It is a common misconception, thinking that farmers are big money-makers. Did you know that in 2011, the average total farm household income was $57,067, with the farm income alone being NEGATIVE $2,250? Still think farmers are rich?
Commodity prices are publicly broadcasted, but the input prices are not. It has become more expensive than ever to put seed corn and soybeans in the ground. It cost farmers just at $500 per acre to put the crop in the ground. So, figure they get lucky and sell their corn for $7.00 per bushel. With a yield of 150 bushels to the acre, that would be about $1,000. Take out the $500 for the seed, fertilizers, crop insurance, storage, hired labor, and all things necessary to keep the crop healthy, and the farmer is left with $500 per acre. With that money they have to buy their big pieces of machinery, such as a tractor, planter, or combine. Still think they are rich?
For most farmers, their crop production is their only source of income. So after all the business operations are complete, they have to support their family. With all of that, they do not have the leisure of having the opportunity of calling in sick or just taking the day off. Each day is crucial in their operation so they can be as productive as possible. There is always that possibility that they could lose everything in a matter of days, weeks, or months by wind, fire, or other disaster. Farming is an unbelievably uncertain profession to go into.
Farm subsidies are a very important part of a farmer’s business. What happens if there is a really bad drought? Or a new insect or disease introduced to their area? What if commodity prices are down? The farmer still paid that initial money up front to put the crop in the ground. When the yield is below normal, the government steps in and helps the farmer out. Private companies do not have the means of accommodating the riskiness associated with farming.
The subsidies are not free money, either. The farmers have to put forth a lot of work in order to show that their yields are down. For most programs, there is an average bushel per acre that they have as a standard. Another stipulation is that the farmer cannot enroll in multiple programs. They choose what best fits their needs.
The government is helping out its producers, but that gives a lot of help to the consumers too. Farmers are our source of food, fuel, clothing, basically anything you can think of. Would you rather support the government and our farmers, or rely of the Middle Eastern countries to provide us with our gasoline? The government has to guarantee food security for its citizens. Also, to make sure we can sustain our country and not have to rely on others to support our needs.
Do you still think that farmers are rich? Maybe the farm subsidies are not such a bad deal after all.