{"id":13715,"date":"2012-09-10T07:04:20","date_gmt":"2012-09-10T14:04:20","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=13715"},"modified":"2012-09-10T07:04:20","modified_gmt":"2012-09-10T14:04:20","slug":"farm-economy-so-healthy","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2012\/09\/10\/farm-economy-so-healthy\/","title":{"rendered":"The Farm Economy Is So Healthy, Government Subsidies Are Going to Millionaires"},"content":{"rendered":"

(This is an excerpt from an article I originally published on Seeking Alpha on August 28, 2012. Click here to read the entire piece<\/a>.)<\/strong><\/p>\n

In “Why Taxpayers Pay For Farmers’ Insurance<\/a>“, Planet Money recently took on the sensitive subject of subsidies to farmers. My sense has always been that these subsidies are more controversial amongst us city slickers. So I took great interest in hearing farmers explain why taxpayers should support their businesses, in this case through farm insurance. <\/p>\n

{snip}<\/p>\n

Planet Money interviewed farmers in Fairbury, Illinois who happen to be millionaires based on their wealth in farmland.<\/p>\n

{snip}<\/p>\n


\n
\"Average<\/a>
Average value of U.S. farm real estate per acre <\/figcaption><\/figure>
\nSource: United States Department of Agriculture (USDA), Economic Research Service: Farm Income and Wealth Statistics<\/a><\/strong>
\n<\/center><\/p>\n

Data in constant dollars are available for farm assets, which includes machinery. {snip}<\/p>\n


\n
\"U.S.<\/a>
U.S. Farm Assets vs. Debt-to-equity ratio (1960 - 2010, Forecast for 2011 and 2012) - Constant Dollars: 2005 = 100 GDP)<\/figcaption><\/figure>
\nSource: United States Department of Agriculture (USDA), Economic Research Service: Farm Income and Wealth Statistics<\/a><\/strong>
\n<\/center><\/p>\n

{snip}<\/p>\n

When asked whether taxpayers should be subsidizing insurance, here is what one farmer hesitantly had to say …{snip}<\/p>\n

I am guessing the rich farmers’s ambivalence toward the crop insurance program does not just come from their status of wealth, but also that these are guys who likely feel like self-made men. They have built their businesses with their own bare hands and sweaty brows. That is not an image which reconciles well with the agent’s characterization of a farm economy so dependent on government support.<\/p>\n

Overall, state and federal government assistance is substantial but at least it tends to be counter-cyclical…{snip}<\/p>\n


\n
\"U.S.<\/a>
U.S. Farm Net Cash Income versus Direct Government Payments (Constant dollars: 2005 = 100 GDP)<\/figcaption><\/figure>
\nSource: United States Department of Agriculture (USDA), Economic Research Service: Farm Income and Wealth Statistics<\/a><\/strong>
\n<\/center><\/p>\n

{snip}<\/p>\n


\n
\"iPath<\/a>
iPath DJ-UBS Grains TR Sub-Idx ETN (JJG)<\/figcaption><\/figure>
\n
\n
\"The<\/a>
The U.S. drought has pushed PowerShares DB Agriculture (DBA) off recent lows<\/figcaption><\/figure>
\n<\/center><\/p>\n

{snip}<\/p>\n


\n
\"Teucrium<\/a>
Teucrium Corn (CORN)<\/figcaption><\/figure>
\nSource for charts: FreeStockCharts.com<\/a><\/strong>
\n<\/center><\/p>\n

Absent a notable change in weather conditions, Deere’s assessments point to strong prices for the foreseeable future…{snip}<\/p>\n

Finally, farmers in need of disaster-relief, millionaire or not, appear to be better prepared than ever to handle such calamities:<\/p>\n

{snip}<\/p>\n

Be careful out there!<\/p>\n

(This is an excerpt from an article I originally published on Seeking Alpha on August 28, 2012. Click here to read the entire piece<\/a>.)<\/strong><\/p>\n

Full disclosure: long CORN puts<\/p>\n","protected":false},"excerpt":{"rendered":"

(This is an excerpt from an article I originally published on Seeking Alpha on August 28, 2012. Click here to read the entire piece.) In “Why Taxpayers Pay For Farmers’ Insurance“, Planet Money recently took on the sensitive subject of subsidies to farmers. 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