6 ms·

> The shift over years has been that the second strategy produces more crops with lower expenses I read an interesting book recently (Seeing like a State) that

> The shift over years has been that the second strategy produces more crops with lower expenses I read an interesting book recently (Seeing like a State) that makes the claim that large-scale monocrop industrial farming is only actually “optimal” if you don’t price in the heavy subsidy, and if you ignore the non-revenue contributions of small-hold agriculture (e.g. the land might provide fuel, crafting materials, and otherwise support the farmers in a way that doesn’t show up on the balance sheet). Not to mention that the larger farms tend to be extractive, in that they are using up water from the water table and nutrients from the soil, and so they will eventually degrade the land to the point where it cannot be productive any more. I did some digging and the farm subsidies in the US are truly eye-watering, and particularly notable is that the biggest 10% of farms take 90% of the subsidy, so we are not even subsidizing “traditional working farmers” or anything like that, just shipping hundreds of billions to huge ag corps. I wouldn’t claim to be an expert nor to be certain about those economic claims though, and would be interested in others’ thoughts here, particularly other books you found useful on the subject.

toyg 5y ago
> particularly notable is that the biggest 10% of farms take 90% of the subsidy This is the real problem. I wish somebody would come up with a simple mechanism to stop all subsidies to companies over a certain size. Yes, it will be gamed, but it's still better than the outright crony-capitalism we have today.
- tastyfreeze 5y ago
  Just stop subsidies altogether. Subsidies distort the market and encourage farmers to grow crops the market doesnt actually want.
  - landemva 5y ago
    Start with removing corn subsidy. There is so much corn ovrrproduction that it gets processed into a bit of sweet and blended in to packaged foods like ketchup. And blended into gasoline. Corn subsidy is massive economic distortion which leads to monocrop farming and lack of diversity.
  - etempleton 5y ago
    The problem is that the whole farming industry is proped up on subsidies and if you ended it tomorrow almost every small to medium farm would fold and get bought by a large farm or sold to build a housing development.
    - AnthonyMouse 5y ago
      That isn't consistent with 10% of the farms taking 90% of the subsidy. The subsidy argument is a scam anyway. It's a commodity market. The margins will be razor thin, the end. If you subsidize production, prices go down. It will eat the whole subsidy and leave the margins razor thin. The only way the subsidy helps you is if you get more of it than your competitors. Now who do you think that applies to, the family farm or the huge corporation with lots of lobbyists?
      - klyrs 5y ago
        Lower food prices are good for the consumer. Exclusively focusing on the supply side is a mistake.
        AnthonyMouse 5y ago
        The consumer is the one paying the taxes that fund the subsidies. That isn't helping them.
        theptip 5y ago
        I get the general point you're making, but in a progressive tax regime like the US, the poor (who benefit most from lower food prices) are paying proportionately less of their income as tax than the rich, so this is helping them. Many US families paid no tax in 2020 due to tax credits, so they won't pay for the subsidies. I would definitely argue that there are simpler ways of helping low-income families to afford food though, if that is your goal... just lower their taxes further, or give them negative tax / UBI if they are already paying no taxes, rather than adding lots of complex gears to distort the economy to try and affect the same outcome. Or more food stamps if you don't like the idea of poor people spending their tax rebate dollars on non-food items that they prefer.
  - willvarfar 5y ago
    Subsidies can be about ensuring crops are produced in-country instead of imported from cheaper countries. This is not the same as saying there is no market for the produce.
    - simonh 5y ago
      Who cares where it’s produced? If farmers in a developing country can get off aid and earn a living, good for them. I do care how it’s produced.
      - azinman2 5y ago
        So many reasons why this is bad, but the most obvious reason right now is the supply chain crisis. It’s one thing if you can’t get a new car. It’s another if you can’t get new food.
      - PeterisP 5y ago
        There are two main aspects. One is long-term food security - even if global trade is mostly fine right now despite the current hiccups, there's no telling how it's going to be in a decade or two, and it's hard to ramp up production (due to lack of skillset, machinery and infrastructure) if you suddenly need it; so it makes all sense to pay some fraction of a percent of your GDP to ensure long-term strategic security of your food supply, especially if it looks like global tensions will eventually rise due to climate change. The second aspect is that even in the current circumstances we're seeing rapid urbanization and depopulation of the countryside, which is generally seen as a problem for many areas. In a "natural" regime without rural subsidies this would happen even faster.
      - AussieWog93 5y ago
        Relying on imports for food makes your country a sitting duck in times of war. All the enemy needs to do is blockade you and then you can be starved into submission.
      - ineedasername 5y ago
        Given the global logistics mess at the moment, I would think it's pretty obvious why the location of food production matters.
  - AngryData 5y ago
