Wednesday, June 11, 2008

Farming Bill--Law of Unintended Consequences

The Law of Unintended Consequences continues to amaze me. Governments pass laws thinking that they are doing something to help those most in need and often exactly the opposite occurs. I’ve seen it happen over and over and think that there should be a committee set up at every governmental body to study what happens in the long term with governmental action.

This past month the U. S. Congress passed a new farm bill. In most of the Congressional press releases on the bill I read that the bill would help to “keep the family farmer going and provide a boost to young farmers.” Of course if you’d read those same press releases 20 or 30 years ago they would have said the same thing. How have we done over the past 30 years?

Every five years Iowa State University does a survey of Iowa Farmland Ownership which looks at who owns that state’s farmland. They just came out with their new study and to me the results are alarming.

Twenty five years ago, in 1982, about 11% of Iowa farmland was owned by those under 35 years of age. Today it is only 2%. During the same time, those over the age of 65 have grown their ownership from 27% to 55%!

Ownership by someone living out of state has grown from 6% to over 20%!

As alarmingly, the percentage of farmland that crop shared, meaning that the owner of the land shares in the cropping costs and risks, has fallen from 50% to only 21% today.

The farm bills of the past, and this new farm bill are not any different--all have attempted to take the natural economic swings out of farming, providing a safety floor to landowners and farmers. The end result of these policies is that they have driven up the price of land which makes it virtually impossible for a new farmer to enter the profession, focused production into a handful of crops, hurt small towns by diminishing farming diversification, pushed farm ownership into the hands of non-farmers and, in my opinion, seriously hurt rural America.

Congress has caused some major disruptions in rural America by incentivizing farmers in the wrong ways. Our small towns all across the country have suffered as a result. It is too bad that they don’t learn from their past mistakes and the Law of Unintended Consequences, leaving the market to sort out the winners and losers. America and especially rural America would be much better, if they did.

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