Why should we give money to farmers hit by drought?

Many people today bemoan the fact that the two major parties in American politics can’t reach agreement. I, on the other hand, often find that the most inexplicable decisions are those that both parties agree on. In response to the recent drought, everyone on both sides of the aisle seems to agree that we need to fork over a large chunk of taxpayer money to hard-hit farmers. Each side accuses the other of using the issue as a political football and trying to attach other legislation to it. Nobody of significance is questioning whether we should give the money. Among supporters of the handouts, I haven’t seen any even trying to justify it. Apparently handouts of this sort are second nature among the political class.

One reason I’ve seen offered in the past is that the government should support farmers to achieve food security, i.e. a guarantee that the USA will have enough food to eat. If our nation’s food supply were in serious doubt, this might be a reasonable argument. Right now, though, we have more than enough food and are in no danger of running out.

Another possible reason is that we need to support people in need when disaster hits. Most farmers aren’t exactly doing badly, though, so even those who support a generous social safety net for the poor would have little reason to insist on handouts for farmers right now. At most the circumstances would seem to justify targeted handouts to poor farmers in hard-hit areas, rather than massive aid and price supports for everyone.

Further, there is the question of why it should be the government that provides aid. Farming is an industry that depends on many unknowns: rainfall, temperature, economic decisions in other countries, and so forth. Farmers should purchase insurance to protect themselves against possible disaster. Private companies could provide that insurance. There’s no need for the government to step in and offer insurance instead. If farmers and private insurance companies negotiated prices, they’d have a motivation to think carefully about whether it makes sense to use a piece of land. If the government all but guarantees a profit for farmers, then farmers might as well use as much land as possible to maximize their profits. The result hurts the environment and conservation efforts.

Government handouts also affect what gets eaten. It’s the meat industry that’s been hit hardest by drought, because the shortage of corn and soybeans will send feed prices spiraling. Without government intervention, this would cause meat prices to rise and people to purchase less of it. This would be good for the environment and lead to less animal cruelty. By intervening to prop up the meat industry, the government makes sure that the animal cruelty and the pollution caused by the meat industry will continue.

In addition, handouts affect the political priorities of farmers. This year’s drought is only the worst in a series of major droughts to hit in recent years. Most scientists agree that man-made global warming is causing these droughts. If farmers had to suffer financial consequences from these droughts, they’d have a strong financial motivation to seek action against global warming. But if the government ensures that they get the same profits regardless of whether or not there’s drought, the farmers don’t have any financial motivation to care about global warming.

I agree. There are a large number of businesses where a stretch of bad weather is bad for business. Skiing instructors can be in trouble if there’s a warm winter with little snow, owners of beachfront businesses can be in trouble if there’s a rainy summer, etc. None of those guys get bailouts if the weather is bad, but their tax-dollars go to help out farmers for their run of bad luck.

If farmers want to be protected from the whims of the weather, they should buy insurance.

There’s also the fact that, in a sense, a farm is just another business. There is certainly a more emotional connection with family farmers (many of my ancestors were just that in the 1800’s). What is the difference between giving handouts to the Smith family farm because they lost their corn in a storm when we don’t give handouts to Robinson General Building Contractors, A Family Owned Business Since 1970? Do we just treat Robinson Contractors as another business and if it fails, well, the business failed, does McDonalds get welfare if people stop eating Big Macs?

I suspect the subsidies were in put in place place when food security was perceived (appropriately or not) to be a real issue. And as is the case with just about any other subsidy, it becomes far more difficult to repeal / reduce the food subsidy than simply stick to the status quo.

In addition, the prolonged existence of the subsidy likely encouraged more people to become farmers (or encouraged existing farmers to grow more crops) given their expectation that the government would provide relief in tough times. This only makes repealing said subsidy that much more difficult.

I will speculate that a lot of rural farming communities are very dependent on crops, and thus if the crops fail one year, and the community dries up and everyone moves away, our overall capacity for growing food becomes constrained when times are better. Think back to *Grapes of Wrath *- the would cities be flooded with farmers who got driven off the land by the drought? The big hand of government coming in to smooth things over keeps these places intact during a rough patch.

And, is the government actually “giving” farmers money, or are they just manipulating markets, or providing low-interest, short-term loans to farmers to get them thru for now?

Subsidies are largely in the form of cash (e.g., an additional 50 cents per bushel of wheat sold - this would be on top of the $3-4 market price per bushel).

I can only surmise that there is a long-term commitment by the federal government to support agricultural concerns because if they fail then the impact is felt throughout the economy.

This is much the same as when we (the taxpayers) all bailed out the giant financial firms so that an economic apocalypse wouldn’t happen.

