Agriculture Subsidies are BS!

[Puppycow]

I was just going to title this thread “Agriculture Subsidies” but I figured that would probably not get much interest. So taking a page from Penn and Teller’s playbook, I figured that the best way to get a discussion started would be to say something a little more provocative. Also, before getting to the logical part of my argument, I’d like to start with a little well-poisoning: Only those whose mothers are hamsters and whose fathers smell of elderberries could possibly disagree with what I am about to write.

Let’s start with sugar. The most efficient way to produce sugar is to grow sugar cane in a tropical climate. Ideally, tropical countries should supply all the world's sugar needs, because that is where it makes the most sense to produce sugar. It is possible, but less efficient, to grow some sugar cane in subtropical climates like Louisiana or Florida, and sugar beets can be grown in more temperate climates. Growing sugar cane in less-than-ideal climate conditions requires more fertilizer and pesticides, which are pollutants. Sugar substitutes like corn syrup can also replace sugar, but they too are not as efficient as growing sugar cane in a place like Nicaragua.

Here are some figures:
GDP of Nicaragua, 2003: $3.6 billion
World sugar subsidies, 2003*: $7 billion
* OECD estimate (source)

Louisiana Republican Senator David Vitter asserted that additional sugar imports from Central America and the Dominican Republic under the proposed 'CAFTA' agreement would "flood the U.S. market and devastate the Louisiana sugar industry as domestic sugar is displaced by highly subsidized foreign imports." Central America's sugar industry is not subsidized.

This is the opposite of the truth. But what else should we expect from our good old friend “Diaper” Dave Vitter, paragon of family values who also tried to give tax money to anti-evolution groups who want to teach creationism as science to schoolchildren.


According to this excellent blog post on the subject, because of subsidies, tariffs, and import quotas, Americans pay about $2.25 for a 5 pound bag of sugar. That doesn’t seem like much, but without government interference the same product would probably cost only about $1. Soft drinks which use corn syrup would find it cheaper to switch to syrup.


Do agricultural subsidies go to poor farmers? Mostly not. In America most of them go to giant corporations like Archer Daniels Midland and politically connected fat cats who give generously to election campaigns and lobby for pork.

In Europe:

The Duke of Westminster, owner of swathes of prime real estate in central London, received £448,472, according to Oxfam and the media, which went through the data with a fine comb. The Duke of Marlborough, scion of the Churchill family and Bleinhem Palace heir, received £511,435.
The queen was paid about £546,000 to help run her estates at Sandringham in Norfolk and Windsor Castle. Prince Charles, whose wealth was on display at his wedding on Saturday, received £224,000 in aid for his farmyard work.
The Scottish and Welsh authorities, fearing legal action for publishing private information, have so far spared their farmers. But the Duke of Buccleuch, possibly Britain's largest private landowner who owns a large part of Scotland, admitted he had received around £700,000 from the EU in 2004, The Sunday Times reported.

Nice to see EU citizens’ tax money put to good use, eh?

This is just the tip of the iceberg. There are many other harmful inefficient subsidies that hurt the poor, the environment, and reduce everyone’s standard of living for the benefit of a few fat cats. Agriculture subsidies are BS!

 

[Darat]

Well organised special interest group is the only explanation I can think of for the continuation of a policy that is politically neither ideologically left nor right.

Granted there can be and have been times when food production is more important than the cost of the food production - for example the UK during and after WWII.

 

[WildCat]

Sugar is an excellent example. The subsidies meant to protect a few sugar growers has resulted in the loss of many times the jobs in industries that use a lot of sugar. Chicago used to be the leading candy producer in the nation, but there are very few candy-related jobs left here as most of the candy manufacturers have moved offshore to where the price of sugar is far lower.

Of course, politicians will defend this travesty by claiming they're protecting family farms, ignoring the fact that most of the subsidies go to giant agribusiness corporations who would do just fine without them.

 

[Southwind17]

I was just going to title this thread “Agriculture Subsidies” but I figured that would probably not get much interest. So taking a page from Penn and Teller’s playbook, I figured that the best way to get a discussion started would be to say something a little more provocative. Also, before getting to the logical part of my argument, I’d like to start with a little well-poisoning: Only those whose mothers are hamsters and whose fathers smell of elderberries could possibly disagree with what I am about to write.

