Ag Policy Blog
Chris Clayton DTN Ag Policy Editor

Thursday 10/17/13

Howard Buffett on Farm Subsidies and Stronger Agricultural Systems

Howard Buffett was taking questions at the Borlaug Dialogue of the World Food Prize events on Thursday when he was asked his views about the role farm subsidies should play in helping develop agriculture in African countries such as Ghana.

His answer reflected some of the issues that will be debated in the coming weeks about the role of U.S. commodity programs and policies such as conservation compliance.

Perhaps, most interesting, Buffett started off noting that farm programs are critical for any country trying to ensure food security.

"There's not a country in the world that I'm aware of that has a powerful agricultural system that did not use subsidies to get there," Buffett said. "So, I don't think it's whether you have subsidies. I think it's, what are they, how they are used and are they equitable in the transfer or distribution?"

In the U.S., the question becomes, what are the consequences, or what behavior do they drive? "I think we're debating vigorously how we go from where we have been and where do we need to be on that issue." Also, is it equitable?

Buffett said he compares agricultural production to the Department of Defense. "If you can't feed your country, then you are vulnerable to lots of things."

A successful agricultural economy is one of the elements to a successful country, he said.

"I don't think agriculture often gets the respect it should have," he said. "To build that system, I absolutely think that subsidies, in most cases, are going to be part of that. I think it gets into the details of how they are divided and how they are used."

Subsidies give farmers a fall-back position, particularly when prices collapse or the crop fails.

"I think that's an important thing, particularly for a country that's trying to develop agriculture -- to keep farmers in business and you deal with the disasters the come along that are always out there," he said. "So part of that is disaster relief."

A failure in the U.S., Buffett said, is not building a subsidy system around conservation agriculture. Buffett pointed to Brazil as a "shining star" for building a system based on conservation. Buffett

"The greatest asset a farmer has is soil," he said. "And soil is not sexy. So, it's dirt and gets treated like dirt. We have to change how people feel about that. You can talk about all the yields in the world, but you're not growing it unless you have the lands to produce it."

Thus, subsidies have to create behavior that protects natural resources such as water and soil.

"We've not done as good a job on that in this country as we can do," Buffett said. "That can be done in Africa and needs to be done in Africa."

Africa has some of the most degraded or weathered soils in the world, he said, and those lands need to be protected to prevent further deterioration.

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Posted at 4:36PM CDT 10/17/13 by Chris Clayton
Comments (8)
Good article! What stands out to me is the term"Food Security" Clarifies those who can see the importance of terminology. "Food and Job Security Act" instead of that darn," welfare for farmers bill". If only the politicians, farm group leaders and media would think about the difference, the target on all of our backs would ebb.
Posted by Bonnie Dukowitz at 5:49AM CDT 10/18/13
Good article Howard is honest and not political.
Posted by melvin meister at 8:31AM CDT 10/18/13
Without direct or deficiency payments, what will be the incentive for conservation compliance? U.S, farmers are not unsophisticated as to the benefits of land stewardship. Good soil is how we make our living. Aren't incentives merely Statism light? If American consumers are so spoiled as to be unaware, a look at emerging economies behavior in grain procurement should instruct us how important food availability is. Although it seems we take abundance for granted, I have a feeling that may change in the near future. The problem with subsidies is the inconsistency with which they are applied under differing political philosophies. Democrats who formerly supported farm subsidies are strangely quiet, while Republicans rail against them, even though both parties seem quite progressive in regard to other sacred cows privileged to benefit from entitlements. is there really no place for capitalism to poke it's foot in the door? Seems everyone has forgotten the aftermath of the Carter Grain Embargo, with surplus grain stuffed into every half decent bin and shed semi-standing. Not to mention that Gawdawful Farmer Owned Reserve. Frankly, now our problem is two or three companies that were formerly exclusively grain exporters have gone multinational, and vertically integrated their operations here to the point of near monopoly. From the local elevator, to cattle/hog feeding/slaughtering and ethanol production, they have gobbled up the entire protein side of the U.S. food chain. There is essentially no competition left, and they have the political clout to lobby congress to see that all out production remains the norm. A subsidy system built around conservation is a surefire way to guarantee less coarse grain is produced here. Something tells me that scenario is unlikely, until the investments being made by China, and U.S. venture capitalist in third world agricultural development are nearer fruition. Will U.S. ag production go the way of the steel industry, et al, losing our market-share to cheap land and "slave" labor abroad, while movers and shakers try to pull off a feat similar to the American Industrial Revolution abroad, using their exorbitant profits to buy up U.S. farmland to enroll in the American Land Conservancy for the tax breaks that affords them Do we really need a giant national park that occupies the entire Great Plains?
Posted by TX Tumbleweed at 12:14AM CDT 10/20/13
Glad to hear Howard Buffett thinks subsidies should be distributed in an equitable manner. Perhaps he is aware of how inequitable farm financial enhancements are distributed in this country. Perhaps he is aware that government giving the largest and most profitable businesses massive investment/profit guarantees along with massive subsidies to purchase these financial security blankets steals from smaller farmers a fair and equal opportunity to compete in the agricultural business. Perhaps too he understands that politicians ever pandering for votes are incapable of providing subsides that are not capitalized into land values.
Posted by Wesley Kuster at 2:48PM CDT 10/20/13
Exactly correct Mr. Buffett! Agriculture subsidies that encourage the protection one of our greatest national treasures soil {not to be confused with dirt} is the way we should proceed. This is not a popular idea in an ag sector who has apparently forgotten the lessons of the past and recent farm legislation that encourage the homogenization of the rural landscape have not helped.
Posted by Unknown at 7:08AM CDT 10/21/13
Wesley Kuster: Can you be more specific on how the farm subsidies are being stolen from the smaller farmers and given to the largest farmers?
Posted by Glenn BRANDS at 11:37AM CDT 10/21/13
Read my comments again Glenn. A fair and equal opportunity to compete in agriculture is being stolen from smaller farmers. Small farmers are not having subsidies stolen from them. The subsidies received by most smaller farmers have nominal value compared to the millions in investment/profit guarantees and millions in subsidies received by the largest farmers.
Posted by Wesley Kuster at 12:46PM CDT 10/21/13
For those who are baffled at the inequity of farm subsidies, google "grain export subsidies/Cargill" and read as many of the choices as you can stomach. Then, and only then will you grasp what is happening in U.S. Ag.
Posted by TX Tumbleweed at 10:00PM CDT 10/21/13
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