Problem: Subsidies. Solution: More Subsidies.

Jacob Sullum | July 9, 2007

Fat fighters complain that agricultural subsidies encourage Americans to overeat by making junk food ingredients such as high-fructose corn syrup and partially hydrogenated soybean oil artificially cheap. "Meanwhile," notes The New York Times, "the lack of subsidies for fruits and vegetables makes them expensive by comparison." The obvious solution: more subsidies. "Some of the bills before Congress," the Times reports, "are aimed at helping growers of fruits and vegetables" by providing money for cultivation research and promoting farmers' markets, among other things.

How about leveling the playing field by eliminating subsidies? The prospects are not bright. There's wide agreement that "fixed direct payments," which farmers receive based on what they've grown in the past, even if they're growing nothing now, make little sense:

"You don't have to sit on a tractor seat, visit the tractor seat, you don't even have to be alive to get a fixed payment," said [Ken] Cook of the Environmental Working Group. "We have fixed payments to dead people all over the place. It's ridiculous."

Tom Buis, president of the National Farmers Union, the second largest organization for farmers in the country, said, "It is hard to defend direct payments."

But the proposed changes to the broader system of subsidies betray a lack of vision:

The Bush administration...wants to eliminate subsidy payments for farmers who have an adjusted gross income of more than $200,000 a year. And some in Congress want to limit subsidies entirely. House Speaker Nancy Pelosi has supported limits on subsidies in the past and some Congressional bills would prohibit any farmer from getting more than $200,000 a year in subsidies.

So the most radical suggestion is to "limit subsidies entirely"? It has almost the right sound to it.

Comments

|7.9.07 @ 5:47AM|#

Getting rid of subsidies is a real trick. It would be better than nothing to just end them all, but we should at least realize that we funded all kinds of agricultural development in certain areas. Simply removing the subsidies still leaves competing industries years behind. Of course, if you subsidize R&D in those industries, you leave the corn folks behind. Subsidies are like cigarettes. Just one will definitely kill you.

Dave W. (edit)|7.9.07 @ 8:33AM|#

The prospects are not bright.

I think big corporations are primarily to blame at this point in time.

Russ 2000|7.9.07 @ 9:28AM|#

Slightly off-topic, but this morning I heard of a soft drink company (can't remember the name, not one of the biggies) that is switching from HFCS to sugar because the ethanol demand has raised the price of HFCS to the point where sugar is now cost effective.

|7.9.07 @ 9:32AM|#

And some in Congress want to limit subsidies entirely.

Just like they want to limit spending.


Don't forget that we are just looking at direct subsidies here. They're not even talking about import quotas, preferential water rates, or preferential fuel taxes.

|7.9.07 @ 9:32AM|#

Once again, I'm putting my libertarian decoder ring on the line...

Would subsidies for spinach and broccoli really be so terrible?

I don't think so. For one thing, there's the off-chance that it could increase demand and make a small but not insignificant dent in the mounting health problems of heart disease, diabetes, stroke, etc.

Remember, even if we don't like it, we still have socialized healthcare costs to pay.

Second, it gives us both an impetus and a bargaining chip to question and displace current corn subsidies. If we can bring this to the table, we may be able to break the current holding pattern and replace it with something better.

If the new subsidies total less than the old subsidies, this is a positive step from a libertarian point-of-view.

Finally, this may have other positive consequences like possibly lowering the price of corn in Mexico and lowering the pressure for the boondoggle ethanol.

|7.9.07 @ 9:41AM|#

Here we find GW's true legacy, wiping out in a single year the hard won progress of decades.

|7.9.07 @ 9:45AM|#

Would subsidies for spinach and broccoli really be so terrible?

I don't think so. For one thing, there's the off-chance that it could increase demand...

Increase demand? No amount of money could make children want to eat those things. Unless, of course, you pay them to eat it...

x,y|7.9.07 @ 9:46AM|#

mizzle,

So you're in favor of subsidies as long as your preferred policy choices are implemented?

|7.9.07 @ 9:54AM|#

x,y,

read the whole post. The only reason that I think increasing demand might be worthwhile is because we are stuck for the foreseeable future with a semi-socialized approach to paying for healthcare costs. Also, if we must subsidize something, I'd rather it be broccoli than, say, tobacco. Go ahead, call me a commie.

