Friday, May 02, 2008

Rev. Wright, outrage, and farm policy...

Every now and then, after several hours of contemplative time on a tractor or combine, some of the jigsaw pieces of life appear to fall together for me. To be sure, there is no box picture to go by, and some of the pieces are kind of forced in, but a vague sense of understanding emerges.

Stay with me.

There used to be a television show - "Connections" on PBS - which tried to show how cause and effect links between seemingly unrelated events created the history we know. Hosted by a deeply brainy James Burke, it was fascinating to this viewer. And I guess I'm still using that historical technique to explain why things are the way they are.

Take these seemingly disconnected events.

First, farm record keeping services announce mind-boggling profits for grain farmers. [Please note: not EVERY farmer, but the average - OK? So don't fire back and tell me you had a bummer of a 2007. Which if you think about it is even more stunning, since somebody had to be even farther above average to offset your figure]
The average return to the operator's labor and management income in 2007 was $171,507 (Figure 1). This return can be thought of as the farmer's "wage" or "salary". This is what remains from the operator's net farm income after a fair return to the operator's equity in machinery and land has been subtracted. The 2007 returns were $98,689 above the 2006 average of $72,818 and $88,168 above the average for the last five years. Higher average returns occurred in the northern and central parts of the state and lower returns occurred in southern Illinois. The 2007 earnings are the highest for any year during the last five years. The 2005 earnings were the lowest. Labor and management incomes have varied greatly during the last five years, ranging from a low of $38,787 in 2005 to the high of $171,507 in 2007.

While the 2007 labor and management earnings are at historic high levels, this does not mean that these high incomes will last indefinitely. Farm earnings, like earnings for many other businesses, exhibit wide swings from year to year. Farm earnings are dependent on a number of factors outside the farmer's control, such as weather, markets, and government policy. From that standpoint, it maybe helpful to look at farm earnings over a longer period of time. The 2003 through 2007 five-year average of labor and management earnings was $83,339 while the 1998 through 2007 ten-year average of labor and management earnings was $40,817, $130,690 below the 2007 earnings. The 2007 level of earnings is considerably above the last five and ten-year averages. [More] [More]
This news is hard to hide. It is being shouted at land auctions and equipment dealers. Bottom line: grain farmers never had it so good. Heck, most of us never imagined having it this good.

OK, now add in the anger and frustration building on these same farms that consumers are blaming them for skyrocketing food costs and undeserved government payments. This was our inaugural post on the new "Sound Off" blog here at AgWeb:
I don’t know what’s going on in your neighborhoods, but I am sick and tired of being lambasted for being a greedy farmer trying to starve out the poor of this world! Where is the National Corn Growers Association I pay into? Why don’t they write letters to the editors, have news conferences, appear on Larry King Live? Why are we so silent? Are we going to let Big Oil run us out of town and still up our diesel and fertilizer prices? Did anyone else see the banners over the highways in Minneapolis?: STARVE THE POOR - USE e85!!!

And I’m sick of hearing how we’re ripping people off in the grocery stores and still expecting a big hand-out in the pending (still, yet) Farm Bill. Can’t anyone get it across to the media that most of that money goes for food stamps? [More]
[A quick comment to "Outraged": the reason we only get a small [and getting smaller] portion of the farm bill is because farm lobbyists have worked for decades for that to be the vehicle for farm funding. Ask any commodity organization member if they want a stand-alone farm subsidy bill. It wouldn't get enough votes in the House to get out of a sub-sub-committee.]

Note the tone and the similar voices now appearing almost daily. Farmers are angry at fingers being pointed to them. But as I have been trying to point out for a while now, we have built much of our public relations image on the concept of farmers being the reason for cheap food.

So, when you take consumers in a recession (likely), food inflation, windfall farm profits, and a firm belief we instilled that we are the reason for food prices, what other conclusion should consumers come up with for their grocery bill? Even if it is not true, we have aligned these dots too close not to be connected. And face it, where is the money we are hauling in coming from?

But wait - I'm still not to my main point. Instead of calmly and quietly reassuring our customers we will keep the grain coming, we're getting fired up to lash back. With our bank accounts bulging, I had to ask why.

Then I saw this political post with some perceptive words from a guy I almost never agree with, Rush Limbaugh.
I watched some of Reverend Wright this morning at the National Press Club. It seems obvious to me that he's doing everything he can to wipe out Obama's candidacy, and I'll tell you why I think it is. I think that people like Reverend Wright -- and I think there are a lot of other race business hustlers out there, by the way, who think this -- really upset that if a black candidate is elected president, that they're going to be somehow diminished in their task, at keeping everybody in their flocks all revved up and angry about the ages old sin of slavery and the ongoing discrimination.

So it appears to me, if you look at Reverend Wright, listen to what he says and analyze it from the context or perspective of what's best for him, which is clearly all he's interested in, what's best for him is that if Obama loses, because then it's easy for him to say, "See, the white power structure doesn't want a black man to rise to the pinnacle of power in the United States of America."

It would certainly fuel Reverend Wright's future and continue to help him raise money and keep people whipped up into a frenzy. He's not helpful. Whatever he thinks he's doing, it is not helpful to Barack Obama. [More, via Andrew Sullivan]
I think Rush is right, and I think that same fear - loss of victimhood - now grips many producers. We have built our lives around being deserving victims of cruel circumstance and now the numbers are showing just the opposite.

