June 5, 2012
By Edwin J. Feulner, Ph.D.
Get ready to hear about the family farm. It’s time, once again, for Congress to plow through a renewal of the nation’s agricultural policy.
Tempted to shrug? You shouldn’t. The legislative monstrosity known as the farm bill is costing you, me and every American a lot of money. It encompasses a variety of bloated government programs that are driving up consumer costs, as well as inflating our tax bills.
The farm bill is sold as a way to “save the family farm.” The heartwarming images evoked by such slogans, however, don’t match reality. Rather than stabilize crop prices, the subsidies contained in the farm bill encourage overproduction and waste. And over the years, more and more of them have been going not to small farms that make a relatively modest living, but to large-scale agri- businesses that make millions.
Farms with gross sales of $1 million or more received 23 percent of all commodity-related payments in 2009, government data show. That’s up from 8 percent in 1991. Farms in the $100,000 to $249,999 sales class, however, saw their share of federal payments shrink from 34 percent in 1991 to 15 percent in 2009. Whatever its intentions, the farm bill has become one of the most flagrant examples of corporate welfare in the federal budget.
Of course, the farm bill encompasses more than just agricultural subsidies. There are quotas designed to control what is planted, and how much - as if the government knew better than the market what should be produced, and in what quantities.
To see how the farm bill affects ordinary Americans, consider the case of sugar. Americans pay two to four times more for the sweetener than consumers in other parts of the world. Why? Because of government-imposed quotas on imports designed to maintain the market share of domestic producers. Every sugar-sweetened product costs more to manufacture. Overall, these sugar quotas cost the economy an estimated $49 million, according to the U.S. International Trade Commission.
Or take another food staple, milk. The U.S. Department of Agriculture uses a variety of price controls and income supports for farmers to limit how much milk is produced. This interference is expensive. By holding supplies down to maintain higher prices, consumers pay hundreds of millions of dollars more for milk, butter, cheese and other dairy products.
“Thus, Americans are taking a double hit on dairy,” says regulations expert Diane Katz. “Tax revenues are used to subsidize producers, and production limits raise the cost of products.”
The effect of the farm bill, unfortunately, isn’t limited to the kitchen. It also hits the vehicle parked in your driveway. Thanks to the government’s push to “put renewable fuel in all of America’s gas tanks,” as Secretary of Agriculture Thomas J. Vilsack puts it, you’re paying more for gasoline. This renewable fuel consists primarily of corn-based ethanol. The introduction of ethanol into the gasoline supply has artificially inflated the cost of filling up.
It has also driven food prices up as well. The artificial demand that ethanol creates for corn and other biofuel feed stocks has pushed farmers to devote more acres to them. They grow fewer soybeans and other crops, shrinking supplies - and making it more expensive to pay for groceries.
Congress needs to put needless subsidies and other outdated farm policies out to pasture.
Ed Feulner is president of The Heritage Foundation.
This article originally appeared in The Washington Times on June 4th, 2012.
Enterprise & Free Markets Initiative of the Leadership for America Campaign
Edwin J. Feulner, Ph.D.
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