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U.S. Farmers Stung by Tariffs Now Face a $3.5B Corn Loss (bloomberg.com)
267 points by paulpauper 3 months ago | hide | past | web | favorite | 189 comments

I work in agtech and I'm not surprised by this at all.

The major corn and soy producers have faced downward pressure for the last 4 years. It now costs more to plant the crop than to pick and sell it.

And yet, the government pushes and incentivizes farmers to just grow more.

Read This Blessed Earth or Omnivore's Dilemma if you want a primer on how messed up this system has become.

What farmers need are a way to restore profits in a sustainable fashion. Simply growing more corn/soybeans/rice/wheat isn't going to cut it anymore.

>What farmers need are a way to restore profits in a sustainable fashion. Simply growing more corn/soybeans/rice/wheat isn't going to cut it anymore.

The way this is done in other industries, except for farming, is that half of the producers go bankrupt, production is reduced, and the survivors are able to be self-sustaining and profitable. We really do not need this much soy/corn. The market is screaming "stop making it" and perhaps it is time we listen.

The market and nature. Groundwater depletion: https://www.usgs.gov/special-topic/water-science-school/scie...

And this can't be entirely restored.. since when water is removed, the cavities in the dirt/rock that held the water collapse, and they can't be refilled (for example).

Making the midwest more sustainable would be a good thing.

Punjab is another example of severe groundwater depletion. Experts here say that growing Basmati rice through groundwater is an unwise endeavour, as we are exporting a future valuable for pennies. Now government is recommending Corn to be planted, I guess I will forward them this link.

That's the thing, the developed countries are so arrogant about how much better they do things than the third world, but if you look a bit closer it's the same shit different supposedly developed country.

Yep, NZ used to protect its farmers with tariffs and subsidise them. When the tariffs and subsidies were removed, a lot of farmers went bust, it was a painful period. But now our agricultural sector is competitive on the world stage against subsidised and protected competitors.

There's still a ways to go though, we've seen a massive movement towards dairy conversions which is predicated on free water, cheap electricity and the government not pricing externalities like lowland river pollution.

Norway also protects farmers with tariffs and subsidies but it doesn't have the same bad effects here because it is targeted at maintaining agriculture and human presence in otherwise unpopular locations (high in the mountains, in the north, along difficult coastlines). Where there is a farm there is a need for a mechanic, a doctor, a dentist, all of these people need a petrol station, someone to maintain and build houses, and so on, so it keeps a community alive and makes the country more resilient against external changes. It also counters, to some extent, the drift to the big cities that all countries seem to experience. And one welcome result is that a very large proportion of the food I eat here is produced in Norway.

There is certainly room for improvement but while I would like it to be cheaper I don't want the country flooded with the kind of race to the bottom crap that depresses wages in other countries.

It probably works here because we have few very large farms and strict, and strictly enforced, environmental legislation.

> And one welcome result is that a very large proportion of the food I eat here is produced in Norway.

This is only the last step. Most of the animal feed is bought outside of Norway and from the wheat we do produce only 15% is of high enough quality to be used for humans [1], the rest is animal feed. The wheat that is used for humans have to be treated since it's too moist.

Norway is _far_ from self sufficient and will never be. The farmers (5% of the population) have received subsidies that are equivalent to the deposits to the sovereign wealth fund since the fund was started, that is to say if we didn't subsidise them we could have had a fund that was twice the size.

The general quality of the food in the stores is also very bad compared to other countries with the exception of pork and sheep meat.

There is nothing to gain as a nation from subsidising our farms the way we do except for the 5% that actually receive all this money. It would be much better for the society to let countries that have areas that can produce food properly do that and just buy it from them instead.

All in all I wish we went the NZ route, let the farms go bankrupt if they can't produce something that people want at the price they will pay it and restore the land to the nature.

[1] https://brodogkorn.no/fakta/matkorn/

Yeah something has got to give. Irrespecitve of Consumer Purchasing Power; Norway has the most expensive food prices in Europe[0].

[0] Norwegian Bureau of Statistics, 06.08.2019, https://www.ssb.no/en/priser-og-prisindekser/artikler-og-pub...

> The general quality of the food in the stores is also very bad compared to other countries with the exception of pork and sheep meat.

The variety/selection is poor, prices are high, but the quality is better than the average in much of Europe. Including Germany and very much all of Eastern Europe. Gastritis is mostly unheard of in Norway.

Lidl went bust here trying to sell their crap they can do away with elsewhere, even at bottom prices.

> It would be much better for the society to let countries that have areas that can produce food properly do that and just buy it from them instead.

And then you have your whole nation dependent on Foreign Policy. I think we need tech to improve local food production to a level that is at least self sustainable ( so their citizen don't starve ) and have extras either produced local or imported.

Indeed, Norway protects farmers in order to ensure agriculture is kept alive, as well as keeping remote areas habitable. I think that's a good precaution. However, Norwegian farms are very inefficient compared to for example Dutch farms. And given that energy is very cheap in Norway, they could have built a lot more greenhouses.

As a foreigner living in Norway, I can say the food in the supermarkets is quite bad compared to what you get elsewhere. And while the onions, cabbage and root vegetables that are in the shelves are produced in Norway, most of the other products actually come from elsewhere, mainly from the Netherlands and from Spain. Just check the country of origin labels next time you do shopping. I know I am often wrong in my assumptions of where food is coming from.

For much of the produce (e.g. fruits and berries) you have both imported and Norwegian versions. Some of them are only seasonal here however, and you certainly ain't getting Norwegian bananas any time of the year.

> I don't want the country flooded with the kind of race to the bottom crap that depresses wages in other countries.

This isn't how economics works. higher demand for foreign food raises wages in foreign countries. When the US and European protected agriculture sector floods international markets with cheap, subsidized goods that is what destroys the livelihoods in developing countries A small historical lesson:


"Agricultural subsidies in developed countries reduce world prices, and thus the incomes of African farmers. World Bank studies suggest that US subsidies alone reduce West Africa's annual revenue from cotton exports by $250 mn a year. The EU also heavily subsidizes its farmers. The EU, which by the dictates of comparative advantage would be a net importer of many agricultural products, is the second largest exporter (after the US) of agricultural produce."

