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Rethinking the Farm Bill: Subsidies and Family Farms

April 23, 2012 By Wouter Hammink, Macalester College

Over the past several weeks Minnesota 2020 has been running a series of columns focusing on environmental policy issues. This is part of our continuing collaboration with Macalester College's Environmental Studies Department and its students.

Imagine standing at the gas pump. Which fuel do you choose? The cheaper options contain ethanol. Without thinking twice, you choose an ethanol blend; you might even see it as the environmentally mindful option. Now imagine yourself standing in the dairy aisle at your local grocery store. The cost of a gallon of milk has never been so high. Though seemingly unrelated, the decisions you make at the pump directly affect the prices printed on your receipt at the grocery store. The influence of government-supported subsidies has altered the agricultural market in favor of risky industries and factory farms. This needs to be changed.

Growing up on a dairy farm, the impact of agricultural subsidies has always been a part of my life, whether I knew it or not. Ethanol subsidization was merely an afterthought when I a child. However, since getting my driver’s license at fourteen, I began making the conscious decision to keep ethanol out of my gas tank.

The increasing presence of ethanol at the pump has drastically increased the demand and cost of corn. When the cost of feeding cows, pigs, and other animals increases; the impact is offset to the producers and consumers of not only beef and pork, but also meat by-products such as eggs, milk, and cheese.

The ethanol industry was created and developed through a system of subsidies encouraging increased corn production. Though ethanol production increased because of the government subsidies, the biofuel has never been proven to be any better for the environment in the long term than petroleum. In fact, compared to unblended gasoline, corn ethanol has been shown to have no positive benefits to the environment. Regardless, ethanol clearly has major impacts on the price of a bushel of corn, as the ethanol industry in the United States requires more corn than the food industry. The prevalence of ethanol (both by market forces and by subsidies) can directly attributed to about half of the increase in corn prices in 2009.

Views of ethanol are evolving, however. The ethanol industry is no longer subsidy-dependent and the belief that corn ethanol is an environmentally friendly fuel is diminishing. Due to ethanol’s stability in the market and changing public opinion, Congress opted not to extend the subsidies given to corn ethanol producers in 2011. This is great news for Minnesota’s farmers and opens the door for a radically different Farm Bill in 2012.

The success of my family’s farm, as well as Minnesota’s family farms, is hurt by government subsidies that favor corporate factory farms. Even in the face of increased competition from factory farms, international producers, and non-food agricultural production, Minnesota’s family farms are depicted as wealthy subsidy earners. This increased competition from large agribusinesses hurts Minnesota’s family farms more than it helps for two reasons: First, subsidies are more likely to help corporate or factory farms. Second, subsidies’ benefits are not reflected in grocery costs or even at the gas pump. Because of this, farm subsidies actually accomplish the opposite of what they intend.

Farm subsidies are intended to help both the consumer and farmer. Instead, America’s current agricultural subsidy system gives unfair advantages to commercial farms and agribusinesses and costs taxpayers over12 billion dollars annually. Minnesota’s family farmers and concerned consumers require a new Farm Bill that eliminates the unfair subsidies costing both the farmer and the taxpayer.

The expiration of ethanol subsidies marks an opportunity for a larger subsidy reformation. The Food, Conservation, and Energy Act of 2008, more commonly known as the Farm Bill, expires in September, 2012. Congress has the chance to drastically alter the American agricultural system. The 2012 Farm Bill should reconsider its corn and feed subsidies, as well as eliminate the current preference for commercial factory farming. Minnesota’s farmers would benefit from a fairer and less regulated agricultural market. Consumers, meaning Minnesota’s taxpayers, would save billions not only in taxes, but also in grocery receipts.

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  • Dan Conner says:

    April 24, 2012 at 9:58 am

    I think is time for agricultural subsidies to be used as originally intended.  That is, to keep the small family farm viable.  Unfortunately, the subsidies also go to very large family and corporate forms.  I have relatives who are farming over 10,000 in Minnesota and receive $ Millions in Government subsidies.  What is that money used for?  These large farmers use that taxpayer money to buy more farms, price being almost no object.  Consequently, large farms get larger.

