Loan Deficiency Payments--WPost Ag Series

The Post's second article on agriculture programs is here: Growers Reap Benefits Even in Good Years. It's again well done, with some graphics that should be noted. The farm programs are so complex you almost have to draw pictures, and even then people will misinterpret what you write.

Today's article covers the loan deficiency program, focusing on corn. The following is of no interest to anyone, being too inside baseball. My memory, which gets worse daily and more cynical weekly, is that the cotton and rice people started "marketing assistance loans" and "loan deficiency payments" in the 1985 farm bill, partially to evade payment limitations. (Nonrecourse loans under the old loan and purchase program weren't subject to payment limitation because the hope was that the farmer would be able to pay them off. So you come up with "marketing assistance loans", which kick in when market prices fall below loan rates (roughly).

Again, this is outside my expertise even when I knew anything, but this is how it evolved. Say the loan rate for cotton is $.55 a pound. In the old days the farmer would harvest the cotton and then take out a CCC price support loan, getting $.55. If market prices never got above $.50 at the end of the loan period the farmer would forfeit the cotton to CCC and keep the $.55. When the marketing assistance program came in, the farmer had a new option--redeeming the cotton for $.50 and keeping $.05 in "marketing assistance loan" benefits. That meant CCC didn't have to worry about disposing of surplus, which meant that the next year we wouldn't require (as big) an reduction in planted acreage. But the net effect was to revert to the 1930's--a two price system where we'd dump surplus cotton on the world market. (That's my cynicism.)

But where do "loan deficiency payments" come in? To simplify operations, instead of going through a loan process on paper, just allow the farmer to pick a date, then compute the $.05 payment and give it to him. So "loan deficiency payments" were "in lieu" of marketing assistance loans. But still outside payment limitation. (They aren't now, but they were for years. And even when Congress instituted limitations, they came up with a separate amount.)

An irony--Al Gore trumpeted his "reinventing government" program--I think the only two programs ended under it were the wool/mohair and honey programs. Of course, Congress always has the last word, so when attention strays, guess what? That's right, welcome to the honey, wool, and mohair loan deficiency payment programs.

WPost on Farm Program Pays $1.3 Billion to People Who Don't Farm

Washington Post is running articles on farm programs, in advance of debate over the 2007 Farm Bill, is here--
Farm Program Pays $1.3 Billion to People Who Don't Farm:

I didn't catch major errors. (There was a misunderstanding by at least one payment recipient--if someone wants to refuse the money it would not go to others. As an entitlement program, FTF differs from appropriated funds.)It emphasizes the personal and the attention-grabbing--for some reason the media like to get readers. If I get the energy to read other blogs I'll probably see some other misinterpretations--like the distinction between cash-rent tenants and sharecroppers, even though it's in the article. Someone will swear that the government is paying some foreigner, I'm sure. One thing about today's article--it didn't lead with big payments to big producers as many such articles do.

It would have been less interesting, but fuller if the writers had pointed out (which they might do tomorrow):

• Freedom to Farm payments were more expensive than payments under the predecessor programs. The increased money was supposed to be part of the "buyout" of farm programs. (I can't say that a simple extension of the programs before FTF would have been cheaper than FTF, but we taxpayers sure didn't get what Pat Roberts promised.)
  
• the big impact of WTO negotiations. WTO rules frown upon payments directly tied to production, another motive to shift to payments based on history (in FTF) (Ironically, today's paper also carries a story about the breakdown of the latest round of WTO negotiations, all because of agricultural subsidies
• the farm lobby was able to consummate the buyout of tobacco and peanut programs in the last few years.

Bottomline--it's difficult to square the circle. Make sure that payments go to current farmers, don't tie payments to current production so they don't aggravate surpluses, don't help absentee landowners who don't have dirt under their fingernails, help the small farmer more than the large one, protect tenants (that's a fight that began back in 1933 with the socialist/communist left strong on the tenant side, just another historical irony). If you can create a program to do that, try tackling world peace.

"R.A."--Blast from Past

Was talking this morning in our community garden to a neighbor about the damage wrought by this week's rains. She said that 3 of her neighbors in the row of townhouses had basement flooding. In some cases it was because their gutters were blocked; the water backed up into the ceiling and attic and ran down inside the walls. She started to explain that her husband had said that they had been smiled at for having their gutters cleaned so often. She's originally from Vietnam and she stumbled a bit in the telling. At first I thought she was having trouble with the English, which is unlikely since it's good, but when she came out with the phrase "[smiled at] for being so R.A.... I realized she was afraid I wouldn't recognize it, but really it brought back memories.

For anyone under 55 or so it's a meaningless phrase and it doesn't come up in Google's top ten results. Back in the days of the draft, and before the GI's serial number became their social security number, the Army assigned 8-digit serial numbers to every new recruit. If you enlisted, you got an R.A. number, meaning "regular army", while if you were drafted you got a U.S. number. Anyone who bought into the army's ways wholeheartedly (or even quarter heartedly, given the times) was mocked for being "R.A."

