Sweet on Subsidies

Sugar beet farmers are back at the trough, with hat in hand, looking for a handout. Why? Because Wyoming had a cold and rainy winter – wow! What a surprise!

Farmers have grown sugar beets in Wyoming for years so one wonders why they haven’t noticed those cold and rainy winters before. But maybe they have noticed and just don’t care. Why might they not care? Because they can harvest your wallet.

What happens when government gives tax dollars to people who make bad decisions? Flood insurance is a good example. Flood insurance is not available in the private sector as part of the standard homeowners policy because people using their own money view flood risk as uninsurable. After a series of floods in the Mississippi basin in the 1960’s, the federal government created the National Flood Insurance Program to provide flood insurance to communities and homeowners. When the taxpayer takes on the flood risk, people are encouraged to continue building in flood prone areas. Gee Martha, it looks like a flood is on the way again. Don’t worry Billi-Bob, the government will give us a bucket for a bailout again.

Incidentally, according to the U.S. Government Accountability Office’s 2017 High Risk report: “Since the program offers rates that do not fully reflect the risk of flooding, NFIP’s overall rate-setting structure was not designed to be actuarially sound in the aggregate, nor was it intended to generate sufficient funds to fully cover all losses.” This is a lose-lose proposition.  

But you know what’s strange? Government didn’t always give money to people who made bad decisions. Imagine what might have happened had government given money to the horse and carriage sector back when the car was invented. As more and more people drove around in cars, fewer and fewer rode around in buggies. This meant buggy builders lost customers, stables didn’t need all those stallions, and harness makers either went out of business or started making car seat covers. Did government support buggy makers? No it didn’t and we don’t see buggies on the streets these days.

However, here in Wyoming, the Wyoming Business Council is in the business of keeping those metaphorical buggies on the road. It subsidizes businesses that can’t get cheap loans in the private sector, including farmers who don’t care about Wyoming’s cold and rainy winters. In fact, since 2000, the Wyoming Business Council has given out more than $5 million to a group of farmers including about 38 in a cooperative known as Wyoming Sugar. The WBC may now give an additional $6 million to these 38 farmers because the USDA, another government subsidy handout organization, declined to give them a federal handout.

But here’s a question few seem to have asked. If farmers hadn’t received payments in the past would they have moved on to other crops more suitable to rainy and cold winters?

Farmers can raise a lot by plowing. Yes, farming is an important activity and yes farmers are valuable members of society but do we want farmers and farming dependent on government welfare? I don’t think so.