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.
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.
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.
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.
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.
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 , 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.
 Norwegian Bureau of Statistics, 06.08.2019, https://www.ssb.no/en/priser-og-prisindekser/artikler-og-pub...
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.
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.
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.
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."
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.
You referring to Fonterra?
Natural, self-correcting famine maybe, but all the same allowing it to occur is understandably undesirable.
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...
The position of Iowa in the Presidential nominating system constrains the Democrats fairly severely too.
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.
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 a good thing the government of Canada do not suggest you give dairy products to your children anymore then :-)
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.
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.
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.
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.
Is the current situation unusual, or is it SNAFU?
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.
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.
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.
I don’t think I can give a response to this that’s acceptable on HN, but wow.
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.
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]
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, 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.)
Additionally, the farmland and farm equipment that was owned by bankrupt producers will still be able to produce food after new ownership.
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.
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.
We don't need to go full libertarian on these farms. We just need to stop growing so much junk.
At least since NAFTA: 25 years now.
If you look at this map  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.
Can you supply some citations for that statement?
 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]
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...
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.
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.)
I know I shouldn’t care, but it’s comments like this that irritate me. Inaccurate to the point of being silly.
(P.S. I work for one UN food organization especially funded for that purpose :D)
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.
We may need more consolidation in these food production. As in by nature of business cycles.
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.
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.
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.
Also, 51.5 days of excess stocks is not 51.5 days of food on hand.
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.)
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 is the key point here. We've never been anywhere close to a famine despite our farmers operating in an unprotected market.
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.
I like it as well, nevertheless.
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.
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.
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.
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?
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.
Or instead of either kind of wasteful labor we could let people work fewer hours...
I can think of many more productive uses for that money than over-farming, which causes a host of environmental issues.
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.
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?
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.
People in the US die because they cannot afford medical costs, the US is perfectly happy with that.
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.
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?
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 .
The closest thing is a "food shortage" in Ireland in 1924-1925.
That is a truly incredible track record for relatively free markets.
The government is not a good planner. End of story.
not sure -- why is this ratio important?
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.
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.
> "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.
I'm not vegan or vegetarian by the way but this aggravates me to no end and contributes to a lot of our problems.
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'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.
But, the amount and type of subsidies in the US is way off the charts for just those purposes.
Personally I would love it, but people are so accustomed & feel so entitled to cheap meat you might just spark violent revolution.
Please suggest if you know any possible ways.
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?
I'd take it any day.
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.
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.
( https://www.nytimes.com/2018/11/19/us/politics/farming-trump... )
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.
I'd imagine the planting, maintenance and harvesting procedures benefit significantly from the crop being a single type.
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.
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.
Trump cut taxes last year. How's that working out?