Ray From Cleveland
Diamond Member
- Aug 16, 2015
- 97,215
- 37,440
- 2,290
When I was trading in the commodities market I mostly invested in grains since they were low priced contracts. Doing research, not all farmers can grow the same kind of crops. Then we started to burn up our food supply to create ethanol which did absolutely zero good when it comes to the environment, but it greatly increased our grocery bill.
Some crops are much harder to grow than others, and it heavily relies on weather. When ethanol hit the market, everybody dropped what they were growing to grow sugar cane. That left us depleted of other grains. The problem with that is what they used to grow was fed to livestock, so the price of pork, beef and chicken took huge hikes in price along with other items made from those grains.
So you are a farmer and after all the bills are paid, you want to make 60K a year. Not too unreasonable. But then you have a bad year and a low harvest. You only make 25K that year. The only way for you to survive is to more than double the price of your goods whatever that may be.
With government subsidies, they reimburse you that other 35K, and thus you don't really need to increase your prices to the consumer. It's safer to plant those harder to grow crops because you won't lose anything.
Ethanol is a complete scam, both parties love it. Democrats love pseudo environmental policies. Ethanol doesn't net reduce carbon emissions, but Democrats can talk about greenhouse gases with a fake program that doesn't work, their favorite kind. Republicans love farm subsidies. So we have a program that doesn't work and is expensive, politicians love it.
And bonus, it makes engines burn hotter which wears them out faster. A DC program that delivers nothing to the people except bills. Political dreams for politicians of both parties.
If we stopped subsidizing farmers, how they grow crops now would change. They would adapt and become more efficient. Government never drives down prices in the end. They prop up bad systems keeping them high
Either that or they would't grow anything at all. If you are a farmer hit with two or three bad seasons, you might as well sell the land to somebody that wants to put a mall there or something like that.
Yes, government subsidies and the commodities market do keep prices down for consumers. That's why both parties subsidize the farmers. The commodities market was created specifically to stabilize prices.
Of course farmers are always trying to improve farming for their advantage, but there is no magical cure to droughts or floods. At times it's an insect problem that kills crops. It's simply not predictable.
A lot of farmers do need to get out of farming. Government never spends money to help people. They do it to buy votes. Both parties do it that way. Their career is farming, they don't want to change professions. When cars came, we had too many blacksmiths. Technology changes the economics.
Farming should be done economically efficiently. Farmers would solve the problems. Some would get bigger, some would go under. That's the way capitalism works.
But congress NEVER drives down prices in the long run. Everything from airlines to telephones proves that deregulating reduces prices dramatically. Phones and planes are both cheaper now than when they were deregulated decades ago
Consumers can do without telephones, planes, computers, but everybody has to eat. The less food being grown, the higher the price for food.
You are going to pay one way or the other. If your weekly grocery bill is $100.00, imagine if it went to $150.00. Then what do we do about kids in school? If they can no longer buy a lunch for a $1.85, then we have to give them $2.50 everyday. We can't leave out those who receive free lunch, and that would still cost the taxpayers.
Food stamp allotment would have to increase as well. Maybe 70 billion a year to 100 billion a year. Food pantries would go dry as more people will keep their food purchases for themselves instead of donating them to charity.
You see, when it comes to starvation, nobody on either side of the political spectrum is going to let that happen. One way or another, subsides or not, Americans are going to eat.
I can't process the question that we end our socialist system and institute capitalism in food and prices will go up. Ending socialism has never led to higher prices ever just as instituting it has never led to lower prices ever.
Government pays farmers to not grow crops, they pay them to grow crops they can't sell. They keep too many farmers in business. They prevent optimization and realizing economies of scale.
Like all welfare whores, farmers gear their business plans to suckle government titties, not to serve markets.
And you ask so what if we end that and prices skyrocket? Why would that possibly happen?
Supply and demand. The less supply and more demand, the higher the prices go.
If you are a farmer and only produce one third of your normal harvest, the only way to maintain profit is subsidies or triple the price of your goods.