Putting the Farm Bill Expiration in Context

The Weekly Standard reports that new figures from the Census Bureau’s Current Population Survey reveal median household income in the US has fallen $3,040, or 5.7%, since June 2009, the last month of the recession.  That’s not much to show for the thirty-eight month Obama “recovery.”

This disheartening statistic provides a good backdrop for the news that dairy farmers are complaining that they will be short changed ten percent of their income — doled to them from the government through the Milk Income Loss Contract (MILC) program — as a result of the 2008 farm bill expiring.

It may seem at first glance that there is not a legitimate connection between this languid economic “recovery” and the income loss of dairy farmers.  But there is a fundamental connection.  It is a question of dependence on the government and the government trying to micromanage our lives, to micromanage business, and to (try to) micromanage the free market.  The poor economic recovery and the decrease in income for dairy farmers can be traced back to the same roots.

If it were not for government over-regulation, manipulation, and control, businesspeople in all sectors of the economy would be better off. 

Heritage’s Ed Feulner explains:

The farm bill encompasses more than just agricultural subsidies. There are quotas designed to control what is planted, and how much – as if the government knew better than the market what should be produced, and in what quantities… 

Take [the] food staple, milk. The U.S. Department of Agriculture uses a variety of price controls and income supports for farmers to limit how much milk is produced. This interference is expensive. By holding supplies down to maintain higher prices, consumers pay hundreds of millions of dollars more for milk, butter, cheese and other dairy products.

‘Thus, Americans are taking a double hit on dairy,’ says regulations expert Diane Katz. ‘Tax revenues are used to subsidize producers, and production limits raise the cost of products.'”

So don’t be too quick to break out the violins when dairy farmers start complaining because they’re not getting the handouts they’ve come to expect from other taxpayers.   What they should realize is that the government created a problem (holding down supplies to maintain higher prices) and then offered a pseudo solution (using tax revenues to subsidize producers.)

When you read comments like, “most farmers are frustrated by the inaction of politicians who seem to care only about election results,” remember which politicians are the real culprits.  It’s not the politicians who rightly block a bad bill because the bill needs some serious reform.  The real culprits are the politicians who try to please certain special interests in a particular sector of the economy so that they can get their votes.

It is unfortunate that dairy farmers are going to have to take a hit in terms of income for a few months; economic prosperity is a good thing.  The problem, however, is that these farmers have become dependent upon government to fund them in an artificial way, and that funding comes from the wallets of other taxpayers.

The notion that government should be subsidizing farmers is fundamentally flawed, and this problem is not limited to dairy farmers.  When the government tries to control any sector of the economy, preventing the free market from functioning, all Americans suffer.

Please Share Your Thoughts

2 thoughts on “Putting the Farm Bill Expiration in Context

  1. No doubt the Farm Bill should be split from food stamp program, Makes no sense and we should lift subsidizing and let the free market system work. I am a crop insurance agent/broker and let the farmer and rancher take on the programs that are in place to help them stay in business due to insured perils. It’s called risk managment and it does work. The days when the banks come in and foreclose on a farmer/rancher would be the fault of the enity. There are tools and the Independent Agency System, through the Risk Managment Agency (USAD), have the relationship with ranchers and farmers. We protect their properties, equipment, workers, life, health disabilty and offer RMA programs. Close some of the USDA FSA offices and let the Independent Agency System represent the FSA programs.
    It will work,
    Mike Long

  2. Farm bills. The historic debacles of the government interference with food supply is the first example that economics teachers use to demonstrate why the the free market needs to stay free.

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