By All Means Necessary
July 18, 2007 | Posted by Scott Faber in Uncategorized
By including a means test in the 2007 Farm Bill, the House Agriculture Committee has started an important and long overdue debate over which farmers are truly in need of federal subsidies.
The income of an average farm household in almost twice that of an average American household, and the large commercial farms that collect the lion's share of farm subsidies report household incomes greater than $250,000 a year.
What's more, every other measure of farm wealth — net farm income, net cash returns, debt-to-equity ratios — show that most farmers have not only joined the middle class but have joined the investor class. Even many small farmers report net worth far greater than most Americans.
According to USDA:
- Average farm household income is more than $80,000 a year.
- Average farm household income for our largest commercial farms is more than $270,000 a year.
- The net worth of our largest commercial farms is, on average, more than $2.2 million.
- Farm household net worth is roughly five times as great as the net worth of the average American household.
- More than 80 percent of farm household income comes from sources of the farm.
Undre current law, farmers with adjusted gross income greater than $2.5 million can not collect subsidies. To calculate "adjusted" gross income, farmers are permitted to deduct more than 20 categories of expenses, ranging from farm expenses to health insurance costs. The Bush Administration has proposed to deny subsidies to a farmer whose average AGI is more than $200,000.
Yesterday, the House Agriculture Committee proposed to deny subsidies to a farmer with an average AGI of more than $1 million and to a farmer with an average AGI of more than $500,000 — unless two-thirds of his income comes from farming.
It's important to be sure that all income is captured by a means test, including investment income from ethanol plants and other rural enterprises. Excluding investment income would be like measuring the wealth of Warren Buffett without considering all those Berkshire Hathaway stocks.
Committee Chairman Collin Peterson deserves credit for putting means testing back on the table. Now, the Committee and the Congress need to go much further if they hope to avoid a brutal battle on the House floor.
In particular, the Committee must work with Speaker Pelosi and House reformers to craft a means test that fairly reflects the means of our largest and most successful farmers. What's more, payment limits should be lowered and loopholes should be eliminated once and for all. And, in light of growing wealth in agriculture, the Commitee should work with House reformers to craft risk management tools that allow farmers to manage the ups and downs of agriculture on their own.
Our farmers are as comfortable with a spreadsheet as they are spreading manure. We need a farm "safety net" as modern and entrepreneurial as they are.
2 Responses
Comment from Sarah Press
July 18th, 2007 at 1:54 pm
Just this week the House Agriculture Committee released its Farm Bill outlining new changes to federal support for farmers. As the bill relates to sugar, it looks like consumers and workers might get less than a sweet deal.
For years our Sugar Program as it is known channels big subsidies to sugar growers to reduce their costs and let them grow more sugar. Yet that's not all Big Sugar gets. The sugar program also severely restricts the amount of foreign supplies of sugar that is allowed into the US market. These restrictions – a blend of very high border taxes and quotas – are designed to make sure that US consumers don't get the benefit of tasting sugar grown in other countries such as Brazil and Haiti.These trade restrictions on foreign supplies of sugar have actually been partly to blame for the elimination of 11,000 sugar refining and candy manufacturing jobs. These industries have had to close their doors to US operations and open shop overseas to take advantage of cheaper supplies of sugar abroad. Of course these jobs wouldn't be lost if Congress eliminated the combination of highly restrictive quotas and tariffs.
Instead of turning things around Congress has made this bad system worse. The recently released Farm Bill proposes to make it that much more difficult for US candy makers and consumers to get access to foreign supplies of sugar. In the end, it is workers and consumers that will pay for this kind of protection offered to such a wealthy few.
For more on this another issues affecting consumers check out Consumers for World Trade: http://www.cwt.org/blog/
Comment from Vickie
July 26th, 2007 at 7:49 pm
I say lets all start growing our own food in our own back yards or window boxes, and that will show those greedy farmers who make more money than I do! How do we get around the ordinances prohibiting livestock if we're meat eaters? I agree that we need to means test and eliminate loopholes to make the system fair (ha, like that will ever happen) but lets lay off the farmers who are making a good living and not criticize them because they make more than the average American (me). They work darn hard to earn it, I'm assuming much harder than the average American, and I don't have to plow or sow or water or harvest (or not harvest if there's no water/rain) and all the other things the farmers have to do (like pay their employees regardless if it's a good year or a bad one) so we can go to the local grocery store and fill our carts with whatever we want, whenever we want it. Now professional atheletes…THEY make too much money!
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