An even better way to get a discussion started is to keep your OP brief with few if any links. I started reading your post but lost interest when I realized how long it would take me to assimilate it! I'm sure the subject matter will appeal to others, but there you go.

I'm arguably being a bit harsh. Maybe I'm just getting a little impatient in my old age! Sorry - just had to say it.

 

[Chaos]

Well organised special interest group is the only explanation I can think of for the continuation of a policy that is politically neither ideologically left nor right.

That just about says all that needs to be said on this topic.

Granted there can be and have been times when food production is more important than the cost of the food production - for example the UK during and after WWII.

But how relevant is this today?

 

[Darat]

...snip...

But how relevant is this today?

Not at all for the "developed" countries but there are circumstances were I can see that agricultural subsidies could be appropriate - perhaps for example in countries which, on the whole, the population can't afford imported food but are not producing enough food internally to feed the country.

 

[Puppycow]

An even better way to get a discussion started is to keep your OP brief with few if any links. I started reading your post but lost interest when I realized how long it would take me to assimilate it! I'm sure the subject matter will appeal to others, but there you go.

I'm arguably being a bit harsh. Maybe I'm just getting a little impatient in my old age! Sorry - just had to say it.

Sorry!
I know what you mean. I'll try to be pithier next time.

 

[Puppycow]

Sugar is an excellent example. The subsidies meant to protect a few sugar growers has resulted in the loss of many times the jobs in industries that use a lot of sugar. Chicago used to be the leading candy producer in the nation, but there are very few candy-related jobs left here as most of the candy manufacturers have moved offshore to where the price of sugar is far lower.

Of course, politicians will defend this travesty by claiming they're protecting family farms, ignoring the fact that most of the subsidies go to giant agribusiness corporations who would do just fine without them.

It's really annoying, isn't it? Is there no cure for pork-barrel politics? Almost all economists, liberal and conservative alike, favor free trade. Maybe if all students were taught Econ 101 in high school people would realize the advantages of free trade. Especially if you don't want illegal aliens, it might be a good idea to allow more trade with Central America so that people there can make a living. Free trade helps direct labor into the most productive industries, which is best for the economy and the average person in the long run.

 

[Darth Rotor]

I was just going to title this thread “Agriculture Subsidies” but I figured that would probably not get much interest. So taking a page from Penn and Teller’s playbook, I figured that the best way to get a discussion started would be to say something a little more provocative. Also, before getting to the logical part of my argument, I’d like to start with a little well-poisoning: Only those whose mothers are hamsters and whose fathers smell of elderberries could possibly disagree with what I am about to write.

I wave my private parts at your aunties.

Sugar is a curious commodity to pin your argument to.

Farm subsidies are a manifestation of a standard, and very old, government trope about keeping food cheap to avoid unrest. If people can't afford to eat, you get unrest. The relative cost of food, and how one implements policies to influence it, may or may not benefit from subsidies, but strategic depth of agricultural capability should not be understated as a matter of policy for any government.

Boom and bust cycles in food production get you breadlines, dust bowls, and other spikes in a core need: food.

You interested in that?

Another thought: if policy keeps the general price of food low, that frees up discretionary income for other economic goods, which can strengthen an economy. (Not guaranteed, but it's one outcome.)

DR

 

[Chaos]

*snip*
Farm subsidies are a manifestation of a standard, and very old, government trope about keeping food cheap to avoid unrest. If people can't afford to eat, you get unrest. The relative cost of food, and how one implements policies to influence it, may or may not benefit from subsidies, but strategic depth of agricultural capability should not be understated as a matter of policy for any government.

Boom and bust cycles in food production get you breadlines, dust bowls, and other spikes in a core need: food.

You interested in that?

Another thought: if policy keeps the general price of food low, that frees up discretionary income for other economic goods, which can strengthen an economy. (Not guaranteed, but it's one outcome.)

DR

Not if the taxes needed to pay for those subsidies are what makes the food unaffordable to begin with.

 

[ponderingturtle]

Sugar is an excellent example. The subsidies meant to protect a few sugar growers has resulted in the loss of many times the jobs in industries that use a lot of sugar. Chicago used to be the leading candy producer in the nation, but there are very few candy-related jobs left here as most of the candy manufacturers have moved offshore to where the price of sugar is far lower.

