Farm Subsidies Are Harming Our Economy

Everyone knows that our cost of living keeps growing. Some blame wages, some blame an aging population, higher gas prices, higher taxes, or more people. What if it all came down to food?

In 1940, a family could live on $2000 a year. Now, many struggle to survive at 10 times that amount. Nearly 20% of the population of 1940 worked on a farm. Today, that number is less than 2%. An infrastructure needs to be in place to get that food to the cities. This adds to fuel and labor required to bring the products to the consumer. Advances in farming techniques through the years has meant that fewer farms can produce the same amount of product, but it has created a disconnect now.

The food industry is being hit with more and more regulation that prevents small farms from being able to compete with large “factory farms.” So fewer farms, but greater demand.

America consumed 1.38 billion chicken wings for Super Bowl Sunday. That is 690 million chickens in one day. The top four chicken producers process 95 million birds a week, combined. They provide over 50% of the market. Just that one product’s infrastructure requires farmers for feed, heat, lights, drivers for trucks, processing facilities, processing employees, packers, inspectors, shipping to retail hubs, distribution networks, and ultimately stock kids and cashiers. The farms and processors are located in rural areas of the country that often require cross-country transportation for delivery, and sophisticated freezer trucks to maintain the integrity of the products. Every hand that touches it adds to the product value. Yet the price of chicken has actually dropped if you adjust for inflation since 1940. Why?

Subsidies. Large farm corporations have assured their money through agenda such as the Farm Bill, and our welfare system offering guaranteed sales to these corporations for institutions such as prisons and schools, all offset by our tax dollars. They are provided incentives for production. The grain fed to the birds is incentivized; the roads are paid for by our taxes; the customers are guaranteed with the SNAP program.

With increases in minimum wage laws, every step in the process costs more. Yet the largest corporations rarely have to absorb those costs as the American tax payer now offsets most of the feed costs, productions costs, and distribution costs due to farm bills.

So, what would happen if we removed these unnecessary subsidies? Initially, prices would go up for the product, as all of the compounded costs are finally factored in. But each step in the chain would finally grow more efficient. Agriculture makes up nearly 15% of the national fuel consumption, some of that is spent producing crops that never make it to the market. Our government actually pays many farmers to overproduce their crops, then pays a higher than market price, and even pays for those crops to be disposed of. So, fuel consumption would drop as there would no longer be an incentive for farmers to overproduce crops that won’t sell.

Diversification in the market would happen, too. Right now many large farms are paid to grow only certain crops, or not to grow specific crops to keep production levels low. This would change with the removal of the subsidies. Many farmers would begin to explore other crop options that would be better suited to their lands, and that may be grown more profitably.

Streamlining existing crops would happen. When profit margins slim due to the subsidies disappearing, farmers would explore more cost-efficient methods for growing and managing their crops. Right now, they factor in substantial losses simply by growing the same crop on the same grounds year after year. But they are paid to grow those crops, so the grounds require higher doses of pesticides, herbicides, and fertilizers to maintain the same levels of growth.

Haven’t you wondered why processed foods are cheaper than whole or fresh foods? Even though there is exponentially more work involved, subsidies help to offset most of those costs. By cooperating with the food stamp programs, they encourage people to use more of the processed, subsidized foods, then healthier alternatives.

The free market would increase efficiencies in getting whole foods to market and to finally compete in price and availability over processed foods.

Our health as a population would go up (reducing medical costs, too) by having access to healthy foods at a similar price structure as processed foods, people predominantly will choose healthy food if the price points are similar.

Not being paid to throw food away would make farmers look for profitable alternatives to just discarding food that had previously been paid for by subsidies. Utilizing it as alternative (and often healthier) animal feed, helping to keep meat prices competitive. Composting would add health back to their fields in a natural way that will not require as much fertilizer.

The Farm Bill does not differentiate for GMO vs. organic vs. natural ways of growing crops, so there is little incentive for farmers to take the steps to provide a cleaner, healthier product for consumers. Accountability for their products would ensure that the markets would more fairly reflect the efforts put into a quality product. Many customers choose based on price alone. When the mainstream products are laden with pesticides, herbicides, and GMO’s for production, but they are cheaper, a large percentage of the population has little choice but to purchase those options or go without. They do not correctly reflect the costs of production, so there would be an increase in some prices as the true production costs become reflected in the retail prices.

But, having the prices more truly reflected in the market place would encourage many small producers to step into the game, as their products would not be vastly overpriced in comparison. Supply and demand would even set a price that is happy for consumer and producer.

National fuel consumption would drop, resulting in lower prices. Food prices would balance, resulting in cheaper and local options. Small farm growth would be promoted, resulting in more jobs and income for rural and suburban communities. Viable employment would exist for rural areas, evening out population distribution that is leaning heavily urban, leading to more affordable housing. Population health would increase, so the burden on our medical community and health care system would be reduced.

One removal of excess bureaucracy could shift our entire economy for the better.

This article was originally published by Think Liberty.

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