RECENT NEWS
Biomass Magazine  May 18  Comment 
On May 18, the U.S. House of Representatives voted 198 to 213 to defeat the 2018 Farm Bill. One day prior to the vote, members of the House defeated a proposed amendment by a vote of 75 to 340 that would have repealed the Farm Bill’s Energy Title.
Biomass Magazine  May 16  Comment 
The American Biogas Council in conjunction with the Agriculture Energy Coalition and the Biomass Power Association is urging Congress to oppose H.R. 2, the Agriculture and Nutrition Act of 2018, also known as the Farm Bill.
Biomass Magazine  May 14  Comment 
On May 14, the Agriculture Energy Coalition sent a letter to the House of Representatives opposing the elimination of a stand-alone energy title and exclusion of mandatory funding for energy programs in the 2018 Farm Bill.
CNNMoney.com  Apr 20  Comment 
$1 billion a year for job training sure sounds like a lot of money.
Agriculture Online  Apr 18  Comment 
Byline: Chuck Abbott WASHINGTON - On a party-line vote, the House Agriculture Committee approved a five-year farm bill on Wednesday that tweaks the supports now in place – a promise of certainty, leaders said, during a...
Insurance Journal  Apr 13  Comment 
Republicans on the U.S. House Agriculture Committee on Thursday called for changes to the government’s food assistance program for the poor, in a package of long-awaited proposals for the next U.S. Farm Bill that could complicate its passage...
NPR  Apr 12  Comment 
Republicans in Congress have released their version of a new Farm Bill. It imposes new requirements on low-income recipients of food assistance, but continues traditional subsidies for farmers.
Biomass Magazine  Apr 12  Comment 
On April 12, House Agriculture Committee Chairman K Michael Conaway, R-Texas, released a draft of the 2018 Farm Bill. The legislation reauthorizes many bioenergy-related programs, but provides them with only discretionary funding.
Reuters  Apr 6  Comment 
U.S. Senator for Kansas Jerry Moran said he assumes the Trump Administration would try to use U.S. farm bill legislation, which helps farmers withstand economic slumps, to shield the sector in a growing U.S.-China trade dispute.




 
TOP CONTRIBUTORS

The Farm Security and Rural Investment Act of 2002 is wide-reaching legislation touching farming, energy, forestry, and nutrition, among other industries. Over 90% of the funding for the Farm Bill, as its otherwise called, goes towards subsidization of U.S. farmers, and it heavily favors five grains in particular: corn, wheat, cotton, rice and oilseed (i.e., soybeans). This bill expires this year and if its 2002 passage is any indication, the renewal and specific focuses of the 2007 Farm Bill will be highly contentious.

Farmers Better Off

Farmers have experienced growing financial stability over the years. Corn, soybean, wheat and rice all returned significantly higher returns per acre in 2007 year to date than in 2006. Cotton, on the other hand, remained relatively flat. Corn in particular nearly tripled in returns per acre ($120 vs almost $350), while rice, soybeans and wheat saw increases around 50%. In addition, farms have the lowest debt levels since 1960 with a 12% debt to asset ratio. Debt ratios peaked at 22% in 1985 and remained around 15% through the early 2000s.

Total assistance from the U.S. government averaged approximately $17 billion per year from 2002-2006.

  • 43% of all farms received government payments in 2005.
  • Subsidies accounted for about 11% of gross revenue and 39% of net income for farms receiving payments in 2005.
  • The largest 10% of farms (by gross revenue) received nearly 60% percent of all subsidies in 2005.

Source: USDA

International Challenges

The Farm Bill legislation has truly global effects, as subsidies can profoundly affect the price of commodities traded on worldwide markets. And if the bill was contentious in Washington, D.C., it may be even more so on the international stage. The legislation gives U.S. growers such pricing advantages, the World Trade Organization (WTO) responded in 2004 by ruling the Farm Bill's cotton subsidies illegal on the grounds of "dumping," or selling below cost. Similar challenges to corn, wheat, rice and/or soy may have far-reaching consequences for commodity growers in the U.S., especially if the country makes concessions to lower subsidies in order to gain negotiation leverage at the Doha Round, the WTO's important forum for global free trade discussions.

Companies Positively Affected by Current Farm Subsidies

  • Commodity farmers such as Archer Daniels Midland (corn growers) benefit from currently existing subsidies, which are counter-cyclical--meaning that growers are buffered from downturns in commodity markets
  • Seed and pesticide companies such as Monsanto and Syngenta experience higher levels of demand as more farmers are financially able to grow key commodities
  • Farming machinery companies such as John Deere also benefit from subsidies due to increased demand from commodity growers
  • Processed food companies such as Sara Lee, Coca Cola, Pepsi and Kraft Foods pay lower effective costs for key inputs in food manufacturing (e.g., corn syrup, wheat flour) as a significant portion of commodity growers' revenue and profit comes from the government.

Companies Negatively Affected by Current Farm Subsidies

  • International grain growers become less competitive than domestic growers in the U.S. because government subsidies in effect lower prices to customers
  • Organic food growers such as SunOpta suffer from subsidies of corn, wheat, cotton, rice and oilseed because fruits and vegetables become relatively more expensive compared to processed foods, and competition for farming land increases
  • Health and organic food retailers such as Whole Foods and even Wal*Mart, which entered the organic foods market in 2006, are negatively affected as fruit and vegetable prices are relatively higher to consumers than food products which heavily utilize by-products of corn, soybeans and wheat.
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