D.A. Ridgely|7.9.07 @ 10:27AM|#

Would subsidies for spinach and broccoli really be so terrible?

My demand curve for spinach and broccoli is better known as the y axis.

Dave W. is probably correct that as agribusiness has replaced the "family farms" of yore, it is those corporations as opposed to, say, the grange members who have now captured the regulators and Congress, but the problem is structural. As long as underpopulated states enjoy disproportional representation, agriculture will have a disproportional influence in domestic policy.

thoreau|7.9.07 @ 10:31AM|#

mizzle,

On the margin, I don't think that any one subsidy, taken in isolation, is necessarily the end of the world (from a consequentialist perspective). But it adds up, and pretty soon it's fricking huge. You have to draw a line.

|7.9.07 @ 10:43AM|#

While all subsidies should be ended, they hardly make more than a marginal impact on the cost of the "shit" we eat. The price of some ingredients could double and your chips would go up maybe a nickel. The packaging, marketing, transportation, payroll costs, etc. etc. represent far more of the product costs than the food ingredients do.

|7.9.07 @ 11:12AM|#

The fact is that the subsidies given out by the USDA have little affect at lowering food prices.

Remember that for every subsidy there is a program to maintain or set floor prices of commodities.

USDA policy is all about guaranteeing farmers' incomes. It has little interest in "helping" consumers.

|7.9.07 @ 11:27AM|#

Farmers got all the good subsidies, the auto workers got bubkis.

|7.9.07 @ 11:43AM|#

Yeah, what did auto workers ever get other than wages and benefits far in excess of what most industrial workers (many of whom were performing much more hazardous or skilled work) ever got.

Sorry, but I have no more tears to spare for auto workers than I do for farmers.

Dave W.|7.9.07 @ 12:08PM|#

Dave W. is probably correct

ctrl+d

|7.9.07 @ 12:14PM|#

The fact is that the subsidies given out by the USDA have little affect at lowering food prices.

What made you think that was anyone's goal? Nobody cares about food prices except farmers, and they want them higher, not lower.

|7.9.07 @ 1:17PM|#

House Speaker Nancy Pelosi has supported limits on subsidies in the past and some Congressional bills would prohibit any farmer from getting more than $200,000 a year in subsidies.

Here is the basics how CRP works...you own 1000 acres of wheat land...the government pays you $50,000 a year to not grow on it....but no more...so you buy another 1000 acres and put the land into your wife's name...another $50,000 a year then your 3 kids each own 1000 acres and presto you get 250,000$ a year for not growing wheat on 5000 acres.

x,y|7.9.07 @ 1:18PM|#

"Would subsidies for spinach and broccoli really be so terrible?"

Yes.

"I don't think so. For one thing, there's the off-chance that it could increase demand and make a small but not insignificant dent in the mounting health problems of heart disease, diabetes, stroke, etc."

A smoking ban (yes, I realize it's not a subsidy) might decrease demand and make a small but not insignificant dent in the mounting health problems of lung disease, stroke, etc. And remember, even if we don't like it, we still have socialized healthcare costs to pay.

I could go on, but it's too easy.

|7.9.07 @ 5:15PM|#

mounting health problems of heart disease . . . stroke

Heart disease and stroke are hardly "mounting" health problems. Deaths from cardiovascular disease have been falling for years.

Robert|7.9.07 @ 6:43PM|#

"The Bush administration...wants to eliminate subsidy payments for farmers who have an adjusted gross income of more than $200,000 a year."

Heh. As if the big shots wouldn't just sell or lease the right to those subsidies to people whose names would be on those subsidies.

|7.9.07 @ 8:39PM|#

Every time I read about our agricultural policy, I become more and more convinced its the spawn of Satan.

S.A. MIller|7.9.07 @ 11:38PM|#

presto you get 250,000$ a year for not growing wheat on 5000 acres

Damn, I don't grow any wheat right now! I need to get some acres...