But does more of the food in NZ ends up being imported ? Food importations have a large impact on the environment because tankers emits a shot-ton of CO2, which is not the case for locally produced food.

> But does more of the food in NZ ends up being imported ?

Depends on the product. Our manufacturing base has been gutted by laissez-faire capitalism (Mondelez and the Cadbury factory being a recent example https://www.stuff.co.nz/business/103965900/popular-dunedin-a...), so most heavily processed foods are imported from Australia.

And 1 of the 2 supermarket chains (Progressive Enterprises) in our cosy duopoly will import other foods from Australia as suits them - but that's because they're an Australian firm and offload excess stock to the NZ market.

In terms of vegetables, fruit, meat, dairy products etc., they're only imported when there's a margin in doing so - for example, we used to have a lot of cheap pork from overseas countries that didn't have to adhere to the same animal welfare practises as local pork producers.

>But now our agricultural sector is competitive on the world stage against subsidised and protected competitors.

You referring to Fonterra?

Not just Fonterra. British farmers routinely demand higher tariffs on our lamb, for example.

Intersting. I don't see the need on tariffs though , the British and NZ lamb taste quite different. That is why I said most of the production aren't really good in Sales and Marketing.

The problem is that these natural market corrections, when they occur with farming, have historically resulted in famine.

Natural, self-correcting famine maybe, but all the same allowing it to occur is understandably undesirable.

One way of alleviating the boom/bust effect is some form of supply management, such as what exists for diary products in Canada: https://en.wikipedia.org/wiki/Supply_management_(Canada)

It's effectively a subsidy, but the subsidy is provided by the actual consumers of the goods (via government price fixing) rather than out of the general revenue pot. Individual farmers get grouchy that they're no allowed to have more cattle than their quota, but the reality is that those limitations protect a commons— if there were no restrictions and every farmer took on a few more cattle, there'd be oversupply, the price would crash, and they'd all be headed to Ottawa for a bailout. Yay free markets.

Note that this whole system is an interesting bit of political football in Canada, because the party that you'd expect to oppose it ideologically (the Conservatives) in fact do not, because their support base includes the rural farmers who benefit from it. The farmers are also well organized and well funded in terms of their lobbying operation. There was a recent mini-scandal about their presence at the Conservative party's national convention, see: https://nationalpost.com/news/canada/full-text-the-dairy-lob...

This is true in the US too. Small government Republicans love farm subsidies because farm owners vote Republican.

The position of Iowa in the Presidential nominating system constrains the Democrats fairly severely too.

It’s because of the realities of the electoral college. The less populated states full of farmers have an out of proportion share of electoral votes.

khuey may be referring to the presidential primary calendar, where the conservatives in Iowa, New Hampshire, and South Carolina have outsized influence by going first:


> It's effectively a subsidy, but the subsidy is provided by the actual consumers of the goods (via government price fixing) rather than out of the general revenue pot.

This is effectively a regressive tax. A tax that disproportionately impacts those with young children. Largely a tax on parents.

I don't think their lobby is that powerful. There aren't that many dairy farmers, but millions that would love cheaper dairy. I wish croissants made with butter weren't so hard to find.

I suspect that the lack of butter in croissants is simply because the cost of margarine is very slightly lower than butter and thus the profit on those with margarine is higher. A half percent reduction in material cost might be a two percent increase in profits.

And as long as a substantial fraction of the customers keep buying the inferior product there will be no incentive for the introduction or wider marketing of the better one.

So stop buying crap food and tell all your family and friends to do the same.

A croissant without butter is not really a croissant in my opinion and as far as I can tell they all have butter here (Norway), here's an example: https://translate.google.com/translate?sl=auto&tl=en&u=https... (they come from the Netherlands).

It’s also a side-effect of the dairy industry controlling the butter market: so they put out one poor quality product and buyers have little choice:


> This is effectively a regressive tax. A tax that disproportionately impacts those with young children. Largely a tax on parents

It’s a good thing the government of Canada do not suggest you give dairy products to your children anymore then :-)

There aren't that many of them, but they have an outsized influence on politics because of the role they play in the economics of rural life. Farmers are the major employers for young rural people, they pay for local services to a greater degree, and their families tend to have been active in the local economy for a long time. When the farmers in an area are doing well, typically so is the rest of the economy and vice versa.

Calling it a tax on parents is a serious reach. And while the US has dumping prices that are lower than Canada's (e.g. when they are faced with dumping product down the drain so instead pour it into an area for little), in many areas and times the prices are not far off the US.

The lack of butter croissants has nothing to do with it, as an aside. We simply have a mediocre croissant palate in Canada, so the general market variety are horrendous.

> The lack of butter croissants has nothing to do with it, as an aside

It has everything to do with a centralized marketer that can put out any grade product it wants, and consumers can either buy it at the price they say or switch to margarine/vegoil.


Expensive inputs further encourages substitutions, especially when the expensive input wasn’t great.

Individual people may not respond well to incentives, but industrial buyers sure do.

The grade argument is debatable. Yes, if you want a bonafide, completely authentic as in France croissant it is less easily obtained (sidenote -- there are makers who do make the higher fat, lower water butter, but there is very little demand), but if a maker is choosing between a imperceptibly different Canadian standard butter and margarine (the former indistinguishable, the latter a vile abomination), and you think that minuscule difference is the reason, you are misled.

Further it isn't expensive. Large quantity butters purchases, including special higher fat versions that aren't generally on grocery stores, are an insubstantial percentage of the cost of making a croissant.


But again, the reason croissants are generally horrendous in Canada is because people just don't care. If people don't care you end up with the weird bready-things that are marketed as croissants. This is a bit of a personal peeve having just gotten back from Belgium/France a couple of months ago, and being spoiled by every hotel having extremely good croissants.

The debate over supply management is revisited at every election, and overwhelmingly Canadians buy into the notion that supply management has benefits in certain industries.

