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Farming For Federal Funds

November 25, 2009

Is the store, restaurant or factory that your family operates any less of a family business than a family farm? Is your business sometimes subjected to risks that are beyond your control?

During the coming weeks the federal government will make another significant financial commitment to one of our most heavily subsidized private industries, agriculture. Since we will be paying the bill, we should know the facts.

The forthcoming aid package will be rationalized for a variety of reasons. First, it is important to preserve the independent family farm as part of our heritage. The farmer is subjected to uncontrollable risks, the weather, that can destroy their business in a season. And finally, all of us, farmers, businesses and consumers will be better off because financial aid for troubled farmers will insure ample quantities of inexpensive food.

Imagine for a minute cold and rainy weather dominating the North American continent for an entire summer. California’s resort and tourist business suffers irreparable harm. Occupancy rates at hotels and motels are at depression era lows. Restaurants are closing their doors for lack of customers. Shops, burdened with inventories in anticipation of seasonal sales, are unable to pay their bills.

Do you think federal aid is on the way? I doubt it. All businesses are subject to some uncontrollable variables. I would venture to say that many more family run shops, restaurants and factories have failed than family farms over the years. The reality is that no industry receives governmental support like agriculture and the “family farm”.

Agricultural production is dominated by a small number of very large, efficient, well financed businesses, most all of which are corporations, some family owned and some not. Of the approximately 2 million businesses that are classified as “farms”, over half of them have gross revenues of less than $20,000 per year from their agricultural operations. These truly small farms and ranches aren’t primary sources of income for their owners, but are fundamentally recreational and supplemental endeavors.

Most of the statistics concerning the farm problem are distorted by the very small number of large corporate farms and the very large number of small part time farms. Further, a large percentage of the family farm acreage is not really farmed by the families that own it. The generations that have inherited those lands have moved elsewhere and now lease the land to others that actually work the farm.

The independent business person, both farmer and shopkeeper, is the backbone of our country and an important part of our heritage. Ours is an economic system built on principles that permit success or failure with minimal governmental control and interference. We will retain that strength by maintaining equal and fair treatment for all industries.

Comparisons are made to the “dust bowl” conditions of the thirties. No such comparison exists. The famed “dust bowl” was the result of too much intensive farming without regard for soil conservation. Much like an assembly worker subjected to an endless string of twelve hour days with no relief, the land revolted. As a result of that experience and the advance of agricultural technology, soil conservation techniques are now widely in use. The land is more productive while at the same time resistant to the ravages of the “dust bowl” conditions.

While justifying aid as a means of insuring “a steady source of food”, Congress should be reminded that several months ago they paid the nation’s farmers NOT to plant over 80 million acres because they were concerned about food surpluses that would increase supplies and drive down prices. When politicians begin to spend our money to rush to the aid of “the family farm”, it’s sometimes difficult to separate the wheat from the chaff.

In addition to all their other government supports, farmers are afforded the opportunity to buy inexpensive crop insurance that provides income protection in the event of situations like they are currently experiencing. As with all business decisions that involve insuring against a loss or risk, if you don’t incur the expense of the insurance and things go well, you make a little more than the next guy. If things go poorly, you have trouble.

Significant amounts of the anticipated aid package will be directed to operations whose incomes may have been adversely effected in the current period, but whose assets are valued in the millions. A situation similar to an investor whose income might be down in a given year despite owning a stock portfolio worth millions. Not a typical candidate for federal assistance.

The continued success of a productive agricultural industry is important to our economy. Equally important however, is the formulation of rational policies that treat all independent businesses equally.

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