News from the Secretary By Larry Gabriel What if we abolished all farm subsidies?
What would happen to the farm economy of South Dakota if all farm subsidies were abolished?
I have heard people say that as many as one-third of our farmers would go broke. No official is predicting that, but some farmers believe it.
Some think it will never happen. Others think it is inevitable. President Bush recently promised that it will happen, if the European Union abolishes farm subsidies.
Only one industrialized nation has tried it. What happened there may be the best indicator of what we could expect.
New Zealand abolished all farm subsidies (except indirect funding for scientific research, which is really more of a subsidy for agricultural schools than farmers) in 1984.
They were more dependent on both agriculture and its subsidies than we are. Agriculture was a larger share of their national economy, and prior to �reform� (as they called it) government subsidies were about 30 percent of the value of production. In the United States, that number is about 22 percent.
The government itself predicted that up to ten percent of the farmers would be put out of business. Massive farm bankruptcies were predicted. The big crisis did not happen.
This is what happened in New Zealand.
? One percent of the farms (mostly those deep in debt) went out of business.
? Farm land values dropped then later came back up.
? Input costs declined.
? Specialty crops and dairy increased.
? Production increased at about six percent annually.
? Agriculture�s share of the national economy increased.
? The country�s farmers still compete well in international trade.
Some farmers may object to my saying this, but the loss of farm subsidies might not be all bad. The question is: do subsidies cause more harm than good? There are many pros and cons to consider. I don�t know all of them. But, I do know one I especially dislike.
I know of a man who farmed a large area in South Dakota and killed all the trees and grassy waterways on his land, while he �farmed the government� for every nickel he could get.
I don�t believe he cared about the land, nature or his neighbors. I do believe government subsidies contribute to this type of behavior. Quite often they reward negative behavior while offering no rewards to people who are already doing it right.
Most of us do what�s right and are good stewards of the land. We care much more about the land than quick deals or government money.
With or without government subsidies, we will be here caring for it the best we can.