    Subsidies are an alternative to having massive granary stores to supply an entire nation. If you don't guarantee overproduction, you will soon find yourself having shortages as crop yields can vary up to 30% each year. Without subsidies farms will optimize towards producing only barely enough to satisfy demand so they don't waste money on crops they can't sell, profit margins are usually 1% or less so there is very little room for overproduction. Once everyone is trying to thread that thin line, a single bad month of weather or a large wind or hail storm would turn you from a food exporting nation to a food importing nation overnight, and crop prices will swing wildly in either direction from it. Subsidies certainly are poorly applied and could use some serious work fixing them, but just getting rid of them outright is foolish.
  - vkou 5y ago
    Given the choice between a free market plus bread riots every time there's a bad growing year, versus subsidies and no bread riots, I'm going to have to swing towards subsidies. As I understand it, during a bread riot, free marketeers get eaten first.
- hn_version_0023 5y ago
  I’d say that this is a real problem, but there’s a larger issue: lying — which includes not just outright falsehoods, but the spin applied to facts to make them more widely palatable. When I look into nearly anything I find some distortion of the truth in service of profits. The problem is that we’re entirely comfortable with lying, and have done so much of it the truth of everything is obscured by the spin. This I feel is at the heart of what ails the USA and the world. As a European friend told me once over beers: ”All you Americans are always selling something, and doing it badly, by lying until you get the sale”
- JoeAltmaier 5y ago
  I'm not sure our economy could handle that. Industry depends on the products coming from those farms. It's always more nuanced than "stop that crazy thing we're doing!"
jml7c5 5y ago
>particularly notable is that the biggest 10% of farms take 90% of the subsidy How much crop production do the biggest 10% of farms represent?
- shawn-butler 5y ago
  Large-scale family farms and industrial nonfamily farms account for only 4.8% of farms, but 57.4% of production (in $). Small-scale family farms represent nearly 90% of U.S. farms, but only 21.5% of production. Source is USDA (2020) America’s Diverse Family Farms.
- theptip 5y ago
  It's a good question, and I don't have the answer. Here's a reasonable jumping-off point that I've started investigating: https://www.cato.org/commentary/examining-americas-farm-subsidy-problem https://www.cato.org/commentary/examining-americas-farm-subs... And here's a more detailed NBER paper digging into distribution of subsidies: https://www.nber.org/papers/w16693 https://www.nber.org/papers/w16693 My general impression so far is that the subsidies are not being disbursed pro-rata to production rates, and larger farms (having more legal resources) are much more able to capture these subsidies; for example with exotic ownership structures of lots of subsidiaries, to maximize the capture of subsidies. These financial/legal engineering strategies simply aren't available to smallholders. It's the same sort of incentive structure that produces outcomes like the biggest companies paying the lowest tax rates. Also, correction, I believe I have mis-quoted the stats off the top of my head -- the Cato article suggests it's more like 80% of subsidies to the top 10%. The general point still stands.
  - SilasX 5y ago
    >It's a good question, and I don't have the answer. It's really the kind of thing you want to resolve before spreading a statistic like that.
    - theptip 5y ago
      I couldn’t disagree more. I was clear about my level of epistemic uncertainty in my OP. And there is a good discussion going on here.
shalmanese 5y ago
> I did some digging and the farm subsidies in the US are truly eye-watering, and particularly notable is that the biggest 10% of farms take 90% of the subsidy Well, yeah. The 90th percentile farm makes $7665 in farm income per year [1] so how much subsidies could they possibly absorb? "Farms" in the US are overwhelmingly used as a tax avoidance strategy. Only a numerical minority of farms are actually designed to grow food. [1] https://aei.ag/2019/02/25/what-is-median-farm-income/ https://aei.ag/2019/02/25/what-is-median-farm-income/
- WaxProlix 5y ago
  > "Farms" in the US are overwhelmingly used as a tax avoidance strategy Can you say more about this / link to some more info? It's an interesting premise and I haven't heard it before.
  - bombcar 5y ago
    I suppose many hobby farms get the land classification of agricultural instead of recreational or homestead and are taxed lower.
    - kevin_thibedeau 5y ago
      Christmas tree farms are the best. You're growing a non-necessary crop that you can ignore harvesting for decades.
      - merpnderp 5y ago
        What about pecan farms? A new farm takes 20+ years to start producing and a lot of people would rather have Christmas trees than pecans.
  - hattmall 5y ago
    Most rural land is used in some sort of agricultural production. The most is probably timber. For most of those land for most years they don't make much profit if any, but loads of expenses can be deducted against that farm income and 4 out of 5 years, those expenses can go against any other income and the allowed expenses are very liberal.
fshbbdssbbgdd 5y ago
If farms got charged for their water use (a high enough price to reduce usage and prevent drought), I wonder if the small farms would still do a better job on that front, or would the more industrial farms do their optimizing thing and become more efficient? I suppose you could also price the impact on soil quality, but that sounds harder to administer.
dools 5y ago
It’s almost like there’s an entire branch of government dominated by a minority of land holders