As an aside -- it's cheaper to buy milk and butter in Toronto, Montreal, Vancouver, and virtually every other urban center in Canada than in San Francisco, NYC, LA, or any other large US center. US dairy dumps their excess on secondary markets like Detroit, and it's always the "Windsor versus Detroit" sort of comparison that we hear parroted.

The decline of famine in the developed world long predates the massive farm subsidies that exist in the United States. The last time there was a major famine in England, for example, was in the 1650s. There has never been a major famine in the USA, yet the subsidies we now think of as the Farm Bill only really started in the 1920s.

> The last time there was a major famine in England, for example, was in the 1650's.

That's an interesting way to cherry-pick a statistic and ignore a genocide (I'll give you a hint: 1840's).

If Ireland had closed her ports, I wonder how much England would have felt the tighter food supply.

England would probably have been fine, considering they were mostly getting inefficient calories like beef butter, milk, and beef from Ireland. Although your citation of the outflows of food is actually a great way to prove my point. There was plenty of food to feed everyone even in the darkest of days, with farming techniques far less efficient than the ones we have now. But shitty economic policy (too small plots of land for tenant farmers, the whole landlord tenant system, colonialism, etc.) and failure to subsidize food consumption for the poor led to really terrible outcomes. Yet there was plenty of food production even when there were no subsidies.

The argument goes that starvation is usually a logistics/corruption problem as much as anything. Technically you can consider the math of supply without it, but practically it matters more than most other things.

Is the current situation unusual, or is it SNAFU?

The Great Irish Famine was systemic problem, not a logistics nor corruption problem.

what is a systemic problem that is not a logistic or corruption problem

That’s the point.

Although the English had all sorts of high minded idealism about the potential for creating dependency amounts the Irish, they supervised the genocide in Ireland.

If a market correction is caused by overproduction there won't be a famine. The level of production will decrease to align with consumer demand (as opposed to government subsidy demand which is far higher).

That's not how life works.

You ever seen the graph of foxes and bunnies? Where all the foxes starve when they kill all the bunnies?

That's what happens IRL, too many food producers go bust, the stored glut gets used, and suddenly you're not producing enough and people die.

A market-priced system for food in the United States would still allow for a massive amount of slack in the case of a supply shock. The typical American probably eats 20-30% more calories than are properly healthy for them, and many of their calories come from extremely feed and land-intensive sources like beef.

Of course, you wouldn't switch to this all at once. You'd announce that you are gradually cutting farm subsidies over the next ten years. The least profitable (efficient) operations would close. This would also develop slack in the form of unused land, which could be held in reserve in case of a supply shock like the one you're hypothesizing.

“Don’t worry if food gets too expensive, you could stand to lose some weight anyway.”

I don’t think I can give a response to this that’s acceptable on HN, but wow.

Is there something wrong with what I said? Is it impolitic to observe that most Americans exist in a serious caloric surplus? I am not excluding myself here or making any moral judgment on those who do. It's just a fact, and it is relevant to the concern that Americans might starve if the food supply contracted.

This might work if income were more equally distributed. If food becomes more scarce and the typical American has to eat 20-30% fewer calories, the price of food will spike significantly. People at the bottom will be priced out and will starve without government intervention.

Managing the food supply to make sure there's always a healthy surplus makes a lot of sense to me. The problem with holding land in reserve, as you're suggesting, is that it takes at least an entire growing season to start producing from that land. That might be too long in the case of a famine.


> Yes, because corn grows in 3 days

Our food reserves are huge.

> And panic buying also isn't a thing.

Panic buying can only eat up a tiny little fraction of a year's food supply.

> [just insults]

> That's what happens IRL, too many food producers go bust, the stored glut gets used, and suddenly you're not producing enough and people die.

Maybe that happened in pre-industrial societies, but that isn't what happens today. Today, when things go wrong, prices of some products go up a bit (e.g., meat), and people buy less of it, replacing those calories with cheaper ones (e.g., rice, corn).

The beauty of a well functioning market is that it's not centralized, things don't go wrong all at once, they happen on a gradual scale and folks can adjust.

Or just the right amount of food producers go bust, and things are stable. And then there's an episode of wheat rust/grasshoppers/drought/flooding, and then you're not producing enough food and people die.

(Or, to riff off of what vcf1 said, then you have to spend less of it feeding cattle, and more of it feeding people. That's survivable, at least.)

The US produces 13 billion bushels of corn per year - that equates to 2,200 pounds of corn for every man, woman and child in the country. Those numbers sound completely implausible, but they accurately reflect the sheer absurdity of US agricultural policy.


And that's just corn! We produce so much of so many other things that we would be totally fine if we cut production by a lot.

That also happens when you kill all the farmland, and deplete all the groundwater.

Except a large portion of the population can till up some backyard space and plant a garden to supplement their cellar full of canned food.

Additionally, the farmland and farm equipment that was owned by bankrupt producers will still be able to produce food after new ownership.

Gardening is a skill that many (probably most by now) people don't have.

It's also the case that a medium sized garden doesn't produce much calories.

> It's also the case that a medium sized garden doesn't produce much calories.

The gardener is doing it wrong if this is their result.

We may have a difference of opinion about what "medium" means, or about what "much calories" means.

When I say "medium", I mean something that is still a modest hobby, and when I say "much calories", I mean at least a few months of food for several people.


Food is a global commodity and is largely fungible. If every farmer in the US went bankrupt overnight we could easily sustain ourselves by importing food from everywhere else.

Famine is really only a possibility in crushingly impoverished (much of Africa) or criminally mismanaged (Venezuela) economies. The potato blight was a secondary cause of the Irish potato famine, the primary causes were poverty and (English) government incompetence. (or malice, if you prefer) The United States has nothing to worry about.

Just because a farmer goes bankrupt doesn't mean the farmland and farm equipment disappears. It will still produce.

Some countries avoid a "famine" of petroleum with a strategic reserve. Some countries already have a strategic rice reserve.

Oh please. Clearly there's a middle ground between outrageous subsidies and obscene overproduction and ... "famine".

We don't need to go full libertarian on these farms. We just need to stop growing so much junk.

