RECENT NEWS
USDA  Jul 29  Comment 
WASHINGTON, July 29, 2014 – The U.S. Department of Agriculture (USDA) today announced continued progress in implementing provisions of the 2014 Farm Bill that will strengthen and expand insurance coverage options for farmers and ranchers.
Southeast Farm Press  Jul 28  Comment 
Virginia Farm Bureau Federation The Virginia Farm Bureau Federation will host a series of regional 2014 Farm Bill information sessions in August to share news with producers about programs introduced or modified under the 2014 farm...
USDA  Jul 22  Comment 
WASHINGTON, July 22, 2014 — Agriculture Secretary Tom Vilsack today reminded producers that changes mandated through the 2014 Farm Bill require them to have on file a Highly Erodible Land Conservation and Wetland Conservation Certification...
USDA  Jul 17  Comment 
WASHINGTON, July 17, 2014 - The U.S. Department of Agriculture (USDA) announced today that approximately $13 million in Farm Bill funding is now available for organic certification cost-share assistance, making certification more accessible than...
USDA  Jun 30  Comment 
WASHINGTON, June 30, 2014 – Agriculture Secretary Tom Vilsack today announced continued progress in implementing provisions of the 2014 Farm Bill that provide new risk management options for farmers and ranchers.
USDA  Jun 30  Comment 
WASHINGTON, June 30, 2014 -- U.S. Department of Agriculture (USDA) Secretary Tom Vilsack announced today the allocation of $5 million to support 19 projects under the National Clean Plant Network (NCPN) funded under the Agriculture Act of 2014...
New York Times  Jun 27  Comment 
Ten Asian and Pacific nations have complained that the Agriculture Department’s catfish inspection program, which was added to the 2008 farm bill, violates international law.
Biomass Magazine  Jun 25  Comment 
Though the USDA Rural Energy for America Program has been hugely successful since it was first implemented in the 2002 Farm Bill, numerous changes have been implemented over the years in order to maximize program value.
USDA  Jun 23  Comment 
DAVIS, Calif., June 23, 2014 - U.S. Agriculture Deputy Secretary Krysta Harden today announced the implementation of new Farm Bill measures and other policy changes to improve the financial security of new and beginning farmers and ranchers.
Biomass Magazine  Jun 16  Comment 
Agriculture Secretary Tom Vilsack recently announced up to $14.5 million in funding for two USDA bioenergy programs made available through the 2014 Farm Bill. USDA also announced the availability of its new Bioeconomy Tool Shed.




 
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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