Take the Federal Out of Farming

The disgrace of agricultural subsidies

Here's how the American free enterprise system works. You have an idea for a business. You find the money to start it up. You try to give customers something they want at a price low enough to keep them happy but high enough to earn a profit. Either your plan works, allowing you to make a living, or it doesn't, indicating you should find a different line of work.

Unless, of course, you are a farmer, in which case all this may sound unfamiliar. A lot of American agriculture operates in an environment where none of the usual rules apply—where the important thing is not catering to the consumer, but tapping the Treasury. It's a sector that, ever since the Great Depression, has been a ward of the government, both coddled and controlled.

By any reasonable standard, federal agriculture policy is past due for a major overhaul. But judging from the latest farm legislation moving through Congress, not much is going to change.

Back in the 1930s, when the economy was a wreck, the survival of capitalism was in doubt and Oklahoma was blowing away, you could understand the impulse for Washington to intervene on behalf of farmers. But the days when agriculture meant a lifetime of toil for a meager living are just a memory. Today, farmers monitor soil conditions by computer, drive air-conditioned tractors and have a higher average income than nonfarmers.

Yet many of them continue to enjoy treatment other industries can only dream about. Imagine the government rigging the market to assure high prices to people selling concrete or cameras. Dairy farmers and sugar growers get exactly that, courtesy of the Department of Agriculture. Farmers who plant a host of other crops receive compensation anytime their prices fall below a fixed minimum.

That's not the strangest part. These days, you don't have to grow anything at all to harvest federal crop subsidies. Instead, Washington will send you a check based on the amount of a product you raised in the past, even if you don't feel like growing it anymore.

Homeowners in one Texas subdivision found themselves getting federal money because their land was formerly used to cultivate rice. Some farmers pocket the payments they get for one commodity but plant something else, enabling them to earn two incomes for the price of one crop.

All this is sweet for the lucky few who happen to be holding buckets when the federal cash falls out of the sky. But someone has to foot the bill, and that someone is anyone who 1) eats or 2) pays taxes.

Government meddling raises the price of products at the grocery, while burning up billions of dollars in federal revenues. A study by Sallie James and Daniel Griswold of the Cato Institute, a free-market think tank, put the total cost of farm programs at $430 billion over the past decade.

Some farmers, and some urbanites, assume that agriculture would plunge into a death spiral if the government ever stopped furnishing all this help. In fact, the majority of people plowing fields would never miss it. In 2005, 85 percent of all federal payments went to just four crops—corn, wheat, cotton and rice. Two-thirds of all farmers are locked out of the largesse.

"For most commodities (such as fruits and vegetables, hay, meat products, ornamentals), there is little government involvement or income support," report economists Bruce Gardner of the University of Maryland and Daniel Sumner of the University of California at Davis. Not only that, but the commodities that get no help are just as profitable as those that do.

Yet Congress shows little interest in ridding us of this extravagant waste. President Bush proposed to trim costs and reduce payments to the richest growers, but the five-year farm bill approved by the House of Representatives in July omitted these modest reforms. A more ambitious bill to significantly reduce the federal role in agriculture, meanwhile, was cut down like a weed. The Senate is currently considering its own version, but the Agriculture Committee has indicated it's quite content with the status quo.

The American economy has undergone radical transformation in the last 75 years, and the majority of farmers have shown they can prosper outside a government-run hothouse. Yet our leaders seem to think that what was good enough for Ma and Pa Kettle is good enough for us.

COPYRIGHT 2007 CREATORS SYNDICATE, INC.

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  • ||

    The Farm Bill is a celebration of Public Choice every 5 years. Everyone knows it is a bad idea, but it is an irresistable pander. The process that births this creature infects every law congress passes.

  • ||

    It's the third "third rail" of American politics.

    For a model of no farm subsudies - look at New Zealand, who went cold turkey on farm support some time ago.

  • ||

    "For a model of no farm subsudies - look at New Zealand, who went cold turkey on farm support some time ago."

    Yeah, but look at them now, not a sheep to be found anywhere ... /snark

  • ||

    Not only is the American taxpayer the victim here, but more tragically farmers in developing countries who have been forced off their land because they cannot compete with subsidized produce from developed nations. These subsidies continue even under "free trade" agreements. The most pertinent example is the two million Mexican farmers who have been displaced, many of whom are now working illegally in the US.