toyg 5y ago

> particularly notable is that the biggest 10% of farms take 90% of the subsidy This is the real problem. I wish somebody would come up with a simple mechanism to stop all subsidies to companies over a certain size. Yes, it will be gamed, but it's still better than the outright crony-capitalism we have today.

tastyfreeze 5y ago
Just stop subsidies altogether. Subsidies distort the market and encourage farmers to grow crops the market doesnt actually want.
- landemva 5y ago
  Start with removing corn subsidy. There is so much corn ovrrproduction that it gets processed into a bit of sweet and blended in to packaged foods like ketchup. And blended into gasoline. Corn subsidy is massive economic distortion which leads to monocrop farming and lack of diversity.
- etempleton 5y ago
  The problem is that the whole farming industry is proped up on subsidies and if you ended it tomorrow almost every small to medium farm would fold and get bought by a large farm or sold to build a housing development.
  - AnthonyMouse 5y ago
    That isn't consistent with 10% of the farms taking 90% of the subsidy. The subsidy argument is a scam anyway. It's a commodity market. The margins will be razor thin, the end. If you subsidize production, prices go down. It will eat the whole subsidy and leave the margins razor thin. The only way the subsidy helps you is if you get more of it than your competitors. Now who do you think that applies to, the family farm or the huge corporation with lots of lobbyists?
    - klyrs 5y ago
      Lower food prices are good for the consumer. Exclusively focusing on the supply side is a mistake.
      - AnthonyMouse 5y ago
        The consumer is the one paying the taxes that fund the subsidies. That isn't helping them.
        theptip 5y ago
        I get the general point you're making, but in a progressive tax regime like the US, the poor (who benefit most from lower food prices) are paying proportionately less of their income as tax than the rich, so this is helping them. Many US families paid no tax in 2020 due to tax credits, so they won't pay for the subsidies. I would definitely argue that there are simpler ways of helping low-income families to afford food though, if that is your goal... just lower their taxes further, or give them negative tax / UBI if they are already paying no taxes, rather than adding lots of complex gears to distort the economy to try and affect the same outcome. Or more food stamps if you don't like the idea of poor people spending their tax rebate dollars on non-food items that they prefer.
- willvarfar 5y ago
  Subsidies can be about ensuring crops are produced in-country instead of imported from cheaper countries. This is not the same as saying there is no market for the produce.
  - simonh 5y ago
    Who cares where it’s produced? If farmers in a developing country can get off aid and earn a living, good for them. I do care how it’s produced.
    - azinman2 5y ago
      So many reasons why this is bad, but the most obvious reason right now is the supply chain crisis. It’s one thing if you can’t get a new car. It’s another if you can’t get new food.
    - PeterisP 5y ago
      There are two main aspects. One is long-term food security - even if global trade is mostly fine right now despite the current hiccups, there's no telling how it's going to be in a decade or two, and it's hard to ramp up production (due to lack of skillset, machinery and infrastructure) if you suddenly need it; so it makes all sense to pay some fraction of a percent of your GDP to ensure long-term strategic security of your food supply, especially if it looks like global tensions will eventually rise due to climate change. The second aspect is that even in the current circumstances we're seeing rapid urbanization and depopulation of the countryside, which is generally seen as a problem for many areas. In a "natural" regime without rural subsidies this would happen even faster.
    - AussieWog93 5y ago
      Relying on imports for food makes your country a sitting duck in times of war. All the enemy needs to do is blockade you and then you can be starved into submission.
    - ineedasername 5y ago
      Given the global logistics mess at the moment, I would think it's pretty obvious why the location of food production matters.
- AngryData 5y ago
  Subsidies are an alternative to having massive granary stores to supply an entire nation. If you don't guarantee overproduction, you will soon find yourself having shortages as crop yields can vary up to 30% each year. Without subsidies farms will optimize towards producing only barely enough to satisfy demand so they don't waste money on crops they can't sell, profit margins are usually 1% or less so there is very little room for overproduction. Once everyone is trying to thread that thin line, a single bad month of weather or a large wind or hail storm would turn you from a food exporting nation to a food importing nation overnight, and crop prices will swing wildly in either direction from it. Subsidies certainly are poorly applied and could use some serious work fixing them, but just getting rid of them outright is foolish.
- vkou 5y ago
  Given the choice between a free market plus bread riots every time there's a bad growing year, versus subsidies and no bread riots, I'm going to have to swing towards subsidies. As I understand it, during a bread riot, free marketeers get eaten first.
hn_version_0023 5y ago
I’d say that this is a real problem, but there’s a larger issue: lying — which includes not just outright falsehoods, but the spin applied to facts to make them more widely palatable. When I look into nearly anything I find some distortion of the truth in service of profits. The problem is that we’re entirely comfortable with lying, and have done so much of it the truth of everything is obscured by the spin. This I feel is at the heart of what ails the USA and the world. As a European friend told me once over beers: ”All you Americans are always selling something, and doing it badly, by lying until you get the sale”
JoeAltmaier 5y ago
I'm not sure our economy could handle that. Industry depends on the products coming from those farms. It's always more nuanced than "stop that crazy thing we're doing!"

