Tuesday, July 05, 2011

The French Do It Too

What's "it"?  Tinker with bureaucratic tricks to help, or seem to help, their farmers.  A quote from Farm Policy, emphasis on the last clause:

“The French government has, to its credit, been responsive to the problem. The state-owned railway operator, SNCF, is subsidizing the transport of cattle feed, the country’s banks are helping with solvency concerns by giving borrowers some leeway, insurance companies are postponing client payments until the situation improves, and the government has just injected €800 million ($1,162 billion) in funds into the agricultural economy, bringing the 2011 single farm payment forward.”
Back in 1981 the farm economy was tanking. One of the methods Congress and the administration used to help was to make advance deficiency payments, issuing the money before we knew what the actual payment rate would be.  Unfortunately, as is the rule with Congress, a one-time expedient often turns into a permanent tactic.  Having shown ASCS (as FSA was then) could handle making advance payments (at least we didn't wholly screw the pooch to quote "The Right Stuff"), they then made that a regular provision, first of deficiency payments then of direct payments.  The tradeoff, because there's no such thing as a free lunch, is that administrative costs went up, because some portion of the advances were unearned, either because of individual faults or unforeseen disasters which changed the average market prices, meaning we had to try to collect the money back.

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