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« Now, the work of Christmas begins | Main | Made in Iowa: New Poll »


Farm subsidies have many unintended effects

By J.P. Michaud
December 31, 2007

First, let me clarify a point from my earlier blog on biofuels and farm subsidies. Food should cost more than it does for two reasons: because the true costs of production are not factored in to the price, and because a large portion of the price is currently paid by government in the form of subsidies. What I failed to clarify adequately was my view that these costs should be borne by American consumers - not the farmers.

When I criticized farm subsidies I was not criticizing the farmers who have become dependent upon them, but rather an inefficient and undesirable way of funding agriculture.

We pride ourselves on being a democracy that thrives on a free market system. Subsidies distort free market forces, hide the true cost of food to consumers, and often encourage wasteful production practices.

For example, subsidizing diesel for agriculture encourages excessive tillage, a practice we are trying to discourage to improve soil and moisture conservation. It is generally agreed by economists in the World Trade Organization, including the American representatives, that agricultural subsidies are not a good thing, do not encourage sustainable and efficient agriculture, and should be ultimately abolished. But no country is willing to take the first step in eliminating subsidies because in doing so they put their own farmers at an immediate economic disadvantage. Only if all countries acted simultaneously would no single country be disadvantaged by acting first. Farmers would obtain the same profits, but consumers would pay more of their actual food bill at the supermarket and less of it through taxes.

In Mr. Reinhardt's letter in last Sunday's issue of the HDN, he misinterprets much of my commentary. The dubious benefits of bioethanol aside, I am not worried about the price of cereal going up, and it is not the cost of subsidies to the taxpayer that concerns me as much as their impact on the nature of agriculture itself.

Also, when I refer to agriculture as a primary source of pollution, I am referring to water, not air. See this article from the EPA: "Did you know that non-point source pollution from agriculture is the leading source of impairment to surveyed rivers and lakes".

Mr. Reinhardt claims that "our alleged overproduction and low commodity prices have helped feed people in Third World countries". In fact, giving away food in developing countries undermines local productivity and ensures a continued cycle of dependence on foreign aid. Only recently are international aid organizations beginning to realize this and insist that aid be in the form of support for local agriculture, rather than donations of excess food from wealthy countries.

According to a recent Oxfam release, a third of Africans are undernourished while the number of food emergencies has nearly tripled in 20 years. Part of this is due to conflict and overpopulation, certainly, but Oxfam also criticizes a ''myopic, short-term focus... with emergency food aid still dominating international action on Africa, rather than long-term support of agriculture."

How would Mr. Reinhardt feel if he drove his trailer full of corn to the local Co-op only to find they were paying less than what it cost him to produce it - because a big ship had just unloaded thousands of tons of free corn donated by a rich country to help feed the growing ranks of our own hungry poor people? That is the real effect of large scale food donations to impoverished countries - the devaluation of local productivity. Similarly, Oxfam has pointed out that elimination of American cotton subsidies would raise world cotton prices by 10 percent and improve the incomes of millions of poor cotton farmers in sub-Saharan Africa.

Mr. Reinhardt suggests the agricultural problems of developed countries stem from inadequate technology, but the large scale technologies now dominating western agriculture are typically not transferable to subsistence level farming. The failed efforts to promote high-yielding hybrid varieties to poor countries during the so-called 'green revolution' of the 1970's illustrate this fact. Subsistence farmers became heavily dependent on repeated purchases of expensive hybrid seeds (many locally-adapted 'heirloom varieties' were consequently lost) and the fertilizers and pesticides required to sustain them, often going bankrupt as the result of a single crop failure. Even genetically modified cultivars must be endowed with traits different from those employed in western agriculture in order to be useful for subsistence farmers, making their development a far less attractive proposition for the multinational corporations that largely control this technology.

And large scale agricultural subsidies have many negative impacts here in the developed world. Most subsidies in America support only four crops: cotton, corn, wheat and soybeans. For the most part, the latter three crops are converted into fast foods high in added salt and fat, the major contributors to our present obesity epidemic.

In contrast, healthful, unadulterated foods such as fresh fruit and vegetables receive no such subsidies and cost consumers significantly more as a result. One of the best things we could do to incentivise healthier eating in America would be to stop subsidizing corn and soybeans, but 'big food' is a powerful lobby and would certainly be a loud voice opposing any reduction of government support for its primary raw materials. Subsidies for 'organic' foods would make more sense because these generate less negative environmental impacts than conventional production, but consumers must pay a premium for these.

A frequently lamented trend in rural Kansas is the erosion of rural communities as many young people leave farms to seek jobs in urban areas. This is primarily a consequence of the average farm size increasing by more than an order of magnitude over the past 50 years. Long gone are the days when you could make a decent living off a single section. If we truly wish to preserve the small towns of Kansas and their peaceful, rural environment we should seek ways to incentivise small, locally sustainable farms that keep more people living and working on the land. By virtue of their intrinsic structure, subsidies favor larger producers over smaller ones and thus contribute to the 'corporatization' of agriculture and the further depletion of rural populations.

Finally, Mr. Reinhardt states: "We either have progress or status quo." and "It is time to embrace all forms of alternative energy, no matter what that does to the price of corn."

Let me clarify that I am not against the development of viable sources of alternative energy, but the 'alternative' label does not, by definition alone, imply an economically sensible or environmentally friendly solution as Mr. Reinhardt and others would have us believe. Similarly 'progress' can be made in wrong, as well as right, directions. Wind farms and biofuels do have similarities. They are both heavily promoted by politicians and industry without adequate disclosure of their high costs and dubious benefits.

They are both expensive bandaids placed over gaping wounds that continue to bleed and serve to distract from the pursuit of superior long term solutions.


Comments (1)

Also, you make a great point about how the subsidized crops are converted into fast foods high in fat and salt.

Now, even a greater concern with the subsidized crops (such as corn) is the addition of high fructose corn syrup to almost all processed or pre-prepared groceries and foods. High fructose corn syrup is causing two killing conditions - heart disease (through the elevation of serum triglycerides and atherosclerosis that lead to heart disease) and Type II Diabetes (through the elevation of serum glucose) leading also to debilitation and death.

Despite the health problems associated with subsidized grain, like corn, my main beef with the subsidies is that the greatest number (highest amounts) of subsidies are going to very wealthy individuals, many of which don't even live on their lands. If the subsidies were going primarily to family farms (which they are not) then it would be altogether different, wouldn't it? Right now, Kansas has the highest number of subsidies and these are going to the big agribusinesses and wealthy farmers. If we keep them, and perhaps we should keep some, let's keep the family farm subsidies but eliminate the millions of dollars of subsidies to wealthy non-farmers and mega-profitable agribusinesses!

To see some of the wealthy recipients, check out these links:

Top 1% of Subsidy Beneficiaries

Mulch Blog

and

Top 10 Recipients of Subsidies

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