Farmers ride the gravy train as Trump boosts welfare to the Heartland

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BRITTMAN

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[
Jump start a little conversation on this February Sunday.

url]https://www.marketwatch.com/story/farmers-ride-the-gravy-train-as-trump-boosts-welfare-to-the-heartland-2019-05-25[/url]

Opinion: Farmers ride the gravy train as Trump boosts welfare to the Heartland

Between this year and last, U.S. farmers will receive about $27 billion in so-called aid because of the president’s damaging policies


By: BRETT ARENDS

Memo to all you “small government” conservatives in the farm states: Send back your latest federal subsidy checks.

Go on. Tell Donald Trump — and all us taxpayers — that you don’t want the money.

You don’t want it. Don’t need it. And, yes, don’t deserve it. If you can’t sell your products on the open market, isn’t that your problem?

After all, you’ve been railing for years against “runaway federal spending” and massive federal budget deficits. It’s time to put your money where your mouth is.

Or was all that Tea Party stuff just a big, fat lie?

Midwestern riches
The Ag Racket was in Washington on Thursday collecting another $16 billion of our money, courtesy of the man the farmers put in the White House. Apparently, it’s our job to compensate them for the effects of Trump’s policies. (Trump doled out $11 billion in “aid” last year.)


Don’t you just love these people? Farmers lean Republican by about three to one. Trump swept the farmland states by wide margins. He won Iowa by 10 percentage points, Kansas by 21 and Nebraska by 25.

You can hardly throw a soybean anywhere in the Midwest without hitting small-government conservatives who rail against government spending, bailouts, “welfare” and “socialism.”

But I guess it’s not “welfare” if you’re white.

They’re all in favor of “free markets” — at least for something simple, like, say, health insurance.

It’s when you start to deal with things that are really complex, like wheat or soybeans, that you need the government to step in.

Of course in a truly free market they’d respond to plunging prices by, er, planting something else. But, then, we’ll never know, will we?

Betting (on) the farm
It takes a lot of chutzpah to complain about poverty while making bigger returns than Wall Street.

But then, the Ag Racket has never been shy — at least when it comes to money.

The returns on farmland were a hefty 6.7% last year, according to the National Council of Real Estate Investment Fiduciaries (NCREIF).

How’d your 401(k) do? The S&P 500 Index SPX, -1.05% of the biggest U.S. stocks dropped 7%.

But by all means, let’s tax the rest of us to help them out. Where’s that violin?

Farmland returns haven’t had a single negative year since at least the 1990s, according to NCREIF. Farmland was actually in the black in the year of the 9/11 attacks. They were up 15% in 2008, when the Lehman Brothers-induced stock-market crash wiped out half your savings.

This was no anomaly. Over 20 years, farmland has produced twice the average annual returns of the S&P 500: 12.4% versus 5.9%.

And $100 invested in U.S. farmland 20 years ago would be worth more than $1,000 today. The same amount in the U.S. stock market: Just over $300.

Farm revenues have doubled over that time, rising much faster than inflation.



Good for them, right? Well, sure. The laborer is worthy of the hire. Honest profits are a good thing.

Subsidies galore
But during that time they’ve been pocketing billions of subsidies from taxpayers. Since 1999 the direct payments alone have totaled an astonishing $370 billion in today’s money. That figure, incidentally, is straight from the U.S. Department of Agriculture.

So if we have to compensate them when there’s a “trade war,” why did we have to compensate them when there isn’t one? And are we going to compensate everyone else too? Should the rest of us get federal credits when we buy a new iPhone?

No wonder Gladstone Land LAND, +0.35%, a Virginia-based publicly traded farmland real estate investment trust, has actually risen during the past month — even while the rest of the stock market has slumped.

So much for the alleged trouble in “farm country.” The stock, a useful proxy for the farming industry, is up 45% including dividends since Donald Trump was elected.

The S&P 500: Just 30%.

Who should be subsidizing whom here?

Brett Arends is a MarketWatch columnist.
 
