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Posts Tagged ‘Farm Subsidies’

VC Note: I’m pleased to present another article by Karen Kwiatkowski.  Like Kwiatkowski, I am not nor have I been in favor of any kind of farm subsides.

Complaints are rampant about the draft 2012 Federal Farm Bill.  Farm subsidy recipients are enraged about proposed cuts, even as the same benefits would flow to them through direct payments and insurance offsets.  Sustainable small farm and local food efforts complain that they are getting short shrift, and corporate agriculture is busily lobbying for its favorite programs.  The 46 million Americans currently enrolled in the Electronic Benefit Transfer (EBT) Program may see reductions and restrictions, and we hear that starvation looms large.

Everybody wants a piece of the federal agricultural pie.  But no one seems to be questioning why this monster half a trillion dollar piece of taxpayer and debt-funded socialized program is in any way good for this country.

King Corn is eyeing the possible loss of the Renewable Fuels Standard (ethanol) subsidy and seeking to gain compensatory supports for corn.  The environmental lobbies are worried that programs that so many of them administer will be cut.  The public debate between small sustainable food production and massive NPK-based industrial food production is heating up, as our own Joel Salatin debates with the New York Times.

Here are some questions I’d like to ask about the 2012 Farm Bill:

  •        — Didn’t centralized government 5-year plans go out with the 1989 demise of the Soviet Union?   When do we get to try the free market and liberty?
  •        — Why do the lobbyists believe Congress owes them our money?  As Davy Crockett noted, it’s not Congress’ money– it belongs to the people!
  •        —  Can no one envision a future where the government doesn’t pick winners and losers and try to control every aspect of the marketplace?  Corporate aid to big banks is wrong.   But standing tax-funded bailouts and benefits for industrial giants like Monsanto and ADM are all just fine?
  •        —  In an era of nearly $18 Trillion in current federal debt, why are we clamoring for even more redistribution of wealth?
  •        — Can someone explain to me the collusion between USDA, FDA, FBI, IRS and DHS in conducting raids, confiscations and general harassment of small food producers and retailers all over the country?  What part of the budget can we cut to relieve us of this idiocy?

I have a radical idea.  Let’s let farmers grow and raise what makes sense to them, and let consumers buy and consume what they want.  Let’s get the corn syrup, white flour and Monsanto bought-and-paid-for bureaucrats out of policy-making.  Why not put private property rights first for a change?  Is it possible in America to encourage liberty and personal responsibility instead of farmer and consumer dependency on government?

I don’t take or apply for federal or state subsidies for my farm, and I never will.  I don’t think my children and grandchildren can afford it.   And I’m pretty sure yours can’t either.

Karen Kwiatkowski, conservative Mount Jackson cattle farmer and veteran, is challenging Bob Goodlatte in the GOP Primary on June 12, 2012.

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Guest post by Brent

The United States government is currently heavily involved in domestic agriculture. Intervention in domestic agriculture by the United States is not justified. I believe government intervention in the agriculture market is resulting in more harm than benefit and a market-based environment would lead to more favorable outcomes for the agriculture market and the American people.

Federal programs to aid domestic farmers are very costly to the American government. “Farm support programs cost taxpayers nearly $20 billion a year” (Griswold 2007). The costs of farm support programs have been rising every year. From 1995 to 2004 the average cost of farming subsidies was $14.3 billion per year, from 2002 to 2006 subsidies cost the American people an average of $20 billion per year with $25 billion alone in 2005 (Frydenlund 2007). With the rising national debt the American government cannot afford to continue the practice of providing subsidies to agriculture firms.