Michael Pollan's Omnivore's Dilemma--Bad Fact I

On page 38, as part of a discussion comparing the state of agriculture post-World War I to now, Mr. Pollan says that in 1920 only 257 tractors were built in the U.S. That seemed improbable, given the volume of cars so I went to my old copy of "Historical Statistics of the United States, Colonial Times to 1957" and in table K-150-158 found there were actually 257,000 tractors in 1920. Mr. Pollan or his research assistant missed the unit of measure (thousands). See here For an accessible source providing some historical background. (Who knew we were actually producing over 2,000 steam tractors a year in 1900?)

Michael Pollan's Omnivore's Dilemma--Enjoy with Care

For some reason Mr. Pollan rubs me the wrong way, so I've troubled to try to doublecheck some of the information in his Omnivore's Dilemma. But give him his due--his reviews at Amazon.com are almost uniformly glowing--the only criticism is a couple of former English teachers who critique the editing. Personally, despite my problems with parts, I'd recommend the book, but I'm going to challenge some of his facts in separate posts.

Krauthammer Gets One Right

I don't usually agree with Charles Krauthammer but today's column, Amnesty for Insurgents? Yes. gets it right:

"Reconciliation-cum-amnesty gets disaffected Iraqi Sunni tribes to come over to the government's side, drying up the sea in which the jihadists swim. After all, we found Zarqawi in heavily Sunni territory by means of intelligence given to us by local Iraqis.

Protests in America over the amnesty suggestion have caused both the administration and the Maliki government to backtrack. But don't believe it. Amnesty will be an essential element in any reconciliation policy. Which, in turn, is the only route to victory -- defined today just as it was on the first day of the war: leaving behind a self-sustaining post-Hussein government, both democratic and friendly to our interests. It is attainable. The posturing over amnesty can only make it more difficult."

My agreement is reinforced by my recent viewing of the movie "In My Country", which deals with the Truth and Reconciliation commission in South Africa. That's one thing Krauthammer misses. For liberals, Nelson Mandela is a secular saint and he could have reinforced his argument by pointing to South Africa rather than Chile. The second thing he missed is that he would refuse amnesty to foreign terrorists in Iraq. I disagree--if you want peace, you have to deal with those who fight, regardless. Israel needs to deal with those it calls terrorists, if and when there's an opening; Ian Paisley needs to deal with those he calls terrorists, now there's an opening, etc. etc. When violence is politically motivated, there should always be room for a political deal, however unjust that may be.

The bottom line is

Floods and Rain

Reston got a lot of rain recently. Our rain gauge is in our garden plot and holds 5". We emptied it twice when it was full and again on Tuesday morning it had 2.5". So we can claim to have had 12.5", more than Dulles is reporting.

The area where I grew up, north of Binghamton, has seen flooding of the Chenango and Susquehanna rivers. Binghamton set a new record for rain of 4+". But they've had more flooding than Reston, even though they've gotten much less rain. The difference, I think, is the soil. It's all glacial sand and gravel there and the water runs right through and off. Here we have good Virginia red clay which absorbs a hell of a lot more water.

Wikipedia and Self-righteousness

I've started to get into Wikipedia , the encyclopedia. Several years ago when the "wiki" concept first got a bit of press I looked at it, but didn't follow up to contribute. At that time there wasn't enough to get your teeth into. Or to put it another way, it was like visiting a construction site and seeing some building materials lying around with a few people digging for the foundation. While the idea of a free encyclopedia constructed by volunteers, of work of value coming from nothing, was interesting, I didn't see a place where I could pitch in.

Now that I'm revisiting, there's a lot of stuff and a number of places where I think I can contribute. As a know-it-all, like many bloggers, I find correcting people's errors greatly rewarding. I'm not sure I like what that says about me--that I'd rather critique than construct?

Best Use of Money--A Distressing Liberal

I'm pleased with the Buffett/Gates story. (Andrew Carnegie, whose Gospel of Wealth was mentioned in some stories, was raised a Presbyterian.) I was distressed though to read the following comment from History Net news:

"My only problem with the countering illness angle [i.e., Gates foundation focus on malaria, TB, etc.] is that it seems reactionary and addressing the problem on the periphery instead of at the core...when we address the issues that create the conditions that allow these illnesses to run rampant (denial of rights, ignoring the rule of law and international legal authority, illegal wars, insistence on sovereignty, etc), then we will be practicing adaptive management and proactive advocacy and will be able to make more of a difference."

Sounds to me like his brain's been in academia too long.

Quiz--Which Story Belongs to Which Paper?

Quiz:
One of these stories is on today's NYTimes front page; the other on the Washington Times front page. Which is which?

"Amid Iraqi Chaos, Schools Fill After Long Decline

Enrollment in Iraqi schools has risen every year since the U.S. invasion, reversing more than a decade of declines."

Iraq's best, brightest flee from violence

"Rasha Tamimi sits comfortably in the luxurious lobby of the Millennium Hotel in Sharjah, part of a line of skyscrapers that stretches the length of the United Arab Emirates -- a world away from the bloodshed of her old Iraqi neighborhood."

Answer: First
Second