Another part of the story that's extremely hard to find in the corporate news. We've been wiping out Latin American farmers by dumping subsidized agricultural products for the past half-decade and yet we call everyone else a dumper. And when others fight back, such as India winning the WTO case against US being anti-competitive on solar cells [1], Trump threatens to leave the WTO [2].

[1] https://www.livemint.com/news/india/india-wins-solar-case-ag... [2] https://www.news18.com/news/world/will-leave-if-we-have-to-i...

That’s quite by design, some believe. Same with how development loans work - they basically mean that the country has to export a large proportion of the their output (to get the foreign currency required to pay back the loan - foreign denominated debt really is a poisoned chalice for any country). So they encourage development of resource extraction and farming of crops valuable for export (fruit, etc. but generally not good staples because of the huge amount of subsidised US product on the market). So they eventually dependant on importing staples, which makes the US very influential (sanctions, for example are much more effective if a country can’t feed itself).

> wiping out Latin American farmers by dumping subsidized agricultural products for the past half-decade

At least since NAFTA: 25 years now.

This doesn't work in farming because it isn't a free market. Most farms are owned by Cargill or Monsanto. And they are all propped up by the federal government.

"Cargill is America’s largest privately-owned company, surpassing the second place Koch Brothers by billions of dollars in annual revenues. Cargill is the corporate behemoth at the nexus of the global industrial agriculture system, a system that it has designed to convert large swaths of the planet into chemically dependent industrial scale monocultures to produce cheap meat, palm oil, and chocolate."


Cargill has also slowly but steadily increased its presence around my parts of the world (Romania), taking advantage of one of the most nutrient soils on this planet, chernozem [1].

If you look at this map [2] is the stuff colored in green. Most of it can be found in the US Great Plains, and the second such zone comprises South-Eastern Romania + most of Ukraine + the plains North of the Caucasus (which are part of Russia). Making money out of Romania is easy, we are already a NATO and UE member, but the great stake for companies like Cargill is to be able to invest and take money out of Ukraine's plains, I think there are hundreds of billions to be made out there, not to speak of the strategic advantage of having Tsarist Russia's former bread-basket under your economic control.

[1] https://en.wikipedia.org/wiki/Chernozem

[2] http://i.imgur.com/TmKdaFz.jpg

Oh jesus, TIL. Thanks for sharing.

Most farms are owned by Cargill or Monsanto

Can you supply some citations for that statement?

[edit] Wikipedia would indicate Non-family corporate farms account for 1.36 percent of US farmland area https://en.wikipedia.org/wiki/Corporate_farming#North_Americ... [/edit]

Well, technically Cargil's are family farms since it is a privately held corporation (150k employees on $115B revenue) owned by a family which owns and operates the farms. Most (unbiased) estimates are closer to 70% family farms although those have also grown extraordinarily large in the last few decades.



Uhm... I've worked at Cargill. You are quoting the whole value of a corporation not the total dealing with farmers. In fact, Cargill's grain division doesn't own any farms. Pork does, but that's not the type of farm we are talking about. Nothing owned by Cargill is listed as a family farm.

The article actually says United States Department of Agriculture (USDA) estimates that at least 30 percent of American farmland is owned by non-operators who lease it out to farmers. Yeah, that is a common arrangement that's been with us for decades.

Also, in some states, such as North Dakota, corporate farms are illegal http://inthesetimes.com/rural-america/entry/19224/north-dako...

All this does is cause relabeling of "corporate" farms to "family" farms since a privately held corporation held more than 50% by a single extended family is a "family" farm. They still end up being so large for economies of scale that no single mulit-generation family (of 20) could possibly farm them. The smaller farms are stuck in debt and poverty or sell out to the other "families". In my experience it's true for almonds, rice, corn, wheat, cotton, hogs, cattle. When you can't see the edge of the farm from the top of a pickup and talk about size by number of wells... it is a "family" farm in name only.

You really are going to have demographics to back that claim up. Technology has been amazing for the family farmer as it has allowed the purchase of machines that allow vast areas to be farmed by far less people. Farmers, unlike their typical portrayal, are pretty savvy about new technologies[1] and can manage both the land and financial tools such as hedging. Its still a lot of families that have been doing this for years and years.

1) although I content the six foot drone the folks here were playing with has a bit of a fun factor too in addition to mapping the fields for their crop forecasts and planning.

Beef grazing would need to be accounted for. Land under agistment, set aside and out of production too, but for rate purposes assessed as agriculture? I think you need to focus on cultivated/cropping.

> Most farms are owned by Cargill or Monsanto.

No, they aren't. Seed companies like Monsanto don't generally own commercial farms. Most farms buy seed from a small set of firms like Monsanto (well, Bayer), and sell to a small set of firms (I think Cargill and ADM are in this group.)

Most farms are owned by Cargill or Monsanto.

I know I shouldn’t care, but it’s comments like this that irritate me. Inaccurate to the point of being silly.

Cargill (especially) and Monsanto are pretty large, but combined they account for around a quarter of the total revenue.

Those companies breed seeds, they don't farm them.

... or Tyson.

Technically they could sell all of that to China for animal feed, the meat consumption of China per capita is nearing Europe and has a huge demand of feed. Too bad trade war screwed all of that and now it looks like a lot of food will be wasted.

Donate it to starving African children.

Not necessarily starving children... but I have seen in the 1990's the USA distributing corn oil, and other surplus of the farming industry through the UN/USAID in Africa. A way of buying influence...

(P.S. I work for one UN food organization especially funded for that purpose :D)

Except grain farming. Our policy makers will happily drive any other type of farmer out of business.

US policy is driving the small producers out of business. We will see prices go up in a few years as farming gets bigger and manufactured product controlled by a few big companies replaces the real thing.

Yes, but when production is reduced we will have a huge spike of food price.

We may need more consolidation in these food production. As in by nature of business cycles.

Do that in farming, and you'll be dealing with bread riots.

Avoiding bread riots is why every single developed nation on Earth heavily subsidizes its farmers, even when they produce at a loss. The ones that didn't got regime changed by hungry, angry people.