    In addition, these large farmers are buying grain elevators, hotels, and unrelated businesses.  Why should the taxpayer subsidize that?

    I believe farm subsidies have to be means tested.  That gets back to the initial intent of the program…to keep small farmers farming.  I don’t think our nation has to worry about keeping huge farmers farming.  It is the large corporate farms and feedlots/factories that are ruining farming anyway.

    Limit farm subsidies to farmers with less than a certain annual income and less than a certain number of acres.  I would think the acreage could be less than 1000 acres and less than 50,000/yr in net earnings from self-employment.  The wealthy farmers need no help.

  • Dan Conner says:

    April 24, 2012 at 10:04 am

    Here is an excellent website that details farm subsidies by state, county, and individual farmer.

    Hopefully, you will notice there are some farmers getting way too much Government money (welfare).  This is more welfare for the rich.

  • Joan Spence says:

    May 2, 2012 at 10:10 am

    The conclusion to dismiss ethanol fuels due to the connection between higher prices for corn-dependent food and ethanol subsidies and the lack of evidence for ethanol’s claim to being greener than petroleum fuels is conservative.  In this case being conservative saves consumers some money in the short term but allows us to follow the path of higher overall costs in the long term.  We must realize that no gain is without investment.  This kind of reasoning is a slippery slope to dismissing all renewable fuels, this is kind of thinking is misguided and small.  These excellent points, higher food costs and higher than expected pollution byproducts is a red flag for more work, not dismissal.  Finding the short comings and working to correct policy and process is the focus for finding better fuel sources.  We ought to find these short comings as opportunities not reasons for dismissal.

  • Dan Conner says:

    May 21, 2012 at 8:11 am

    First, I think the price of ethanol is not less expensive than oil.  There is a “double whammy” effect.  The first “whammy” is that the price of ethanol has followed the price of gas through the speculative oil markets.  Ethanol has not been any price stabilizer for gas.  The second “whammy” is that ethanol has an equal and opposite affect on corn prices.  Corn prices have quadrupled since ethanol has been widely made.  This has ran up the price of feed for livestock, corn syrup, etc.  The most exasperating of all is that more energy is used to create ethanol than is realized as a fuel.  Accordingly, it is a loser as a benefit to the public.  It’s nothing but a massive reallocation of wealth to agribusiness. 

    Maybe the economic resources used for ethanol should be used to develop alterative sources of energy that don’t pollute, are close to inexhaustible, and are economically viable.  There’s geothermal, wind, solar, hydrogen, etc.  Why isn’t more money being spent to make these sources more viable?

  • Terrry Sveine says:

    May 22, 2012 at 9:15 am

    Ethanol is better for the environment and many studies have proven this. (They are too numerous to cite here.)This is too factually supported to spend time restating the obvious.

    Ethanol is renewable - oil isn’t!
    That alone should be a good reason to support it.

    Ethanol allows many people to profit from producing it. How many farmers own an oil well?!

    Ethanol is created at home, while much of our oil comes from overseas, making it, in the words of the last three presidents, a defensive issue as well as an ecological issue.

    Corn is a stepping stone to other bio-sources to create ethanol. It is a still-evolving technology.

    The cost of many of the products cited in the subject story are a result of high oil costs, not higher corn costs. Don’t think that “big oil” isn’t out there to spin blame on the ethanol industry to make themselves look good.

    On the other hand, “big oil” is buying and developing many of their own bio-fuel plants telling me that they know something about the future!

  • Dan Conner says:

    May 23, 2012 at 7:14 am

    Ethanol better for the environment than what?  It certainly isn’t better for the environment than hydrogen, or solar.  In addition to running up the price for corn related consumer products it has run up the price for seed corn.  This doesn’t even get into the issue of the safety of genetically modified corn.  Monsanto now has this corn producing its own toxins to pollute the environment.

    If corn is such a miracle worker for our energy use, then why do farmers require so much “welfare.”  Come on $50 billion?  I’ve heard so many farmers desiring to kick people off welfare and demeaning the poor.  Well, how about the farmers?  Why is the American public paying welfare to farmers who should be, and apparently are, self-supporting?