If the possibility of black (I think that term is back in the acceptable column now) president undermines the moral authority of demagogues who blame every problem on racial discrimination, the eye-popping profits on grain farms certainly robs us of the right to claim an entitlement by virtue of economic discrimination.

The emergence of BTO's are another slap in our "oppressed" faces. Not only do these guys not look like victims, they are clearly wolves in subsidy-sheep's clothing. More outrage ensues, and the outcry carries a similar ring.

Victimhood is a powerful mindset, allowing us to shrug off personal accountability for our lives. And just like Bill Crosby has been setting African-American teeth on edge with his dismissal of racial victimhood in favor of individual (and especially parental) responsibility, the financial reality farm profits could force producers to admit they are not all that oppressed.

The voices from our farms, I believe, are not so much about unfairness and economics as the fear of having to build a whole new world picture where we are fully functioning citizens with equal advantages and disadvantages.


Anonymous said...

John, you couldn't be more right in your posting. The one thing that I think farmers, in general should be concerned about is the fact that many rural offspring could not stay an the farm and continue the family tradition because there was not enough acres thus dollars to go around. Now with record profits that apear to be around for a while perhaps some of these children that feel left out may want to come back to the farm and rural america. This will only put more pressure on cash rents and land value. Competition is a good think unless it is a product I'm working or trying to sell. Be very careful announcing the record profits as eventually the competition will flood the market.

Anonymous said...

And yet the Congressional conference committee working on the new Farm Bill adjourned last night (actually,early this morning after 1:00 a.m.) without resolving where to draw the line on the subsidy eligibility test of Adjusted Gross Income, but their discussions are not coming close to the Administration's proposed cutoff point of $200K. Last numbers being thrown around ranged from $750K - $900K and even higher.

At those levels it would appear that farmers want to maintain victim status while making more than 99% of all americans.

Anonymous said...

In order to get the money for food stamps, we have to have a "farm" bill? That's politics?

I have a four acre base (less than 10 acres), so I guess I don't make enough to qualify for farm program payments? That's politics?

Having a decent farm bill for incumbent President's does not help chances for re-election? That I suppose is politics.

Ol James said...

You left out whether there was a "Big Bang" or it was "Creation" theory, and possibly a shooter on the Grassy Knoll.
Very insightful Mr. John. But I have a question..Why are the Grain and Meat and other "Associations" not informing the public as to the workings behind the rise in the cost of these items?? After all it's the marketeers that are making the money.
The "Associations" need to get them some lobbyist, but I digress. I'm not a fan of "Unions" or "Lobbyist". But if I were paying to be in an "Association" I sure would want to see something. I am a member of the Farmers Federation,(ALFA).
Hey, I'm a middle-aged-plump-white-Redneck-male...mayhaps I could be a victim??

John Phipps said...


I was trying to make the opposite point: without food stamps there would be no farm program because unlike Senators, few reps have many farmers in their district. Farmers have been adamant about keeping food stamps in the farm bill so they can state most of it doesn't go to them and so reps have a reason to care. Think of a barnacle on a ship.

This isn't just my opinion - ask any farm lobbyist.

Anonymous said...

John - I can see you have not been in the fields enough - or too much. I was considering the direction this country could take if we COULD elect a positive Reagan like black (I don't know are you supposed to capitolize Black?) leader. Reagan like in personality and positive message not policy. What an opportunity to move forward!!

also, when we are deffending our new found income by burning food we need to try to put things in perspective with our city brothers and sisters. Bread goes up $.50 the farmer is only getting xx of the $2 loaf of bread the farmer only gets xx. AND the baker, trucker and ceo's deserve their part as well!

I will also remember that you agree with Rush and us that often.

I am Doug and I approve this comment. (no guesses what state I live in!)

John Phipps said...


Your statement is very commonly heard. It makes me curious what percentage of a bread loaf would farmers consider appropriate?

We think bread is about wheat. As anybody in the baking industry will tell you, it's about getting a consumer to buy your bread.

If bread was about wheat, farmers would be bread sellers. Those few who do sell a consumer product have a clearer picture of how much value processing adds, I think.

Anonymous said...

Good column John. I personally do not feel like a victim. However it is starting to feel like we are becoming the scapegoat (along with GW) for a lot of consumers feeling the high price pinch, particularly those (most) who think only one dimensionally.( if that's a word) In a 20 oz bag of Doritos, there might be 18 oz (almost all) corn. At $2/bu, that's $.04 . $6.00 corn means an increase of a 'whopping' $.08 on a bag that costs $3or $4, or a 4% to 2% increase. That is on a product that is almost all corn! That is what the increase in food commodities is really doing to food prices, very little. We are now getting $.68/ dz for shell eggs. Did the price in the store go down? Not much. ( I do not blame the store retailers, I know what the local margins are) This is the story that needs told. The farm organizations are telling the real story, but it has to be picked up by the major media outlets, not just the Ag media. There in lies the real problem? I think so. gbosfarm

Fiedler Family Farms said...

Saying the price of corn does not affect the price of food is like saying price of crude oil does not affect the price of gasoline.