Department of Agriculture

[kandrathe]

I was listening to NPR news and overheard farmers who didn't have "crop insurance" having to sell their lands because they didn't have the resources necessary to keep a farm running.

So, your first problem was listening to just NPR. Their slant will take you one way (we are all victims).

The government pays up to 60% of their crop insurance. Much like health insurance offered by your employer, the farmer should always have crop insurance -- especially when someone else is footing most of the bill for you. At the beginning of the year, well before you need to choose your crop and buy your seeds, the government sets the per bushel / ton strike price for certain commodities. The farmer is still free (and most do) use commodity hedges to further offset potential losses. (link to USDA RMA FCIC info)

So naturally, I pondered why farmers don't sue the department of agriculture for not providing water for them, especially for the farmers that pay for crop insurance?

Sure. If the government can tax you for not having health insurance, why not sue the government for their negligence in not forcing farmers to also carry crop insurance.

In fact, it would be so much easier for us if the government just took all of our income, and gave us an allowance for what they deem we should have for "spending money". <-- that was sarcasm btw.

Whats the logic in that, you say? Well I was curious as to how much money is doled out for a typical crop insurance claim (but couldn't find any useful information)

The FCIC, since 1985, has doled out $1.7 billion per year on average to pay farmers for losses. But, it is separate from Crop Revenue Coverage, which protects them against low prices. My calculations show an average premium was about $6640 per year. If the ratio of premium volume to crop value insured holds, then the cost per year is about 10% of the gross potential crop value.

...as opposed to providing a running Desalination Plant that runs on mostly Solar Power? And how is that, you ask? As an example, Santa Barbara county ... This provable monetary loss from negligence = lawsuit to me.

If I fail to use my safety restraint and are propelled through the windshield, is the automobile manufacturer liable? You are saying that the government failed to provide rain, or its equivalent (a complicated water infrastructure) to prevent farmers from loss. Where, they could have just bought the insurance, heavily recommended and subsidized by the government. On another front, California's attempts at irrigating their desert resulted in a big ecological disaster (Salton Sea).

But of course, something that seems so simplistic on the outside must have it's flaws, so I really must be missing something.

The latter, I'm afraid.

Thoughts?

All in all, it's a mess.

Some farmers have it too easy --

1) They get low interest loans and have a special ag bank infrastructure designed just for farmers -- it's not quite the same for your mom and pop corner store. Yes, farmers have huge capitalization start ups getting $5 million combines, with planter, and harvester heads. Then again, your mom and pop store doesn't start with the floor space of your local Walmart store either.

2) Tax treatment -- Certain agricultural income, such as unharvested crops, qualify for taxation as capital gains rather than ordinary income and, therefore, benefit from the lower tax rate (15%).

3) See my 1st paragraph above on crop insurance.

4) Grain stores -- smarter farmers invest (individually or collectively) in their local storage systems to safely stow away bumper crops in the high yield years -- when prices are low, and sell that grain at high prices during lean years. Easier to do for grains, not so much for oranges, carrots or watermelons.

5) The government has various means of price supports -- a $5 billion-a-year handout to grain and cotton farmers whether they need it or not. Livestock producers, and the growers of non-subsidized commodities are actually hurt by government price supports. Cheap grain would be a boon to cattle farmers, but the government keeps the average price higher than it might be naturally.

6) A federal ethanol mandate that will consume 40% of this years corn crop driving the price of both corn and fuel higher. The Renewable Fuel Standard requires that 13.2 billion gallons of corn starch-derived biofuel be produced in 2012. This is a huge boon for farmers of crops converted to ethanol and for the heavily subsidized ethanol producers and bad for everyone else. When you find the price of meat (and other food) is too high in the market, you can thank the ethanol subsidy.

Some of this is not all bad, in that ethanol blends will reduce smog in heavily congested parts of cities. But, the federal "one sized fits all" mandate treats rural Idaho like downtown Chicago. We've discussed here before how overall ethanol is a bad thing when it converts food into fuel (and water pollution). I'm actually hugely in favor of plant based ethanol where it uses switch grass, or other biomass taken from otherwise untillable land. That would be a benefit. But, it needs to operationally stand on its own without subsidies (and mandates) or it will distort markets (i.e. hurt us all).

7) There are many government programs promoting biofuel -- so, while the US energy policy is driving petrol (and coal) costs higher, and higher. The government is promoting special rural development aid for biorefineries to convert farm land into a means to produce bio-diesel to provide enough fuel to continue farming. If you caught the circular nature of this, good.

8) I have issues with the left hand and the right hands of government -- not only do we pay farmers to grow certain crops, we also pay them to plant no crops (Conservation Reserve Program), and to not harvest some of their crops. We subsidize certain crops, like tobacco, then turn around and use government intervention to tear down the market that consumes the product. It's too much of a health problem for us, so we'll export it to China.

So, when it comes to water projects (Great Lakes, draining Canada, or desalinization), I'm in support if a) everyone is on board, b) it makes economic sense, c) it makes ecological sense today and for 100 years.