Farm policy: The more things change …

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(Farm and Dairy file photo)

I told the cashier in the Sparkle Market in Andover that I was “A.T.O.” This, after I gave her my last few bills and just managed to cover my purchases. I got a blank stare.

I get that a lot. They tolerate geezers, don’t they? Number one son tells me I forget how old I am.

“All Tapped Out” is 1960s talk. Ditto for “drop a dime,” which used to refer to calling the cops from a pay phone with an anonymous drug tip. It came to be more of a tattletale thing: “I’m going to drop a dime on you.”

Josh reminds me that never in his lifetime has a pay phone taken any less than a quarter. And, lest I forget, the pay phone has gone the way of the passenger pigeon, another reference that his generation does not get since the last one died in the Cincinnati zoo in 1914.

Josh also thinks that ordering “unleaded” coffee does not make much sense since we began a five-year phase-out of lead in gasoline in 1990, before he started to drive. Josh is clearly embarrassed by the term, but maintaining my status in geezerdom requires that I embarrass a member of my family at least once a day. Since Josh lives in Columbus, that role usually falls to Squeeze.

The French say, “Plus ca change, plus c’est la meme chose.” Loosely translated that means, “the more things change, the more they stay the same.” These idioms have changed or gone out of fashion, but some things have remained the same.

Take the farmer’s dependence upon government subsidies, for example. The American farmer and the American consumer have been co-dependents for more than my lifetime.

The government has managed our economy with the assumption that the good of the many was pre-eminent.

In the case of the farmer, the assumption was that he could survive at some level of poverty, occasionally aided by Uncle Sugar, as long as the consumer got cheap food.

In practice, at times of worst prices, the government subsidized the farmer so that he did not actually quit farming and affect the supply of food. At times of best prices, the farmers spent what they earned to re-tool, and the benefits of that spending trickled down to consumers through the rubber, steel, and chemical industries.

This process also provided jobs to the political class.

Some legislators could rally their troops by railing against the money spent to support rich farmers. Other legislators could remind their rural constituents that they had supported the latest farm bill so that the farmers could survive.

This process went through a major revision when the ethanol boom helped fuel a revision in ag prices that made subsidies to grain farmers superfluous. That revision has trickled away the last five years with high production through technology and good weather.

We have built back up the surplus of grain, even with 5 or 6 billion bushels of corn going out the tailpipe of millions of cars.

At the same time, we have seen the explosion of production costs that came as a result of paying for technology and a result of the prosperity that bid up land values and rents.

Some of us remember $62 potash and $75 seed corn and $40 rent. Talk about geezers!

Now comes the reality of $3.50 corn and $8 soybeans. Yes, that is still twice what they were worth in the farm depression of the ’80s, but our costs are astronomically higher.

Now we are having trouble passing a farm bill. Maybe it is because politicians have forgotten how to deal, but maybe it is because the farm bill might result in actual costs as actual subsidies are paid to actual farmers.

Trade salvos

This summer, the reality of farmers paying for foreign policy popped up once again. Tariffs on grain became a reality of retaliation that stopped soybean exports to China completely. The tariffs were the opening salvo in a trade war with the goal of eliminating tariffs.

This is counter-intuitive, and reminds me of a certain crude ’60s axiom about fighting for peace. Maybe you had to be there.

In the process of firing up the trade war, we drenched the farm gate price of soybeans. To compensate, Uncle Sugar paid a subsidy to soybean farmers. I wish Jimmy Carter had done the same when he dashed our prices with his foreign policy.

Now we are engaged in negotiations to improve trade relations. The leaders of the U.S. and China met over dinner this weekend. A deal to make a deal was cut. It remains to be seen what the results are.

Monday morning we see soybean prices up 17 cents. The hope was for a resolution that would jump prices 60 cents. What we got was a 90-day period to talk about a solution. Talk is cheap, and so are soybeans.

American farmers have been anticipating the announcement of a second compensatory soybean payment, to be announced this week. The assumption was that it would be the same as the first. In fact, only an announcement has been announced, not an amount, if any.

The fear was in the category of a mixed blessing. Yes, we would get good news from the trade meeting, but then we would get a big bounce in the market and no justification for a second payment.

At this point I anticipate a payment, and likely the full expected payment. It remains to be seen. Depending upon Uncle Sugar has never been a clean process.

Plus ca change…

(Marlin Clark is an associate of Russell Consulting Group, with local office in Williamsfield, Ohio. Comments are welcome at 440-363-1803.)

 

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