Tied as we all are one to the other, it is only by appropriate distribution of our common weal that we can avoid destruction of the means of production during a crisis.

Or something like that.

Well, like it or not, we tend to subsidize things that are necessary for our modern life, like food and oil. We’re also the largest exporter of food in the world, and it’s not even close. All that food we export creates massive international political capital; it can be argued that American wheat exports have more power than the American military.

For a little background reading: http://en.wikipedia.org/wiki/Food_power

Tends to be world wide famine if they fail too.

Food is too important to fuck with.

Yeah, it’s a little hard to get behind letting the food industry fail. We don’t really need financial wheeler-dealers, but we kind of need food.

I always knew you had a libertarian streak in there somewhere! :wink:

There is plenty of food. It’s just certain types of food from certain regions that are affected.

Arguably farmers will send more animals to slaughter, resulting in a short term drop in meat prices as the market is hit with excess supply. Then it takes the market about 18 months to rebound, all with rising feed prices.

Farm subsidy is a flagship bait-and-switch of the republican platform. ‘We support American Ma and Pa farmers because they are struggling and they are the backbone of this great nation.’ So subsidies are granted all fair like, per acreage, so who really wins is massive automated industrial farms with no need for subsidies.

Sure Democrats can take on unnecessarily subsidized industrial giants, at the cost of starving grandma and grandpa of their farm lifeline.

You who have never known famine…

http://www.bloomberg.com/news/2012-08-08/global-food-reserves-falling-as-drought-wilts-crops-commodities.html

“The U.S., with less than 5 percent of the world population, consumes 31 percent of global corn production, 18 percent of soybeans, 32 percent of cheese and 20 percent of beef and veal, according to USDA data.”

I think this is misleading, since we PRODUCE almost 50% of global corn production and are the largest corn exporter. Of course we consume it! We’re swimming in it! We also produce 33% of the world’s soybeans and about as much cheese as we consume. But as we are by far the largest producer and exporter of these food crops, our farm sector is the most important one on the entire planet. Everyone has a stake in our continued good production.

Oh sure, we may be able to cut back in some areas (ethanol production, animal feed, corn sugar, etc) and continue to feed people (at the cost of the collapse of entire industries and a lot of jobs) and at tremendous cost in increased prices which will absolutely impact every one of us, the poorest countries most of all.
The good news;

“Farmers in the U.S. are less likely to feel the pinch because about 85 percent of crops are insured, said Steve Hatz, a senior vice president and regional manager of the agribusiness unit of San Francisco-based Bank of the West, the second-biggest U.S. agricultural lender after Wells Fargo & Co.”

There actually is a reason for farm subsidies and other agricultural programs; whether or not they are still needed or desirable is open to debate. If there is a huge crop of some commodity then the prices can drop low enough that farmers may not make any money after expenses. Then the next year enough a large number of farmers may decide to not plant that crop and the resulting shortage can drive up prices meaning that farmers will plant more acreage the next year causing a surplus that drives down prices, rinse and repeat. Agriculture is more susceptible to this boom and bust cycle because a particular crop is usually only harvested once a year and everyone does it at the same time. Throw bad weather into the mix and things get even more unpredictable. That is fundamentally different than most businesses which can make adjustments to their production and labor costs more easily.

We always want to be a net surplus food producing nation. The cushion produced serves as insurance against disaster, and provides a valuable export commodity.

The reason to subsidize farmers impacted by natural disaster/drought/etc. is to ensure that that cushion/surplus is maintained. The loss of agricultural surplus could have huge repercussions, not only for the US but for the world.

I’ve been lurking and learning, and now compelled to add something to this discussion. Having lived in the corn belt my entire life, with many friends and family members involved in agriculture, including family-operated farms, I just want to say that I don’t know a single farmer who doesn’t have crop coverage through private insurers.

It is my understanding that those policies are often subsidized on both sides of the equation. Even if they have a policy with Well Fargo, Wells Fargo is getting paid by the US government in order to offset the true cost of the insurance.

As for the OP, I think it would be better if the government shifted their involvement from direct subsidies to optional low-interest loans, or they should just cut out the banks (middlemen).

How much of that stuff is exported and how much is destroyed?

I don’t really see any usefulness in subsidizing a product just to export it. If the gov’t pays to make beef in the US 50% cheaper, then people in China can buy US beef, since hey, cheap beef. But the net effect is the US taxpayers are just buying a bunch of stuff for Chinese. That’s a good deal if your in China, since you get someone else to buy you food. And its a good deal if your one of the .5% of the US population employed in agriculture, since you get to lower your prices but still get the same amount of money per-unit. But I don’t see where US taxpayers get anything out of buying food for other people.