A perfect trade – ‘paper’ for ‘farmland.’
And farmland is the gift that keeps on giving, with the types of government subsidies which particularly benefit billionaires.
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MarketWatch – Mar 13, 2021:
Bill Gates and Warren Buffett should thank American taxpayers for their profitable farmland investments
By Vincent H. Smith and Eric J. Belasco
Bill Gates is now the largest owner of farmland in the U.S. having made substantial investments in at least 19 states throughout the country. He has apparently followed the advice of another wealthy investor, Warren Buffett, who in a February 24, 2014 letter to investors described farmland as an investment that has “no downside and potentially substantial upside.”
There is a simple explanation for this affection for agricultural assets. Since the early 1980s, Congress has consistently succumbed to pressures from farm interest groups to remove as much risk as possible from agricultural enterprises by using taxpayer funds to underwrite crop prices and cash revenues.
Over the years, three trends in farm subsidy programs have emerged.
The first and most visible is the expansion of the federally supported crop insurance program, which has grown from less than $200 million in 1981 to over $8 billion in 2021…
The second trend is the continuation of longstanding programs to protect farmers against relatively low revenues because of price declines and lower-than-average crop yields….
The third, more recent trend is a return over the past four years to a 1970s practice: annual ad hoc “one off” programs justified by political expediency with support from the White House and Congress. These expenditures were $5.1 billion in 2018, $14.7 billion in 2019, and over $32 billion in 2020, of which $29 billion came from COVID relief funds authorized in the CARES Act. An additional $13 billion for farm subsidies was later included in the December 2020 stimulus bill.
If you are wondering why so many different subsidy programs are used to compensate farmers multiple times for the same price drops and other revenue losses, you are not alone.
Our research indicates that many owners of large farms collect taxpayer dollars from all three sources. For many of the farms ranked in the top 10% in terms of sales, recent annual payments exceeded a quarter of a million dollars.
Farms with average or modest sales received much less. Their subsidies ranged from close to zero for small farms to a few thousand dollars for averaged-sized operations.
Thus for almost all farm owners, and especially the largest 10% whose net equity averages over $6 million, as Buffet observed, there is little or no risk and lots of potential gain in owning and investing in agricultural land.
While many agricultural support programs are meant to “save the family farm,” the largest beneficiaries of agricultural subsidies are the richest landowners with the largest farms who, like Bill Gates and Warren Buffet, are scarcely in any need of taxpayer handouts.
Vincent H. Smith is director of agricultural studies at the American Enterprise Institute, a Washington, D.C. think tank, and professor of economics at Montana State University. Eric J. Belasco is a visiting scholar at AEI.
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Mr. Buffett also used a sizeable portion of his funds to buy into the mobile home sector… and this has not been working out so well for many of the mobile home owners in America.
Warren Buffett, Slumlord – Predatory Loans, Kickbacks & Preying On The Poor
ZeroHedge, Apr 6, 2015 – Excerpts:
Buffett’s mobile-home empire promises low-income Americans the dream of homeownership. But Clayton [controlled by America’s second richest man, billionaire Warren Buffet], relied on predatory sales practices, exorbitant fees, and interest rates that can exceed 15 percent, trapping many buyers in loans they can’t afford and in homes that are almost impossible to sell or refinance, an investigation by The Seattle Times and Center for Public Integrity has found.
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