Monday, October 09, 2006

Farm subsidies - waste or investment?

There is a perception out there that average farmers, like yours truely, are getting rich off government subsidy payments. We get money for growing more corn, but get money for not growing corn; we get money for disasters, and we get money to prevent disasters. Overall, the idea is that us farmers get a lot of money from the government, and this isn't fair to the rest of society, especially if a few big farmers get most of the loot.

First of all, I for one would be glad if we didn't have the government involved as much as they are. There is a real market shifting dynamic from the government programs which add artificial barriers and doors to the marketplace. Having said that, it is something that is foisted upon us, and commodity farmers, growers of corn, soybeans, wheat, cotton, rice, etc, can not easily operate without them. The marketplace has grown around these subsidies such that expenses are built in to take advantage of the government loot; it just goes through our hands and into the hands of others, such as land rent, inputs, and machinery.

My belief, and that of many other farmers here in The South of Iowa, is that we are subsidized by the government to provide cheap food to the masses. We can produce food for less than typical levels of production costs because we are subsidized. It allows processors the opportunity to buy grains at lower prices, which benefit them and their customers. Basically put, the farmer isn't getting rich off the subsidies, the general public is benefiting.

A great place to find out more about subsidies (albeit a site with a slant toward eliminating them) is the Environmental Working Group's site. They undertook a big project a few years ago to obtain agricultural payments since 1996 from the USDA. One can look up a particular farmer and find out how much they are making. I'm not afraid to make mine known to anyone who wants to see it.

However, when one totals up the amount of subsidy spending in, say, 2004, and divide that by the national population, we are all getting cheap food for, well, a bargain. According to the EWG, 12.5 billion dollars were spent on commodity, conservation, and disaster payments that year. Estimating our population to be around 295 million at the time, that works out to around $42.37/capita. That means you pay about 42 bucks a year to get the cheapest, safest, and most convenient food in the world.

(One could also point to obesity and say you get what you pay for, and I wouldn't disagree with that statement, either. I didn't say we had the highest quality food, just the cheapest and safest. Not too many cases of food poisoning from Mt. Dew, you know.)

So, the next time you complain about food prices at Dahls or some other foo-foo grocery store, think about this; your tax dollars are actually lowering the cost of the food you eat.


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