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« Debating Conservative Friends | Main | Asiatic Mode of Production and Bureaucratic Collectivism »


Nation in Crisis

By Ken Poland
May 23, 2008

The world is in a food crisis! The rich American farmer is to blame. Congress just ignored this fact and passed the Farm Program Bill, over the President's veto. (They do something right, once in awhile.)

Our nation is in an economic crisis! Too many old folks expecting to collect on their retirement funds and asking for adequate health care are to blame.

Farm Program payments and the Social Security entitlements are being blamed for all our troubles. I'm to blame! I'm an active farmer, drawing Social Security and partially covering my medical expenses with Medicare benefits.

First, let us look at the Social Security and Medicare situation. Most of us who are receiving benefits from these two programs have been paying premiums into Social Security, all of our working careers and Medicare premiums since its inception. How do you figure those benefits as being any different than indemnities paid by any insurance program (health, life, or property)? If you pay the premiums, you expect coverage!

Our government has been borrowing from the Social Security Trust Fund, almost from the beginning. We borrow money to keep from having to levy taxes to meet current expenses. The reasoning was that it made good sense to borrow from the Trust Fund (that's like taking money out of one pocket and putting it in another pocket). Now, we are facing, in the very near future, the fact that payroll deductions are not going to produce excess funds, above current demands.

OH MY!! Does that mean we'll have to start levying taxes to cover the demand? Does that mean we can no longer cover the current expenses in the general budget without raising taxes? We can no longer dip into the other pocket (SS Trust Fund)?

Raise taxes? That would seem to me to be the logical solution to the dilemma. But that isn't the safest political solution. The current Administration and many of our Congressman are advocating cutting benefits. Let's put them into the Social Security System and the Medicare program, and see what they think the solution should be. That would be like trading in the Cadillac for a Model T Ford.

Now, let's talk about the Farm Bill. It has a whopping $307 billion price tag calculated to cover it.

Statistics gleaned from an article attributed to Barry Flinchbaugh, KS ST Professor, are quite interesting.

A part of that Farm Bill, $209 billion, is allocated to programs to feed the poor, both urban and rural. $35 billion is to cover commodity price supports. $5 billion is to cover direct payments to producers, whether they have a harvest or not. By my calculations that leaves $58 billion that Prof. Finchbaugh doesn't account for. To put all these figures into perspective, he reasons that with President Bushes proposed $2.9 trillion budget, a $20 billion expenditure could slip through the cracks as an acceptable accounting error.

Also, according to Flinchbaugh, there are 2.1 million farms in the USA.

84% of those are categorized as small farms. ($100,000, or less, gross sales) They produce 21% of the food supply and receive 30.5% of farm payments.

3.8% are categorized as big farms. ($500,000, or more, gross sales) They produce 50% of the food supply and receive 27% of farm payments.

12.2% are categorized as medium size farms. ($100,000 to 500,000 gross sales) They produce 28% of the food supply and receive 42.7% of farms payments.

Statistics are boring and hard to follow. They can also be interpreted to suit the statistician. My interpretation is that the farm program is working.

Who benefits the most from the farm bill? The public consumers of the finished products (food and byproducts) benefit the most. Next would be the medium sized farm operators. Without the safety net provided by the program, the risk would be too great and financing would not be available.

Some more statistics of interest: When wheat was farm priced at $3.00 per bushel, you had 5¢ worth of wheat in a 1 lb loaf of bread. Wheat hovered around that $3.00 price for several years. Has the price of bread remained static? When you get sixty 1 lb loaves of bread from a bushel (60 lbs) of wheat, what is the farmer's portion of the cost of bread, today. Wheat at the infamous $12.00 farm price would calculate to 20¢ in a 1 lb loaf. Did that 20¢ make bread un-affordable?

Keep in mind that I'm putting the entire farm price of the wheat on the bread. What about all the byproducts and who benefits from those?

The cost of putting that loaf of bread in your kitchen includes transportation, milling, retail outlet cost, and a built in profit for all those entities between the farmer/producer and you, the consumer.

If you think those costs have not hit the farmer, too, you are not thinking. Fertilizer that used to cost me $70 per ton is now $700 per ton. Fuel that used to be 25 or 30¢ per gallon is now $3 to $4 per gallon. Part time labor that used to be $2.50 per hour is now $10 or more per hour.


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The blog post previous to it is titled "Debating Conservative Friends"

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