(Individualism vs Collectivism, 31 Oct 2012)
Bailey McClanathan ·
Agricultural policy in the United States, on its face, is seen as a series of innocent measures to safeguard the bucolic American farmer, and thus the U.S. food supply. Pursuing this ideal, however, has led to inefficient market behavior and some insidious consequences throughout the country and the world.
Across the board, U.S. agricultural subsidies fundamentally alter purchasing power parity both in foreign and domestic markets. Currently, developing nations are often “beneficiaries” of excess US product. While seemingly altruistic, dumping commodity crops onto the world market inhibits lesser-developed countries’ ability to be competitive in either domestic or foreign agriculture markets. In short, the U.S. government sells products at a significant loss; a loss that no fledgling agrarian could absorb in order to sell a competitively pricedproduct. The World Trade Organization’s Doha Round is hampered by this practice. In 2005, the WTO even went so far as to ask the U.S. to stop domestic price-fixing of certain products to allow more parity in the world market.
The long-running U.S. farm subsidy program is fundamentally detrimental to the free market. Not only is it an impediment to fairness and competition in economies both locally and globally, there are some strong domestic reasons for change as well. Firstly, the current state of affairs leads to unnecessary environmental degradation. And secondly, the market distortions negatively impact public health. A dismantling of the subsidy system would align agricultural policy with the rest of the government’s low interference mantra, aid global development, and all the while tackle significant domestic issues.
This history of subsidies in North America dates back to colonial times, but commodity programs, replete with price and income supports, became an integral part of U.S. agricultural policy with the New Deal’s Agricultural Adjustment Act of 1933. Almost immediately, these subsidies led to distortion in market behavior. Subsidized crops, e.g. wheat and corn, were grown — and continue to be grown — disproportionally to demand in response to the government’s non-performance based bonuses and “golden hellos”. Sounds familiar? Nevertheless, these distortions endure and have skewed a great many aspects of American life, from business and trade practices, to resource usage and employment, down to the fundamentals of the American diet.
Is it finally time to dismantle the labyrinthine, outmoded agricultural policy in the United States? Despite calls for progressive reform and evidence to support the need for such, the government has yet to make a call. The 2012 Farm Bill has officially stalled in the House of Representatives until election season is resolved. Historically, this is an issue that garners bipartisan support; not only assuaging rurally populated constituencies but also the behemoth corporate agricultural lobby.
So what’s the problem here? First, the bill needs decoupling. It currently mixes highly controversial budgetary items: farm supports and food stamps. Second, and more subtly, the government needs to change the way it thinks about food. Much can be gleaned from an examination of farm supports and their impact on agribusiness, the American consumer, and the world market.
Today, many sectors of the economy are artificially sweetened by government policy. These subsidies cause agribusiness to unduly till land that would otherwise lie fallow or remain forested. Not only does this degrade land important for conservation of biodiversity, it also unnecessarily burdens the American taxpayer when the government is bound to purchase the excess product. Animal agriculture, for example, becomes far more profitable with grain and dairy subsidies. The subsidy fundamentally changes the way meat is produced. Traditionally a grass-fed product, the large-scale grain subsidies have made it more profitable to raise livestock on a grain- or corn-fed diet. By allowing more animals per square acre, today’s production methods produce staggering amounts of pollution and often severely deteriorate the land used in production. The policy protects agribusiness and, debatably, the US food supply, but does nothing to combat the environmental degradation it reaps.
The subsidies endure in spite of the linkage between inordinate consumption of animal protein and processed foods and a corresponding susceptibility to the serious illnesses (such as diabetes, heart disease, cancer) that plague Americans. Foods containing or manufactured with subsidized crops are less expensive than their non-subsidized counterparts. In 2004, nutrition experts Adam Drewnowski and S.E. Specter found you could either purchase 1,200 calories of potato chips or 250 calories of carrots for one dollar. Again, the interventionist policy balks when faced with the realities of a policy that sickens its populous and thereby burdens other government agencies, like Medicare and the Agriculture Department’s MyPlate nutrition initiative.
It would be one thing if the struggling, small-town farmer received these subsidies, but they don’t. The strategy set forth by 1970s Secretary of Agriculture Earl Butz (“Get big or get out”) consolidated farms and ushered in the cheap-food policy that remains today. By and large today’s farm supports go to corporations with pre-tax profits in the tens of billions. The 2012 farm bill restructures the direct payments system, but the alternative still allows for billions in shallow loss and crop insurance programs that any other large corporation would provide through its own Business Continuity Management procedures.
Farm subsidies in the US have long served as a controversial lynchpin in both domestic and foreign economic policy. The time has come for policymakers to frankly discuss the pragmatic realities of outmoded and distorted legislation. By removing agricultural subsidies, the price of all food products becomes competitive. The government will no longer be on the hook for excess production, thus lessening the burden on government funds and individual taxpayers. Dually, the government will no longer need to dump crops on the world market and stall global economic growth. There would no longer be an economic incentive for agribusiness to degrade or till unprofitable land. And finally, parity of food pricing will enable low-income Americans, the 99%, to make real choices about their diet and their health.The case for dismantling agricultural subsidies is compelling, and warrants bipartisan support when and if policymakers decide to take notice.