RECENT NEWS
Southeast Farm Press  Dec 17  Comment 
“For ‘next-generation’ farmers and ranchers, which is how the bill refers to beginning farmers, the new legislation provides $100 million for the Beginning Farmers and Ranchers Development program to facilitate farmland transition to the...
Southeast Farm Press  Dec 11  Comment 
Clint Thompson, University of Georgia Farm bill meetings are set for Tifton and Bainbridge Monday, Dec. 15; Dawson and Quitman Tuesday, Dec. 16; Vidalia and Waynesboro Wednesday, Dec. 17; Cartersville and Hull Thursday, Dec. 18; and...
Southeast Farm Press  Dec 11  Comment 
One thing this particular Congress and others that immediately preceded it have done especially well is to make plenty of symbolic gestures. For example, do you remember the specifics of the debate that delayed the new Farm Bill? Farm Press...
USDA  Dec 11  Comment 
WASHINGTON, Dec. 11, 2014 - The U.S. Department of Agriculture is publishing a rule that outlines how it will improve the Environmental Quality Incentives Program (EQIP), one of USDA's largest conservation programs. The interim final rule...
Southeast Farm Press  Nov 21  Comment 
To help Alabama farmers understand the ins and outs of 2014 Farm Bill programs, Alabama Extension will hold a series of informational meetings in December. read more
Insurance Journal  Nov 20  Comment 
U.S. farmers are about to reap a bumper harvest not just in corn and soybeans but also in new subsidies that could soar to $10 billion, blowing a hole in the government’s promise that its new five-year farm bill would … The article Farm Bill...
Southeast Farm Press  Nov 6  Comment 
Carl Zulauf, Ohio State University Because the crop program decision for the farm bill covers the current 2014 crop year and involves a choice among three program options, delaying the election until late in the election period reduces...
Southeast Farm Press  Nov 5  Comment 
Farmers have until Feb. 27 to update their yield history and reallocate their base acreage for the 2014 farm bill and officials with USDA’s Farm Service Agency or urging farmers to come by their local FSA office and complete the paperwork as...
USDA  Oct 27  Comment 
WASHINGTON, October 27, 2014 ─ As part of the continued rapid implementation of the 2014 Farm Bill, Agriculture Secretary Tom Vilsack today announced proposed new actions to include new forest products in the BioPreferred® program.
Insurance Journal  Oct 23  Comment 
Texas cotton producers say they are pleased to learn the U.S. Department of Agriculture has reconsidered its decision about implementing a provision of the farm bill. The department’s announcement means its Risk Management Agency will calculate...




 
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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