Optimized systems tend to become non-resilient - fragile to external shocks. The last thing I want is a fragile system of food production and distribution.

It's better to pay extra into an inefficient system than deal with famines.

I don’t understand the downvotes.

No one wants just-in-time, no-redundancies production of critical-to-life resources. You would be willing to subsidize a healthcare market to ensure hospitals didn’t have the exact supply of antibiotics on hand required “on average.” You wouldn’t want water purification plants to produce a market-optimum amount of water with no room for variation.

Why would you want that for your food supply?

Don’t get me wrong, there are other issues on hand - lack of diversification, oligopoly, etc. but the fundamental argument of “we subsidize critical resources because people die if there’s a shortage” isn’t a terrible idea.

> “we subsidize critical resources because people die if there’s a shortage”

That's not the argument, though. Government subsidies are intended as welfare programs for farmers. Far more food is currently produced than would ever be needed in the case of a shortage. We could produce a lot less and still be fine.

After the 2019 corn crop is harvested, the USDA is projecting 51.5 days of excess stocks in the United States

You can store food for 20 years. Actually having a 3+ year supply of food would cost less and provide more security than current subsidies.

Also, 51.5 days of excess stocks is not 51.5 days of food on hand.

Storage is already at a premium since the US-China trade war. Not enough storage facilities. Maybe the US should cut from the productiob subsidies and subsidize short term storage?

Understandable, and in the same vein of why it is so important for the United States to retain industrial manufacturing capacity (i.e. auto and heavy machinery makers) because you never know when you’ll need to rapidly ramp up production.

Would there be a benefit if we could support and subsidize commercial farms up to a certain size, and no larger, removing the compulsion for ultra-large, mass-industrialization of our agriculture industries?

> Would there be a benefit if we could support and subsidize commercial farms up to a certain size, and no larger, removing the compulsion for ultra-large, mass-industrialization of our agriculture industries?

I like it a lot. We might add a bit of an incentive for non-monoculture agriculture - different strains of wheat, for example. (There's some of that already, and we don't want all the smaller farms to do that, but some doing it might be a good idea.)

NZ stopped protecting its farmers and we're a large exporter of food and the 3rd most obese nation - all those damn famines huh?

NZ is nowhere near the size of the US though. If you face a famine in NZ, you import from Australia, China, India etc. If you have a famine in US... millions of people will be without food, it would be an insanely crazy situation (consider how many firearms are held by ordinary Americans).

The modern American life is very strongly predicated on cheap, abundant supply of _some_ kinds of nutrition (unhealthy for most, but still, something that prevents starvation even if it increases the chances of heart disease etc.)

> If you face a famine in NZ, you import from Australia, China, India

If is the key point here. We've never been anywhere close to a famine despite our farmers operating in an unprotected market.

NZ has a very small population and absolutely no systemic importance. It’s not remotely comparable to the US.

Some great exceptionalism there. So, you subsidise corn farmers because of global geopolitics? Occam's Razor suggests myriad other explanations.

Nothing you're saying makes any sense. As others have tried to say, the population + landmass of NZ make it statistically insignificant compared to US.

Which is completely irrelevant to my discussion of how removing protectionist policies increased the efficiency of our agricultural sector.

It’s relevant if your hypothesis is that it will have the same effect in the US, which I’m tired of saying at this point that it WONT.

So stopping subsidies for corn will impact other crops too? Isn’t nutrition diverse nowadays?

Edit: Answered. Corn is used as a cattle feed and hence beef prices will be impacted. It will have a chain reaction pulling down just corn subsidies.

Tangent: India used to have famines and import grains until Punjab ushered a green revolution with record wheat and rice harvests in 1960s. My grandma told me how before wheat barley used to be the nutritional source, and I for nostalgia sake asked for a barley dish. Nearly threw up.

Huh. I like barley quite a lot. Doesn't seem like it really has enough flavour to be offensive enough to induce vomiting though.

Perhaps it is not the taste but the shape/size and consistency of the boiled grain. For those who don't know, it looks like Kellogg's Smacks, but more chewy, and it can feel a bit strange to chew or to swallow.

I like it as well, nevertheless.

Sorry, should be Bajra. Pearl Millet.

Famines are closely correlated with weather and solar output disruption. I pretty much doubt subsidies can counter something like the Dalton minimum.

1. NZ has 3 times more arable land/person than, say, the United States. It could probably use the same farming methods as China did in the famine of Great Leap Forward, and still have enough food to go around.

2. Driving without a seatbelt, or car insurance works, until it doesn't.

3. You'd probably be producing even more food/person, and be more resilient to market failure/drought/crop failures/etc were it subsidized.

3. Nope. We were producing less food when our farmers were subsidized.

1. According to my googling, the USA has 0.38 hectares of arable land per person, NZ has 0.14 per person.

You're aware only 2% of our land is arable compared to the USA's 16% right? Lots of mountains and hill country here.

Arable's a blunt classification though. In NZ we have no mountain lions preying on our sheep, which makes better use of that land. Not to mention favourable growing conditions.

It would be nice to have more mountain lions in Kansas to thin down the large deer herds.

There won't be bread riots in the US. Too much corn and wheat. We'll just eat cheap for a while.

> And yet, the government pushes and incentivizes farmers to just grow more.

I'm a corn farmer (along with soybeans, dry beans, and wheat). What particular incentive is there for me to grow more corn? I am honestly unsure of what you are referring to.

There is a natural incentive for me to stay within that group of crops because that is what my existing infrastructure is capable of handling. If I wanted to grow, say, tomatoes, assuming my locale is actually suitable for growing them commercially, I would need to set up an entirely new infrastructure to handle them at great cost. That doesn't make business sense. Accepting a bad year on corn sales to be made up in the good years does.

That said, new crop corn was at nearly $6 with the local basis applied a few weeks back. If you cannot plant and harvest corn at a profit at $6, you're doing something horribly, horribly wrong. The real problem this year – and what prompted the jump to $6 – is the wet spring that left us struggling to get the crop in. If you have a crop to harvest this year, and were savvy enough to sell it, you're laughing.

