Skip to main content

Farming Can Be A Roller Coaster
At times, government support keeps us on track.
by James McJunkins, President & CEO

I have observed thousands of local farmers’ financial statements over my 37-year career with Farm Credit, and I have seen firsthand the impact many of the government programs have had on their operations. With that in mind, I know this to be true: without that government support, we would never have been able to sustain our current level of agriculture production. Most farmers would likely have gone out of business, and the economics would not have been there for anyone to take over or carry on.

Once a farm goes out of production for a number of years, it takes many more years to rebuild. Had this occurred, this would have created great volatility in the commodity markets. Being able to maintain the level of production we have has ensured a consistent food supply at a relatively consistent price. While the price support levels have unfortunately not prevented some farmers from going out of business, it did provide a level of sustenance for the majority of producers to remain viable.

A few other observations:

Risk

Farming is an essential, yet a high risk, industry. Weather, disease and price changes are but a few of the challenges that may occur at any given time and totally wipe out a farmer’s investment.

National Defense and Security

The United States often uses embargos on other countries as a weapon of war or negotiation. Many times those embargoes use our farmers’ food production. Grain embargo with Russia, rice embargo with Cuba, soybean tariffs with China—these are but a few examples. When we restrict agriculture trade to other countries, it is our farmers who feel the effect of lower prices. From a security standpoint, we must never become dependent on another country for our food supply or they will certainly use it against us. Financially supporting our farmers during these times has been absolutely critical.

Consumer Spending

According to USDA statistics, the United States boasts the cheapest food supply of any country in the world. A consistently low-cost food supply gives us the opportunity to spend more money on non-food goods and services such as phones, computers, cars, homes or entertainment. The average American citizen spends less than seven cents of every dollar on food, thanks to the support of our government and our superior farming technology and efficiency. Countries like Nigeria, on the other hand, spend more than 56 cents of every dollar on food.

Money Multiplier Effect

It has often been said by city officials that when a specific event comes to town and brings outside customers, the “money multiplier effect” can be seven times the actual cost of the event. Every dollar spent by event-goers in a community is, in turn, spent on labor, supplies, fuel or equipment, and then these vendors, in turn, do the same. So, when the farmer gets a dollar, from either the sale of commodities or government support, that money is spent in the community and then those individuals spend what they received as well. Many rural communities would be devastated without farm income. Many jobs—from the local diners, truck drivers, suppliers, marketers and dealers—would not be necessary. And where do all of these people spend the money they obtained from the farmer?

Just as in any government program, such as Social Security or The Supplemental Nutrition Assistance Program (SNAP), formerly known as “food stamps,” there are always folks who abuse the program. But, we should not focus our energies on eliminating essential programs, but on improving or redesigning these programs to best continue to provide the essential assistance for which they were intended.

Find your local branch