some facts:

1. TOTAL federal "Farm Program" spending amounts to about 2% of the annual federal budget. 
2. Of that amount 75% of those dollars are used for food stamps, nutrition programs, school lunches, etc.
3. The remaining 25% (or roughly .5% of the annual federal budget) goes to farmer or farmland related programs.
4. Of THAT .5% roughly 25% (we are now down to about .16% of annual federal budget expenditures) goes to farmers in the form of DIRECT FARM SUBSIDY PAYMENTS.
5. Corn farmers like me receive approximately $24 per acre each year which immediately gets capitalized into the expense side of the ledger in one way or another.  It is not "free money" I keep.  Generally it gets spent on land.  In other words land owners get most of it (many of whom are not farmers).
6. This $24 in direct payments is a small fraction (less than 2.5%) of the total gross revenue earned on an acre of Illinois corn ground.  It is really rather unimportant.  A 15 cent move in the price of a bushel of corn (an often daily occurrence) has more impact.

What I am saying is this.  Go ahead.  GET RID OF THE ENTIRE DIRECT FARM SUBSIDY PAYMENT PROGRAM.  I'm all for it.  You should be too.  BUT DO NOT FOR A MINUTE THINK THIS WILL HAVE A MEANINGFUL IMPACT ON THE FEDERAL DEFICIT.  It's just too small.  It makes for good politics.  Farmers are a small voting block.  The ag sector of the economy is generally doing well.  

Farmers are an easy target.  But we are not an easy solution.

Meaningful deficit reform will really only come from SHARED SACRIFICE.  Farmers will do our part.  But we all need to play a role.  Entitlement programs like Social Security, Medicare, Medicaid, public employee pension programs, military spending etc. are where the meaningful budget cuts MUST take place to have an impact.  They are where the $ is.  Thanks to our leaders in Washington our deficit spending is now roughly 40% of our annual budget expenditures.  I wasn't a math major in college, but I'm not sure how .16% can plug that hole.

Don't be misled by popular rhetoric.  Demand real change!

This Budget Pennies video is a great demonstration of the point.