November 21, 2010
By Brian M. Riedl
Farm subsidies represent a solution in search of a problem.
We are told the farm economy cannot function without subsidies. However, nearly all subsidies go to growers of just five crops: wheat, cotton, corn, soybeans, and rice. By contrast, fruit, vegetable, livestock and poultry operations receive nearly nothing, yet still produce two-thirds of the farm economy, with stable prices and healthy incomes. Why can’t the Big Five crops function in the same free market?
We are told food is too vital to national security to leave to the free market. This is the same misguided logic that has induced calls for a federal takeover of health care. It’s unclear how a centrally-planned, bureaucratic, economically illiterate farm subsidy system that doesn’t help the farm economy aids national security. (And who eats cotton, anyway?)
We are also told that subsidies alleviate farmer poverty. Setting aside the Norman Rockwell imagery, farm subsidies are America’s largest corporate welfare program. Congress targets most subsidies toward large commercial farmers, which report an average annual income of nearly $200,000.
More than merely ineffective, farm policies impose substantial harm. They cost Americans $25 billion in taxes and another $12 billion in higher food prices annually. Environmental damage results from farmers overplanting crops in order to maximize subsidies. By undermining America’s trade negotiations, subsidies raise consumer prices and restrict U.S. exports. Cotton subsidies undercut African farmers, keeping them in desperate poverty. And as Michael Pollan, author of “The Omnivore's Dilemma,” has written, by promoting corn and soy (from which sugars and fats are derived) rather than healthier fruits and vegetables, farm subsidies contribute to obesity, rising health care costs, and early death.
The real problem is that farmers’ incomes fluctuate yearly due to crop- and weather unpredictability. This can be solved inexpensively with Farmer Savings Accounts and improved crop insurance. With a $1.2 trillion deficit, outdated, unnecessary farm subsidies must be included in broad-based budget reforms.
First appeared in The New York Times
Brian M. Riedl
Grover Hermann Fellow in Federal Budgetary Affairs
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