INTRODUCTION
Farmers continue to get bashed over the farm subsidies question. Even more so under Trump, and with the release of updated data on farm income and wealth, (USDA: Economic Research Service (ERS,) 9/2/20, "Data Files: U.S. and State-Level Farm Income and Wealth Statistics,") https://www.ers.usda.gov/data-products/farm-income-and-wealth-statistics/data-files-us-and-state-level-farm-income-and-wealth-statistics/). Many Democrats seem to be claiming that Trump has been good for farmers, especially across the major grain farming regions and the South, where there are a lot of red states. These Democrats make a case that farmers should vote for Trump. All of this helps Trump win, of course, and they're mad about it. Many others join the chorus.
Behind these claims are a number of major farm subsidy myths that I've addressed here and elsewhere over the years. Most importantly, people look only at the subsidies, and not the larger economic context behind them. For example, the cornbelt has received the most subsidies from Trump, much more than from Obama. It’s also had the biggest reductions in Net Farm Income.
People know that there have been problems on farms under Trump, starting with the trade war with China, and continuing with some big covid 19 impacts, such as reductions in livestock due to problems at meat plants, resulting in lowered demand for corn. Waivers from biofuels usage, (big for corn and soybeans,) is another problem that's being talked about. But still, there has been a lot of writing and posting complaining about the government subsidies farmers receive.
The bigger problem of farmers paying much bigger subsidies to agribusiness, including CAFOs, (animal factories,) and to foreign buyers like China, (all as cheap, below cost farm prices,) gets little specific mention. It seems clear that this side of the issue package gets little traction.
Behind all of this is blindness to the actual full evidence, subsidies, yes, but in the context of the larger market context. The subsidies are visible, it seems. The larger context remains hidden. Here I correct this.
NET FARM INCOME: SHOWING SUBSIDIES
Net Farm Income comes from gross crop and livestock receipts, subsidies and other factors, and then subtracting expenses, as computed by ERS. What I show is a variation on that. I show what net farm income would be if there were no subsidies, and then I include all subsidies, (Direct government payments,) on top of that. These payments include the main farm subsidy programs, Agricultural Risk Coverage (ARC,) and Price Loss Coverage, (PLC), Trump's big new temporary subsidies, plus payments for conservation and anything else.
One important issue for some farmers is how regular farm subsidies, Agricultural Risk Coverage, (ARC,) and Price Loss Coverage, (PLC,) have worked out. ARC has dried up for some crops during the Trump years. For example, 97% of Iowa Corn farmers chose ARC in 2014, as PLC wouldn’t pay anything at those Obama era price levels. But then corn prices fell, year after year, from $6.92 in 2012 to $4.49 in 2013, $3.71 in 2014, $3.52 in 2015, $3.30 in 2016 and $3.31 in 2017, and only a little higher in 2018. As prices fell, however, ARC subsidies declined, to where almost all ARC recipient across a large region received no subsidies for corn, soybeans and wheat in 2017 and 2018, (paid in 2018 and 2019). (www.fsa.usda.gov/… & www.fsa.usda.gov/... ) The ARC program is irrational. It’s not at all “risk management.” It’s forced gambling.
Related to this, PLC subsidy triggers, (called “Reference Prices, and originally set in 2013,) were not adjusted for inflation in either the 2014 or 2018 Farm Bills. So, for example, the subsidy trigger for corn, originally $3.70, (below which you get a fraction of the reduction as a subsidy,) falls down close to $3.00 by 2023 (in 2013 dollars). (See the discussion below about the original Democratic Party Farm Bills and more recent proposals.)
Additionally, the PLC subsidy triggers for peanuts and rice were set well above 2015 full costs, while the comparable “Reference Prices” for most grains were set well below these costs, favoring the South over the Midwest. (More about these comparisons is also shown in the slide shows.)
It seems that few farm and food issue advocates who are concerned about subsidies have given much thought to what the full evidence actually looks like.
NET FARM INCOME IS SIGNIFICANTLY LOWER WITH TRUMP, EVEN WITH BIGGER SUBSIDIES
The full evidence shows a very different picture. Net Farm Income is down a lot all across much of the red Trump region, especially in the Cornbelt, (Iowa, Illinois, Indiana, Ohio, Missouri,) Plains states, (North Dakota, South Dakota, Nebraska, Kansas, Oklahoma, though Texas is up,) and 5 Dairy or Lake states, most of which connect with the Cornbelt, (Minnesota, Wisconsin, Michigan, New York, Pennsylvania). The Cornbelt got the biggest subsidies, but also had the biggest reductions, both quantitatively and as a percentage, (as the most acute loser states).
