Most first-world countries subsidize the heck out of their farmers. The United States alone spends about $20 billion per year on direct subsidies money taken directly from your pocket and given to farmland owners. Add in other indirect subsidies such as irrigation funding, nutrition food aid, export credits, tariffs and other trade barriers and that figure rises to $180 billion per year. In other words, you will be paying up to $600 annually in farm subsidies for the rest of your life. Given that Congress is debating whether to cut education spending including funding for this College why don't we cut farm subsidies instead?
As someone who has benefitted from these subsidies, I thought I might give my two cents on this issue.
Let's be honest: The reason these subsidies exist is that the farm lobby (which admittedly includes me) has long been an effective special interest group. This lobby is so effective that, when President George W. Bush vetoed the 2008 farm bill, Congress overrode his veto.
Consider a story from my family's farm. A few years ago, the prices of the crops we grew rose significantly. Thus, we were fortunate enough to receive some extra income that year. The next year, we decided to increase our output in response to those higher prices, but so did many other farmers, so the prices of many of our inputs fertilizer, for instance rose. These higher costs ate away our profits, and the fertilizer companies made a temporary profit. But then, in response to these higher prices, the fertilizer companies increased production, and their profits went back to zero. Importantly, farmland was the only input that did not fluctuate with the market.
You see, farmers can easily hire more workers, John Deere can build more tractors, and Mosaic can produce more fertilizer. But there is no fairy who can magically create more farmland. So while John Deere, Mosaic and your typical farmer will not earn excess profits in the long run, land rents will not automatically return to their previous levels. In fact, in the long run, any and all changes in the profitability of farming (whether due to changes in food prices or changes in government subsidies) will be borne by landowners.
My story may be specific, but the moral is important: If the level of farm subsidies is changed, the only long-run effect for farmers will be a change in land prices and rents. Only farmland owners, not farm workers in general, would bear the cost of reduced subsidies.
Take New Zealand, for example, a country that used to heavily subsidize their farms, but then scrapped all of its subsidies in 1984. This was an even bigger shock to New Zealand's economy than it would be to ours because agriculture is five times larger in New Zealand than in the United States (measured as a percentage of GDP and employment). Immediately after the subsidies were scrapped, times were tough for New Zealand's farmers, and land prices fell. But New Zealand's farmers quickly recovered: Today, agriculture is a larger percent of New Zealand's GDP than it was before 1984.
Saving taxpayers' money is not the only reason to scrap farm subsidies. Our farm subsidies are inadvertently contributing to our obesity epidemic. We subsidize the production of corn, for instance, far more than we subsidize fruit and vegetable production. As Michael Pollan wrote in The New York Times Magazine, "The reason the least healthful calories in the supermarket are the cheapest is that those are the ones the farm bill encourages farmers to grow."
Furthermore, first-world farm subsidies harm farmers in the developing world. First-world farm subsidies increase agricultural production in the first world at the expense of agricultural production in the developing world. As a first-world farm kid, I have the ability to earn a living even though I will no longer work on a farm, but this is not the case for many developing-world farmers. Mark Mallock Brown, former administrator of the United Nations Development Program, estimated that first-world farm subsidies cost "developing countries about US$ 50 billion in potential lost agricultural exports." By comparison, the total spent by the United States on non-military foreign aid is less than $35 billion per year.
In short, let's scrap the farm subsidies. Although I have benefitted from these subsidies, I'm not going to lie by saying that they constitute good public policy.
