NCPA - National Center for Policy Analysis


November 14, 2007

If members of Congress shopped at a grocery store, they'd know that food prices are rising faster than at anytime in 17 years.  Milk now costs $3 a gallon in many states. Eggs, oranges, peas, tomatoes and rice are selling at or near all-time highs.  The biggest winners have been corn producers, as corn prices have doubled in two years -- thanks in part to new mandates for ethanol, says the Wall Street Journal.

All of this is translating into the best gains in farm wealth in decades:

  • Total farm income is expected to leap by 44 percent to $73 billion this year, according to the U.S. Department of Agriculture.
  • The average income of full-time farmers hit $81,420 last year, with large corporate farms earning in the millions of dollars.
  • Meanwhile, farmland prices in the past five years have increased by $200 billion a year or an average asset gain of $100,000 per year per full-time farmer.

And yet Congress is writing another five-year farm bill as if it were 1936 and the Okies roamed the plains, says the Journal:

  • The House has already passed a $286 billion bill and the $291 billion version now moving through the Senate may be the largest feast of subsidies ever served up by Congress.
  • The bill provides an estimated $25 billion in direct crop payments, and another $10 billion in "emergency assistance" and insurance subsidies.

In other industries, we celebrate the impact of trade and technology in reducing prices, but U.S. farm programs are expressly designed to make food prices higher for consumers, says the Journal.  Economists estimate that Americans pay about $12 billion more a year for food as a consequence -- on top of the higher taxes to sustain the direct handouts, says the Journal.

Source: Editorial, "The No Farmer Left Behind Act," Wall Street Journal, November 14, 2007.

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