The billions of dollars in subsidies the US Government spends on a handful of crops including corn? Mandates about things like ethanol that support the price of certain crops? They don't have to be in the form of direct payments to influence what a farmer does.

[0] https://en.wikipedia.org/wiki/Agricultural_subsidy#United_St...

I think your point about the difficulty of switching crops is a good one. There is a lot of specialized equipment that goes into farming and farmers can't instantly switch crops any more than an independent grocery store could switch to selling clothes over night.

However, regarding incentives. While there aren't "incentives" aren't there government subsidies? The article talks about $28 billion in new money for farmers to offset tariffs?

“Major Major's father was a sober God-fearing man whose idea of a good joke was to lie about his age. He was a long-limbed farmer, a God-fearing, freedom-loving, law-abiding rugged individualist who held that federal aid to anyone but farmers was creeping socialism. He advocated thrift and hard work and disapproved of loose women who turned him down. His specialty was alfalfa, and he made a good thing out of not growing any. The government paid him well for every bushel of alfalfa he did not grow. The more alfalfa he did not grow, the more money the government gave him, and he spent every penny he didn't earn on new land to increase the amount of alfalfa he did not produce. Major Major's father worked without rest at not growing alfalfa. On long winter evenings he remained indoors and did not mend harness, and he sprang out of bed at the crack of noon every day just to make certain that the chores would not be done. He invested in land wisely and soon was not growing more alfalfa than any other man in the county. Neighbors sought him out for advice on all subjects, for he had made much money and was therefore wise. “As ye sow, so shall ye reap,” he counseled one and all, and everyone said, “Amen.“


That is more than 50 years old and still true today. Great quote.

The corn loss this year is due to weather, specifically how wet it was. Planting was super late in many areas, if they were able to plant at all.

Omnivore's Dilemma author, Michael Pollan, wrote an oped in the new york times back when his book, "King Corn" was published. The article and the book are both worthwhile reads about the subject of corn in the US.


A 100 years ago it would take a 1000 people to plant, maintain, and pick a farm that would take a just one person and a machine to do today. Obviously we don't need as many farmers as we did back then and a result of that is the collapse of the food prices.

Do you really care that with all the spending the government does that farmer subsidies are a problem? I'd rather see more people farming than building bombs, evading my privacy for 'security', and wars fought over ideology.

To be fair, that machine took N people to manufacture (along with upkeep, which I imagine that one farm person is no longer doing on the complicated farm machinery), and another M people to drill/refine/transport the fuel, fertilizer, pesticides, and other chemicals needed to run such a farm so efficiently. I wonder how big N+M+1 is..

Probably fewer per calorie of food grown.

> I'd rather see more people farming than building bombs, evading my privacy for 'security', and wars fought over ideology.

Or instead of either kind of wasteful labor we could let people work fewer hours...

Being less bad than a bomb is not a very high bar to jump over.

I can think of many more productive uses for that money than over-farming, which causes a host of environmental issues.

The government system of subsidizing production is a good thing. The problem is it's not planned enough (or planned to service certain interests). When we didn't have subsidies, we had underproduction of food crops because of the vagaries of market forces. This lead to starvation and displacement.

However, I think I could agree that corn and soy in particular are overproduced. I've heard that you can eat less soy by eating soybeans than by eating livestock raised on it.

> The government system of subsidizing production is a good thing.

How is that a good thing, shouldnt the free market take care of it? If there is shortage of wheat why cant wheat be imported from other countries to take care of the shortage?

> If there is shortage of wheat why cant wheat be imported from other countries to take care of the shortage?

What if there was a wheat recession and there was no more wheat anywhere? Or what if there was a trade war and they refuse to trade? At least I think it is a good thing that people no longer starve to death during recessions.

What is the point of talking about hypotheticals?

People in the US die because they cannot afford medical costs, the US is perfectly happy with that.

It's not a hypothetical at all. This is bound to happen sooner or later. You don't want it to happen even once. Food reserves only go so far - and if you use them for this very foreseeable problem (you just don't know when exactly) you leave yourself more open to the unforeseeable catastrophes.

And yes, there is a very good point talking about hypotheticals on such literally vitally important topics.

> People in the US die because they cannot afford medical costs, the US is perfectly happy with that.

Maybe the difference is that sick people don't riot? If I remember the already mentioned "The Omnivore's Dilemma" correctly the current agricultural policies among other factors mentioned there also were created because of civil unrest due to food shortages, to prevent it from happening again. I can find plenty of sources for food riots, I have not read about anything similar caused by medical costs.

> It's not a hypothetical at all. This is bound to happen sooner or later.

Based on your hypothesis?

> Maybe the difference is that sick people don't riot?

So people dying is ok its just that they should not riot?

Their family and friends do!

The subsidies were started because the free market encouraged farmers to destroy their crops to raise prices during a famine. We now have overproduction, which is far better than underproduction.

Because every country needs to be able to produce food. Importing all your food is a huge security risk.

We are not talking about importing all the food though.

> When we didn't have subsidies, we had underproduction of food crops because of the vagaries of market forces. This lead to starvation and displacement.

No idea at all what you're talking about. The last time a Western non-planned economy had a famine outside of wartime was in 1906 [1].

The closest thing is a "food shortage" in Ireland in 1924-1925.

That is a truly incredible track record for relatively free markets.

[1] https://en.wikipedia.org/wiki/List_of_famines

Sorry, I was riffing and forgot some of the key details. It was that during the great depression, there was a crisis of overproduction at the same time as an economic crisis. Farmers began destroying food at the same time that people could not eat (because they could not access or afford the food). The government stepped in to manage the prices and actively destroyed ag output.


> The problem is it's not planned enough

The government is not a good planner. End of story.

> It now costs more to plant the crop than to pick and sell it.

not sure -- why is this ratio important?

You produce at a loss? Is this a serious question?

Legit question. Planting, picking and selling are all costs of doing business. Unless "picking and selling" refers to sales revenue which is not my interpretation either.

It would have been clearer to write something like "planting and picking costs exceed sales revenue."

Can replacing these crops with hemp, now that it’s legal, help with this problem?