  • ||

    "For most commodities (such as fruits and vegetables, hay, meat products, ornamentals), there is little government involvement or income support," report economists Bruce Gardner of the University of Maryland and Daniel Sumner of the University of California at Davis

    Uh huh. None of that subsidized corn gets fed to livestock. No way!

  • ||

    "For most commodities (such as fruits and vegetables, hay, meat products, ornamentals), there is little government involvement or income support,"

    So WTF are those billions being spent on?

  • ||

    MYTH OF LOW FOOD PRICES

    When there were millions of small farmers in the first half of the 20th century, price guarantees acted like wages, shifting short-term risk from labor to employers.

    As productive efficiency increased dramatically against an inelastic demand for food, food prices fell dramatically (despite the subsidies) and most small farmers were driven out of the market.

    But the subsidies stayed, largely due to the propagandized myth by Big-Ag of glorified small farmers practicing capitalism.

    Today, a standard pr line is that food prices would be higher absent the subsidies - maybe, but profits to a highly concentrated industry would also be much lower.

    In addition, cutting the subsidies would draw a closer look at the processed crap that gets served in school lunch programs due to these subsidies.

  • Horny Farmer||

    So WTF are those billions being spent on?

    Corn-fed hookers! Wee-hah!

  • ||

    Yeah, Reinmoose, and don't forget the gazillion acres of Western federal land open to cattle ranchers at prices less than it costs the taxpayers to administer the land.

  • fyodor||

    These subsidies continue even under "free trade" agreements.

    From a politics POV, the aggravating thing about these subsidies is that it aids in reinforcing the view lefties have of free trade agreements, that they're just a disengenous means for western industrialized nations and big corporations to make ever bigger profits at the expense of the poor of the third world. Of course, poor consumers (in both rich and poor countries) are among the chief beneficiaries of freer trade, but it's true that the combination of lower trade barriers and continued farm subsidies in the industrialized world creates a fucked up situation for poor third world farmers, and in addition to that being fucked up in its own right, it makes free trade and free trade advocates look bad in the process (even though we're actually against the subsidies that are the real villain).

  • ||

    The Founders could have protected against this by stipulating that all laws have a sunset, a date after which they are automatically repealed unless Congress votes to renew them.

    But dammit, they didn't.

  • ||

    The Founders could have protected against this by stipulating that all laws have a sunset, a date after which they are automatically repealed unless Congress votes to renew them.

    Easily circumvented with an omnibus extension bill gaveled through by acclamation at the close of each session.

  • ||

    Mencken wrote an absolutely savage essay about farm subsidies which is still a delight to read, but I haven't been able to find a link to it.

    IIRC, it was titled "The Honest Husbandman".

  • The Democratic Republican||

    I agree with this article, but I wish reason spent as much time griping about other coporate subsidies as they do about farming. What about defense contractors? Teacher's unions? Entitlements? I spend a lot of time reading reason, and I have to think they spend a disproportionate amount of time on farming -- especially given that it is only a fraction of a percent of what is being spent on the other programs I just mentioned.

  • ||

    'The Husbandman'
    http://www.bizbag.com/mencken/menkfarm.htm

  • ||

    Thanks, MR

  • ||

    We need the addresses of the farms taking these subsidies.
    Then we call out the Libertarian militia and ride to "make things right".
    Are you ready?

  • ||

    Part of the problem is that the federal government overrepresents rural farm states at every level. Just look at the Presidential election: the bizarre bipartisan consensus that Iowa has some sort of divine right to hold the first primary, combined with the Electoral College system, guarantee that anyone who wants to be President will defend farmers' place in line for the federal funding trough.

  • ||

    I think the farm subsidy bill has some bizzare side effects cheap corn leads to cheap corn syrup which leads to cheap junk food which leads to obesity.

  • AL||

    Over 70% of the farm bill funding goes to the WIC program ,or food stamps.The subsidy ensures cheap and plentiful food for all americans.If you think foreign ag is not subsidized you are wrong.When we are dependent on foreign food we will lose our power.If you like being dependent on foreign oil,your going to love being dependent on foreign food!!

  • nobody||

    Wow. I cant beleive anybody is buying this crap. AL is lying or in the pocket of agribusiness.

GET REASON MAGAZINE

Get Reason's print or digital edition before it’s posted online

  • Video Game Nation: How gaming is making America freer – and more fun.
  • Matt Welch: How the left turned against free speech.
  • Nothing Left to Cut? Congress can’t live within their means.
  • And much more.

SUBSCRIBE

advertisement