A government subsidy to farmers creates high levels of income disparity in the agriculture market. In 2003, the wealthiest 10 percent of farmers collected 72 percent of the government subsidies handed out (Frydenlund 2007). Many people believe that farm subsidies have been put in place to protect the “local” farmer but that is simply not true. The large agriculture firms are the ones receiving the majority of the benefit as Frydenlund (2007) points out. The struggling rural farmers are not the ones receiving the benefits of subsidies, “ While farm programs have enriched certain farmers, they have failed to deliver long-promised rural development” (Griswold 2007). Studies have found that areas in the United States where subsidy payouts are high tend to have poor job and population growth. As Frydenlund (2007) discusses the results of a study conducted by the Federal Reserve Bank of Kansas City, “Job gains are weak and population growth is actually negative in most of the counties where farm payments are the biggest share of income”.

Government intervention in the form of subsidies to farmers increases environment degradation. For example, Griswold (2007) writes that farm support programs promote the overuse of fertilizers and pesticides which damage the environment. The price of land conservation also rises due to land owners being able to receive government subsidies from allowing farmers to use their land (Frydenlund 2007). Edwards (2007) of the Cato Institute writes, “Lands that might otherwise be used for parks, forests or wetlands get locked into farm use”. By providing incentive to turn land to usable farm space, the federal government is decreasing the amount of land set aside for environmental conservation efforts. If the free market were allowed to run its course, the amount of land set aside for conservation would increase due to lower opportunity costs and therefore the amount of harmful fertilizers and pesticides would in turn decrease.

Government subsidies in the agriculture market can cause higher food prices for American consumers. The government subsidies of ethanol are a prime example of subsidies driving up the price of food. Farmers responded to ethanol subsidies by devoting more corn to the production of ethanol which lowered the supply of “food” corn. This intervention results in a rise the cost of food, “Rising food prices in response to ethanol mandates also illustrate an important point raised by Ludwig von Mises in his various critiques of interventionism–there is no such thing as an isolated government intervention” (Carden 2010). This is a major point against government intervention, the act of intervention can affect many unintended areas of the economy. A free agriculture market would be able to keep food prices at a desirable level of equilibrium. Government intervention in food markets lead to inefficiencies and higher prices.

Many supporters of government farm support claim that subsidies in agriculture are necessary in order to maintain adequate levels of domestic food production for national security reasons. For example, Young (2007), chief economist for the American Farm Bureau describes farm subsidies as an “insurance policy”.  Guell (2008) also suggests, that without government aid many farmers would have declared bankruptcy and halted growing. This scenario of farmers leaving the industry due to lack of government intervention has not been true across the globe. The farmers of Australia and New Zealand are a prime example of this scenario being false. Farmers of these two nations receive dramatically lower government payouts and yet their populations have experienced no food disruptions or shortages since government spending was cut due to improved efficiently throughout the newly free market of agriculture (Griswold 2007).

Government intervention in farming and agriculture is not justified and it producing an outcome that is suboptimal compared to letting the free market reign. Federal subsidies are contributing to higher food prices, environmental degradation and increased income disparity. Fears of national security risks due to a free agriculture market have been disproved by Australia’s and New Zealand’s agriculture market. In order to achieve an optimal outcome for the people of the United States, the government must cutback or remove current intervention in the farming and agriculture market.

Works Cited

Carden, A. 2010, America’s Food to Fuel Problem, Viewed on 26 February 2010,

http://www.forbes.com/2010/02/10/ethanol-environment-government-initiatives-opinions-contributors-art-carden.html

Edwards, C. 2007, Ten Reasons to Cut Farm Subsidies, Viewed on 27 February 2010,

http://www.cato.org/pub_display.php?pub_id=8459

Fydenlund, J. 2007, Farm Subsidies: Myth and Reality, Viewed on 28 February 2010,

http://www.docstoc.com/docs/896376/Farm-Subsidies

Griswold, D. 2007, Online Debate: Should the United States Cut Its Farm Subsidies?,

Viewed on 27 February 2010, http://www.cfr.org/publication/13147/

Guell, R 2008, Issues in Economies Today, 4th edn, Mcgraw Hill/Irwin, USA.

Young, B 2007, Online Debate: Should the United States Cut Its Farm Subsidies?,

Viewed on 27 February 2010, http://www.cfr.org/publication/13147/

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