I haven't studied hemp but there are two primary limitations:

1. Corn saps nitrogen from the soil. Soybeans add nitrogen to the soil. Since both are cash crops you want to rotate them. Since hemp is a weed and not a legume it would still might have to be rotated in with soy. It's simply not a cut and swap operation like a line of code :)

2. The government isn't incentivizing hemp so now every acre you swap with hemp not only isn't discounted, the demand for it is a fraction of that of corn.

That and it isn't legal to grow in any of the farm belt. Just because you can grow in CA or CO doesn't mean you can in KS or TN.

You can in TN now... Farm belt is changing and many tobacco farms have converted.

Actually Kansas licenses industrial hemp starting this year.

Why should profit be the motive to grow food. What extactly have we been doing as a society that we still have people who stuggle to pay for basic necessities needed to live.

It's because the market is an incredibly powerful way to make this effective. However, that's assuming it's a well functioning market and that incentives are actually going towards filling all important needs and we don't fall into some game theoretical dilemma. The latter is where markers need to be directed or supplemented. I'd argue that the free market would be the best way to make sure we get the food the vast majority of consumers want at a good price. However, I'd also agree that the free market will fail at providing safety from famines in a bad year or making farming sustainable in the long run.

That some people are starving despite overproduction of food is a symptom of a larger economic problem in the US. It's not that the wrong goods are being produced but that we distribute them in a way that leaves many people below there minimal needs. Solutions to me are obvious: "Traditional" forms of wellfare like we see in Europe or UBI.

What have we been doing as a society? Asking politicians and corporations to give us what we don't need, to get rid of what we do need, and to not make us pay for it. We got what we ordered.

Why should profit be the motive to write code?

for some people it isn’t, but i think he’s referring to the fact that food is pretty damn far toward the base of maslows hierarchy. many people (myself included) believe that a measure of a society is how far up the triangle you can get before needing to do something you don’t want to do to reach higher (eg work in order to improve your hobby skills)

Most of the corn and soy produced is not for direct human consumption, but for cattle feed - https://www.usda.gov/sites/default/files/documents/coexisten...

> "Just over 70 percent of the soybeans grown in the United States are used for animal feed..."

These crops are heavily subsidized by the government, which allows the production of meat at a seemingly low price due to low feed costs, but in the end the taxpayer is paying for the actual meat price indirectly through taxes.

Why not reduce the production of soy and corn to reasonable levels, and let the consumers pay for the actual cost of meat?

If the government wants to subsidize crops, do so for fruits and vegetables instead.

Exactly this. Meat is drastically cheaper than it would be from natural market forces and actual healthy shit is expensive.

I'm not vegan or vegetarian by the way but this aggravates me to no end and contributes to a lot of our problems.

But what's the rationale behind keeping meat price low.

We know meat can be easily substituted with plant based diet, so no one will starve.

Meat processing is also resource intensive (for example, it needs large amount of water).

We need to price in externalities, even the methane gas released by cattles should be calculated and put on the prices of meat as a tax.

I don't think the government is really intentionally trying to keep meat prices down. I think it's a side effect of subsidizing crops.

I've heard two reasons for subsidizing crops.

1. The government wants the country to be somewhat self-sufficient for food. If, let's say, there was another world war and imports were cut-off, they want to avoid mass starvation.

2. Crop output from a farm will vary from year to year due to weather and other factors. Without subsidies, during a streak of good crop years, production of that crop will exceed demand and the price will drop. This will cause some farms to go bankrupt (the number of farms will decrease until supply matches demand again). If a bad crop year then follows, you'll have shortages. Subsidies can smooth out these inefficiencies cause by weather by keeping farms alive during the good years so we have enough crops during the bad years.

Is there an actual argument somewhere for why these subsidies are desirable for the nation? Let's say, written by people who agree with them. What is the stated purpose? This should be written from the perspective that most industries should not warrant any subsidies. I don't understand why taxpayers should subsidize farms, and I'd like to read the rationale.

Some degree of farm subsidies are good/necessary just for the sake of food safety and national defense.

But, the amount and type of subsidies in the US is way off the charts for just those purposes.

A colleague (who supports farm subsidies) explained to me that farm subsidies incentivize hard work while education loan forgiveness incentivizes laziness.

Um, because to win the presidential election you need to do well in the Iowa caucuses and agricultural communities are overrepresentated in the legislature.

It's quite depressing how we are subsidizing cars and meat consumptions on the US. Two of the biggest factors in global warming and touching either will be a practically unwinnable political battle. Even if everyone believed in climate change the rural part of the US would fight this with all they have.

Because then the industries and communities that support the farming will complain about job losses and vote accordingly. Then the rest of the country will complain about inflation.

Why not

Personally I would love it, but people are so accustomed & feel so entitled to cheap meat you might just spark violent revolution.

I want to buy corn from the USA and import to India, but there is no way to find and connect with corn farmers online. I've found the corn to be cheaper even after paying the custom duty in India.

Please suggest if you know any possible ways.

Real headline: Corn price futures fell heavily on unexpected planting area and yield pegging

Edit: Actually the new report causing the 20% drop in price is controversial. And given all the news has reported weather issues disrupting planting season... I'd say buy corn futures... Any futures investors care to weigh in?

Grains are likely to head lower until around November/December.

American agriculture in general and corn growing in particular has been propped up and distorted by pointless subsidies for decades. Now the time has come to pay the piper for artificially manipulating the market.

Here in Brazil the value of corn has risen, with the expectation of US vs. China trade war. Already soybean remained stable.

I can't imagine being a farmer. You get almost nothing for what you grow maybe a $100 dollars per ton. But you need to buy a $250,000 (or more) tractor to plant, spray and harvest it - if not multiple tractors (till, plow, spray, harvest).

But you can grow 10 tonnes per acre and so on a 100 acre plot, you grow 1000 tonnes and make 100,000$ in 4 months if you grow corn. And if the profit margin is 100$ per ton.

I'd take it any day.

Farmers are the largest federal welfare recipient when you count subsidies after the tariff debacle. Quite an irony that stereotypes welfare queens as as an undesirable minority.