jml7c5 5y ago

>particularly notable is that the biggest 10% of farms take 90% of the subsidy How much crop production do the biggest 10% of farms represent?

shawn-butler 5y ago
Large-scale family farms and industrial nonfamily farms account for only 4.8% of farms, but 57.4% of production (in $). Small-scale family farms represent nearly 90% of U.S. farms, but only 21.5% of production. Source is USDA (2020) America’s Diverse Family Farms.
theptip 5y ago
It's a good question, and I don't have the answer. Here's a reasonable jumping-off point that I've started investigating: https://www.cato.org/commentary/examining-americas-farm-subsidy-problem https://www.cato.org/commentary/examining-americas-farm-subs... And here's a more detailed NBER paper digging into distribution of subsidies: https://www.nber.org/papers/w16693 https://www.nber.org/papers/w16693 My general impression so far is that the subsidies are not being disbursed pro-rata to production rates, and larger farms (having more legal resources) are much more able to capture these subsidies; for example with exotic ownership structures of lots of subsidiaries, to maximize the capture of subsidies. These financial/legal engineering strategies simply aren't available to smallholders. It's the same sort of incentive structure that produces outcomes like the biggest companies paying the lowest tax rates. Also, correction, I believe I have mis-quoted the stats off the top of my head -- the Cato article suggests it's more like 80% of subsidies to the top 10%. The general point still stands.
- SilasX 5y ago
  >It's a good question, and I don't have the answer. It's really the kind of thing you want to resolve before spreading a statistic like that.
  - theptip 5y ago
    I couldn’t disagree more. I was clear about my level of epistemic uncertainty in my OP. And there is a good discussion going on here.

shalmanese 5y ago

> I did some digging and the farm subsidies in the US are truly eye-watering, and particularly notable is that the biggest 10% of farms take 90% of the subsidy Well, yeah. The 90th percentile farm makes $7665 in farm income per year [1] so how much subsidies could they possibly absorb? "Farms" in the US are overwhelmingly used as a tax avoidance strategy. Only a numerical minority of farms are actually designed to grow food. [1] https://aei.ag/2019/02/25/what-is-median-farm-income/ https://aei.ag/2019/02/25/what-is-median-farm-income/

WaxProlix 5y ago
> "Farms" in the US are overwhelmingly used as a tax avoidance strategy Can you say more about this / link to some more info? It's an interesting premise and I haven't heard it before.
- bombcar 5y ago
  I suppose many hobby farms get the land classification of agricultural instead of recreational or homestead and are taxed lower.
  - kevin_thibedeau 5y ago
    Christmas tree farms are the best. You're growing a non-necessary crop that you can ignore harvesting for decades.
    - merpnderp 5y ago
      What about pecan farms? A new farm takes 20+ years to start producing and a lot of people would rather have Christmas trees than pecans.
- hattmall 5y ago
  Most rural land is used in some sort of agricultural production. The most is probably timber. For most of those land for most years they don't make much profit if any, but loads of expenses can be deducted against that farm income and 4 out of 5 years, those expenses can go against any other income and the allowed expenses are very liberal.

fshbbdssbbgdd 5y ago

If farms got charged for their water use (a high enough price to reduce usage and prevent drought), I wonder if the small farms would still do a better job on that front, or would the more industrial farms do their optimizing thing and become more efficient? I suppose you could also price the impact on soil quality, but that sounds harder to administer.

dools 5y ago

It’s almost like there’s an entire branch of government dominated by a minority of land holders