Tuesday
Aug282018

Things I don't understand about Farm Policy Economics

This takes me a bit to get there,

Tit for tat tariffs make US farm goods high priced in markets outside the US.  This reduces the price US farmers can get and threatens their livelyhoods.  Less US competition is a boon to countries like Brazil that now have greatly improved commodity prices for their soy in select markets (If soy would be selling for $4 but the US is selling for $5, the US isn't selling soy.  That creates a shortfall that raises commodity prices, say 25% to from $4 to $5 for Argentia and Brazilian soy.  US farmers still sell at $4, and have it tariffed to $5.  Producers outside the US win.)    The H.R.5629 - 115th Congress (2017-2018) Federal Crop Insurance Act and Food Security Act of 1985 called for in ... fiscial year 2019 (Lets call it FCIAFSACFIPTBFFY) is created to pay voting farmers that are loosing money up to a half million dollars per farm so they don't go out of business.  Brazil farmers win +25% profits in competion with select tit-for-tat tarrifed US products and US farmers get +12% comp for losses up to a half million dollars per single farm property owner - yea - and US insurers likewise get +12% comp for farm insurance retained premiums.  All payed for by National Debt loaned out to us from China.

Things I don't understand:  

The net result?  Super cheap intra-US commodity crop prices on a bumper crop year? 

Is the US paying for Brasil's +25% profit in select markets and the growth of international market farm competition?

The insurer's comp on retained premiums, so they get money for money not spent so the gov can "target rate of return" and move it with this one year policy from to 12% (+12% comp=24% effective rate)?   Is the crop insurance 12% or 24% a gift to insurers given large harvest expectations this year?  I really haven't sorted this out.

Maybe I'm just over thinking FCIAFSACFIPTBFFY as an example of agriculturial policy when it is really just code for "buy or hold farm votes?"  

bill link:https://www.congress.gov/bill/115th-congress/house-bill/5629/text

 

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