I'm not sad by this. I'm tired of the ethanol industry and still amazed the ethanol requirement in gasoline exists.

"So much winning" I guess.

I work in manufacturing and we're impacted as well. The largest impact is reduction in Chinese end-user business.

The products we make are used in Chinese factories to assemble smartphones. Believe it or not (I do) but the Chinese do not possess the technology nor the manufacturing sophistication to make high quality items (read: iPhones) on a large scale efficiently with a domestic (to China) supply chain.

Sure, the factories that produce iPhones are capable of producing a conforming iPhone. But the machines it takes to produce a conforming iPhone require technology, skill, and technique the Chinese currently do not possess.

So, believe it or not (I can prove it) the Chinese buy their factory equipment from small suppliers in the U.S. where the quality is decent enough to get equipment capable of producing an iPhone. We make the machines they use to laminate screens.

We are currently incentivizing China to develop the technology to domestically create the iPhone. That isn't a problem because it puts me out of business. That is a problem for the western economy because it reduces Chinese reliance on the Apple supply chain. We're teaching them, through trial and error, how to replace Apple with Huawei in the Chinese market. If Apple loses the Chinese market; the world market is lost inside of 10 years. We're teaching Huawei how to make an iPhone by brute force by making it economical to do so.

Nevermind the price of materials like aluminum has gone crazy. Even the DFARS stuff has gone up as a result of reduced supply in domestic markets. And for some customers we can't use anything else. So either make up the supply difference or get fucked on DFARS requirements. You're the ones costing America it's world dominance. Not us.

So do whatever you want, conservatives. My personal opinion is that your trade war is shooting yourselves in the foot.

But surely China is doing this regardless of whether America makes it difficult or not. They're dedicated to reducing reliance on any foreign stuff.

But the disparity in quality is truly a problem they struggle with. Their stated goal isn't their core competency. Volume is their competency, not quality.

For example, they can't even use a lot of their own materials in aerospace because they have no tracability. That's why nobody builds airplanes in China. If Airbus or Boeing could get a reliable part out of China instead of the US they would love to ship they can save money, but that's not possible and no country would let that plane in their airspace. Probably not even China.

China knows this and buys their quality products from elsewhere. It's not cost effective enough yet for them to change that strategy.

We are changing that for them.

Shipping heavy grain around the world is terrible for the environment.

Well, another $12 billion subsidy is coming their way, I'm sure. But nobody would dare call farmers welfare queens...

( https://www.nytimes.com/2018/11/19/us/politics/farming-trump... )

There is a documentary called king corn which basically showed that all profit in the corn industry is basically from subsidies. Without the subsidy, corn is not profitable to grow in the United States. Also the bigger beneficiaries are actually larger AG companies that benefit from being able to buy artificially low value corn to make their products. In essence, the corn subsidy is a welfare program not for the "family owned farm" it is for large corporate food processors like coca-cola, pepsi, cargil etc.

That was a good movie. The corn syrup producer was especially creepy.

My guess is that corn syrup only even exists because of subsidies that make it profitable to grow corn.

It's not their fault every government in the world subsidizes food and makes prices artificially low so it's impossible to farm for a profit. What's your alternative? No farmers because its not profitable? Only enough food being grown where people can make profit from? This isn't a bad system we have now, the subsidies are fairly small and food is really cheap because of it. Those farmers also work quite hard and lives suck in general. Farm subsidies are an example of the government actually doing it's job for once.

I agree, the one thing we could and probably should change is the diversity of crops we subsidize. We want food stability, but we don't need to base that stability on pure corn syrup.

Not to mention crop monoculture is terrible for the quality of the soil, forcing farmers to use (literally) tons of synthetic phosphorous, nitrogen, and potassium just to get acceptable yields. It results in lower quality crops than those that result from polyculture, as well.

A comment in the top thread mentioned The Omnivore's Dilemma by Michael Pollan as a good introduction to this issue and I'll second that. A fun read, too. He investigates hunting and amateur mycology as well.

How do the costs of managing a multiculture field compare to a monoculture one?

I'd imagine the planting, maintenance and harvesting procedures benefit significantly from the crop being a single type.

I guess you're right, but only for so long - different crops add and remove different nutrients from the soil, so if you keep planting the same thing you will eventually deplete the soil of the nutrients to grow that crop.

> Farm subsidies are an example of the government actually doing it's job for once

I'm curious to hear more about this idea. To me, it seems to be "subsidies are fine for me, but welfare is bad for thee".

I literally grew up living in a house rented in an almond orchard. I have experience with the entitlement of farmers firsthand, I don't feel the same way you do.

We're not subsidizing to get crops grown, were subsidizing to keep approval ratings high.

Plenty of people complain about corporate welfare all the time? The current administration is the far from small government/low spending so you can't expect it to come from them, unless it somehow benefits some of the mega-firms who have tentacles into the government, as is tradition at this point. They can't wait to raise the debt ceiling even higher.

I entirely expect the next administration will similarly be full-bore on corporate welfare too, especially if we have a recession. Just like the last one did.

It's now been totally normalized after the big banks paid TARP back after they used it on M&As buying up smaller weaker banks with cheap gov debt that few other financial companies had access to in the down market, which also had nothing to do with the original TARP plan but thats another story. Pretty much everyone brings up how they paid it back so it's totally okay for a select few billion-dollar companies to get bailed out with treasury loans and grants every time their industry tanks.

At least these are a direct consequence of gov policy, not indirect like pushing the idea of mortgages to every person and low interest rates.

Democrats also do the same thing except it is just different industries. Republicans will subsidize corn....democrats will subsidize renewable energy etc. This basically how each party does the political spoils systems. Only way to make it stop is to overall stop funding the system. Vote for lower taxes etc.

>Only way to make it stop is to overall stop funding the system. Vote for lower taxes etc.

Trump cut taxes last year. How's that working out?

Guess what collected from Chinese tariffs now goes to the farmers directly, apparently. /s

It's interesting to see all the progressives in this thread get bent out of shape over a government program that provides cheap food to the masses.

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