In general, the extent of my relationship to farming includes eating the foods and drinking the milk they produce, and mooing at the cows as I drive past. I’d say that makes my credentials for criticizing farm subsidies quite impeccable. In looking into a post about potential areas of cuts in our bloated federal budget I came across farm subsidies as one of the areas subject to Obama’s spending freeze and wondered just how much was involved and what they’re actually about. I’m certain that a considerable number of readers of this post will be better informed on this subject than I so please be gentle. But in a relatively ill-researched review of the topic it strikes me that there’s an enormous amount of waste driven by deep-pocketed growers with an incredibly strong lobby that spreads the wealth to choice political candidates. Neither Republicans nor Democrats have shown any political will to address this issue (I was especially amused to read that Michelle “Obama is a Socialist” Bachmann’s family farm was the recipient of over $250,000 in farm subsidies over a 10 year period) even in a dire economic climate when we need to find savings – and farm subsidies are the kind of low hanging fruit that is easy to pick off. Unfortunately they have very sharp thorns.

First a great letter to highlight the lunacy of some farm programs:

A letter addressed to the Secretary of Agriculture
Post date: October 3, 1997

Honorable Secretary of Agriculture
Washington, D.C.

Dear Sir;

My friend, Ed Peterson, over at Wells Iowa, received a check for $1,000 from the government for not raising hogs. So, I want to go into the “not raising hogs” business next year.

What I want to know is, in your opinion, what is the best kind of farm not to raise hogs on, and what is the best breed of hogs not to raise? I want to be sure that I approach this endeavor in keeping with all governmental policies. I would prefer not to raise razorbacks, but if that is not a good breed not to raise, then I will just as gladly not raise Yorkshires or Durocs.

As I see it, the hardest part of this program will be in keeping an accurate inventory of how many hogs I haven’t raised.

My friend, Peterson, is very joyful about the future of the business. He has been raising hogs for twenty years or so, and the best he ever made on them was $422 in 1968, until this year when he got your check for $1000 for not raising hogs.

If I get $1000 for not raising 50 hogs, will I get $2000 for not raising 100 hogs? I plan to operate on a small scale at first, holding myself down to about 4000 hogs not raised, which will mean about $80,000 the first year. Then I can afford an airplane.

Now another thing, these hogs I will not raise will not eat 100,000 bushels of corn. I understand that you also pay farmers for not raising corn and wheat. Will I qualify for payments for not raising wheat and corn not to feed the 4000 hogs I am not going to raise?

Also, I am considering the “not milking cows” business, so send me any information you have on that too.

In view of these circumstances, you understand that I will be totally unemployed and plan to file for unemployment and food stamps.

Be assured you will have my vote in the coming election.

Patriotically Yours,

Funny, but not so much, huh?

The sugar industry is an especially egregious example of wasteful federal dollars spent to prop up a relatively few sugar producers at the expense of other industries and the US consumer. I have not yet found an article from a reputable publication of any political persuasion that supports sugar subsidies. The facts are pretty straightforward even if the numbers are inflated: the price of sugar in the US is generally 1.5-2.0 times higher than sugar on the world market thanks to the subsidies; according to a 2006 Commerce Department report, each sugar job saved through US subsidies costs three jobs in consumer manufacturers of candy, chocolate, cereal, etc with companies moving to Canada and Mexico to take advantage of lower sugar prices; analysts argue that the higher price costs US consumers $2 billion a year in higher prices of pure sugar as well as sugar based products. In the last year alone world sugar prices have doubled from an already historically extremely high level of 14 cents a pound to 28 cents per pound – and US sugar is roughly 40 cents a pound! If you thought that donut you bought each morning with your coffee was getting pretty expensive, you’re right!

So what’s the logic behind sugar subsidies? From what I’ve read the answer is – there are none! The government keeps prices high by guaranteeing producers a minimum price, establishing strict quotas on imports, and imposing production quotas to control supply. And to whose benefit? The sugar producers – and only the sugar producers. I’ve not seen a single argument on how this benefits the US economy or the US consumer. And what’s the argument of the producers? Two things: first, they claim that US production is extremely efficient but that global over-production, cheap labor costs in third world countries, and massive government subsidies in those countries keeps supply artificially high and world prices artificially low; and second, they say that US consumers would not benefit from lower sugar prices if import quotas are raised because candy and cereal manufacturers would simply pocket the additional profits.

Now, I cannot believe that anybody with half a brain is buying either one of those arguments. Who cares how efficient US producers are?? If the rest of the world wants to produce and subsidize sugar and we can buy it 50% cheaper, why wouldn’t we want to do that? Is the US sugar industry such a vital part of the economy that we need to protect it and ensure a long-term supply of sugar? I don’t think so. And who cares what the sugar industry thinks about whether lower prices will get passed along to consumers? That’s not for them to decide. What we absolutely don’t need is an intermediary industry that is subsidized by the government and making enormous profits each year on the taxpayer’s nickel!

So we need to put an end to these sugar subsidies, right? Uh, good luck with that. Obama appears to be a friend of Big Sugar and there are undoubtedly neat backroom deals between blue and red state representatives to protect respective farming subsidies. Is the sugar story indicative of farm subsidies on traditional crops? Maybe some of you can enlighten us further on that issue but I’d say that we NEED to support our domestic farms in order to guarantee our long-term supply of basic food commodities – that’s a national security imperative. That doesn’t mean there aren’t ridiculous programs in place within those farm subsidies that offer opportunities for genuine savings without inflicting any harm on our farmers. Unfortunately farm subsidies are the ultimate pork barrel program and getting past the political machine protecting them is a difficult proposition.

Tags: Budget Deficit, Farm subsidies, Sugar subsidies

This entry was posted on Thursday, February 4th, 2010 at 2:20 pm and is filed under News/Politics. You can follow any responses to this entry through the RSS 2.0 feed.