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haymaker

Active member
Right now farmer suicide is up higher than veterans. With farmers going bankrupt there will be opportunity for Mr. Arends to buy some land and a million dollars worth of machinery so he can raise corn that he can buy cheaper than he can raise it. Bet he doesn't, obvious ignorance and agenda here. Not worth serious discussion.
 

remy3424

Member
Wow, farmers hitting the mother load now....that fella needs to get a reality check. He needs to buy himself a section of ground plus the equipment and see how good it is. Look at commodity prices and land prices and then convience yourself the big ROI is there. Price a tractor, planter and combine....no one can afford to be a farmer without help from someone. A waste of energy went into that article....and I am not a farmer, but I have seen a few before.
 

btdtst

New member
Hmm, I think you need to do a little more research, Brittman, before you buy into all of the BS cited in your article. Saying a $100 dollars invested in land 20 years ago is worth ten times as much today is ludicrous. Lots of other ridiculous "facts" in that article.
 

BRITTMAN

Active member
Didn't say I bought into the argument. That said, the cost of land is no doubt a deterrent to new farmers (not inheriting) entering.

Farming is big money and many of the larger farms make money on commodities by volume and not budget. Equipment is expensive (albeit the big operations turn over the equipment on a surprising regular basis), seed is expensive (can't hold onto part of last years crop), chemicals, drain tile, loans, etc....

I still see "family farms" trying to make it via diversification and on old equipment ... but those seem to be less and less.

Lot of independent consultants out there making 6 figure plus incomes working with these farmers on maximizing every acre in production.

Still remember the nightly news of the 80s with farm bankruptcy auctions a regular occurrence.
 

BRITTMAN

Active member
Right now farmer suicide is up higher than veterans. With farmers going bankrupt there will be opportunity for Mr. Arends to buy some land and a million dollars worth of machinery so he can raise corn that he can buy cheaper than he can raise it. Bet he doesn't, obvious ignorance and agenda here. Not worth serious discussion.
Many states forbid outside investment groups and corporations from buying farm land. Not necessarily good for those heirs just looking to sell the land to the highest bidder.
 

BRITTMAN

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Farming Subsidies in Brown County, South Dakota, 1995-2019‡

Recipients of Subtotal, Farming Subsidies from farms in Brown County, South Dakota totaled $383,565,000 in from 1995-2019‡.

Public record - can list them here if you want to see. Largest operation in Brown County, SD ... located in Bath, SD accepted over $5 million over the past 25 years. Exceeds $6.5 million if you include crop insurance payments (disaster). This "farm" took $0 in conservation payments.

View attachment 9801
 
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BRITTMAN

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All that said, to Haymakers point ... all this does is add pressure on the average farmer to make a living and have something to pass on or retire on.
 

BRITTMAN

Active member
Hmm, I think you need to do a little more research, Brittman, before you buy into all of the BS cited in your article. Saying a $100 dollars invested in land 20 years ago is worth ten times as much today is ludicrous. Lots of other ridiculous "facts" in that article.
8 to 10 times over the past 20 years seems to be pretty close in IN, IA, and SD, but that is likely cherry picked top shelf land.

2010, 2011, and 2012 saw huge % increases in farm land.

Who actually owns the land farmer or bank. If it is the farmer, he will make money. If it is the bank, then right now ??



Anyways, Looks like Kansas price escalation is significantly less ... say around 4X - 6X. Impact of the extended drought a few years ago ????

https://www.agmanager.info/sites/default/files/KansasFarmlandValuesIndex.pdf


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fourtrax

New member
Thread is rather political in nature. I personally don't care to see much politics on the bbd. This isn't the place for it whether I agree or not.
Sorry to see this bbd going downhill.
 

BritChaser

New member
In my long life I've never walked into a grocery store and found the shelves, reefers, and freezers anything but totally full of good food at affordable prices. This near miracle was possible due in part to government intervention in the ag market place. A farmer friend says he happily receives his government money when he thinks of the "free" money, free or subsidized housing, and free medical care welfare recipient's get for doing nothing while he has to work 355 days a year for his government money and has to pay someone to take care of his cattle during his 10-day annual vacation. Comparing welfare to government support for ag is a false equivalency.
 
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