Farm debt is up, as are interest costs. Yearly average net value for corn and soybeans, (value minus USDA full costs,) averaged nearly $10 billion above zero for Obama, while with Trump they've averaged more than $5 billion below zero. That's a $15 billion difference per year for corn and soybean farmers.
Over all farm cash receipts are down more than $12 billion per year for livestock and nearly $28 billion for crops. Multiplied by four years that's a reduction of more than $150 billion dollars.
2 DETAILED SLIDE SHOWS OF HOW FARMERS ARE HURT BY TRUMP
These statistics mean much more if they can be seen, along with maps of where this is happening, not just read. That's now available on two slide shows I've uploaded featuring this data. The first slideshow shows the contrast between Trump and Obama and other time periods by farming region. The main focus is on comparing Net Farm Income (showing subsidies). Other comparisons are also shown. For example, regular farm subsidies have all but disappeared by 2019 for states like Iowa. This slide show is found on SlideShare, here.
https://www.slideshare.net/bradwilson581525/farming-regions-obama-vs-trump
The second slideshow shows the data for every state. It's on SlideShare, here.
https://www.slideshare.net/bradwilson581525/trump-subsidies-in-context-states
WINNING THE RURAL VOTE
The rural vote is important for winning the electoral college. To win, Democrats should respect the need of farming states to be heard, and not drowned out by urban mega-centers. Democrats must re-learn about the core farm issues. Historically Democrats have supported much cheaper farm bills that help farmers get paid much more fairly. That's reflected in the Net Farm Income charts, which start with the "parity" years, (1942-1952,) of the early Democratic Party Farm Bills of the New Deal. For most states, this early period had much higher Net Farm Income, with hardly any of it coming from Direct Government Payments of any kind.
This is also seen, very dramatically, in the various progressive populist Farm Bill proposals over the decades, like the Family Farm Act of 1987, (Harkin-Gephardt, https://familyfarmjustice.me/2016/12/09/family-farm-act-of-1987/), which found that this approach would favor grass-fed livestock systems over CAFO systems. More recent proposals come from the National Family Farm Coalition, the National Farmers Union, the Texas Farmers Union, and the Wisconsin Farmers Union (https://zcomm.org/zblogs/primer-farm-justice-proposals-for-the-2012-farm-bill-by-brad-wilson/ ). There have been econometric studies done inmost of these proposals. They make more money on farm exports, make CAFOs pay farmers significantly more, and cost much less than Republican approaches.
Years ago Joe Biden supported the Harkin-Gephardt proposal, above, and says he might support it again. Kamala Harris also supported this more profitable, less expensive, Democratic Party approach, (repeatedly touted in Democratic platforms over the years, www.presidency.ucsb.edu/...).
A MUCH CHEAPER ECONOMIC STIMULUS
With all of the big spending in response to covid 19, including the farm subsidies and those in response to Trump’s trade war, farm subsidies will be much at risk in the future. To see how bad this might be for farmers, check out the blue portion of the Net Farm Income bars on the charts above and in the slideshows. The blue shows what Net Farm Income would have been without any subsidies. Meanwhile, the farm economy has been very bad, with very profitability, very low low Rates of Return on Equity and Assets from current income.
On the other hand, with the Steagall Amendment of 1941 and other legislation, the farm programs were used as a non spending economic stimulus, where minimum farm Price Floors were raised to “living wage” or “parity” levels to create wealth, (85% or 90% of parity with a goal of achieving 100% of parity of income). (See my Daily Kos diaries on this here www.dailykos.com/… and cf. here www.dailykos.com/....)
Today these programs need extra features to make up for all of the damage that’s been done to U.S. agriculture, to climate and the environment, to minority farmers, and to the economy generally, (less wealth and lower rates of wealth creation,) all for the benefit of agribusiness. We need to restore the diversity of livestock systems to bring back sustainable livestock crops like grass, alfalfa and clover hay, and feedgrain nurse crops like oats and barley. Vast areas should be seeded down to this permanent cover. Bringing back Supply Management systems should make the biggest farms cut back more, and give special advantages to organic farms and the farms of special needs farmers, including beginning farmers, women farmers, and minority farmers. zcomm.org/...