Of course, politicians will defend this travesty by claiming they're protecting family farms, ignoring the fact that most of the subsidies go to giant agribusiness corporations who would do just fine without them.

What? Why would subsudies result in higher prices? The general role of such subsudies is to keep food prices at artificialy low levels. How does that raise prices on sugar?

 

[Fnord]

Well organised special interest group is the only explanation I can think of for the continuation of a policy that is politically neither ideologically left nor right.

Greed knows no political boundaries.

As for the OP, I agree 100%. My grand parents lost their 100-acre farm because the 500-acre commercial farm across the road received government subsidies for not growing any crops, while my grandparents had to work 20-hour days just to break even.

 

[Southwind17]

Sorry!
I know what you mean. I'll try to be pithier next time.

I quite like that word: 'pithier'. I've only come across it on this Forum. Makes me think of a thick-skinned orange!

 

[Darth Rotor]

Not if the taxes needed to pay for those subsidies are what makes the food unaffordable to begin with.

True enough. It depends on how money circulates, and is recirculated, within a given system.

DR

 

[GodMark2]

Subsidies also have the extra benefit of keeping a known supply of food within easy reach. If we were to somehow be cut off from the rest of the world, we could still produce sugary goods. If we moved our sugar production to the tropics, we would have to do something to ensure we could get shipments from the tropics, which would cost tax money anyway.

 

[Chaos]

What? Why would subsudies result in higher prices? The general role of such subsudies is to keep food prices at artificialy low levels. How does that raise prices on sugar?

Okay. Once again. I will make sure to do this very slowly, so you can keep pace.

Subsidies are money.

Money has to come from somewhere.

"Come from somewhere", with government, means taxes. You didn´t this that stuff is just conjured out of thin air, did you?

Taxes mean you, as a consumer, have to pay through your nose in order to be able to buy cheap subsidized goods.
The idea that you´re better off that way than paying less for taxes and more for food is usually BS.

 

[egslim]

Subsidies also have the extra benefit of keeping a known supply of food within easy reach. If we were to somehow be cut off from the rest of the world, we could still produce sugary goods. If we moved our sugar production to the tropics, we would have to do something to ensure we could get shipments from the tropics, which would cost tax money anyway.

If the US is cut off from the rest of the world to that extent, the supply of sugar will be the least of your worries.

Though I agree with your point in principle, for strategic purposes it is nice to be self-reliant to some extent. But in many cases agricultural subsidies actually promote agricultural exports. And those have no strategic value, except to allies.

Personally I find this insane: The Dutch rank third (or used to) worldwide in value of agricultural exports, behind the US and France. The Netherlands are a tiny country, listed sixteenth worldwide in population density. That kind of export serves no strategic purpose, especially since other EU members have more favourable natural conditions for agriculture. We're crazy to spend as much on agricultural subsidies as we do. It's also a waste of increasingly expensive energy.

 

[Darat]

Subsidies also have the extra benefit of keeping a known supply of food within easy reach. If we were to somehow be cut off from the rest of the world, we could still produce sugary goods. If we moved our sugar production to the tropics, we would have to do something to ensure we could get shipments from the tropics, which would cost tax money anyway.

But they tend to also do quite the opposite - for example in the EU for many farmers it became more profitable to not farm for food.

 

[WildCat]

What? Why would subsudies result in higher prices? The general role of such subsudies is to keep food prices at artificialy low levels. How does that raise prices on sugar?

In the case of sugar there are limits as to how much can be imported. Subsidies don't have to take the form of direct payments to farmers, they can also be tarrifs and import restrictions. Either way, the end use pays more either through higher taxes or higher prices.

 

[ponderingturtle]

Okay. Once again. I will make sure to do this very slowly, so you can keep pace.

Subsidies are money.

Money has to come from somewhere.

"Come from somewhere", with government, means taxes. You didn´t this that stuff is just conjured out of thin air, did you?

Taxes mean you, as a consumer, have to pay through your nose in order to be able to buy cheap subsidized goods.
The idea that you´re better off that way than paying less for taxes and more for food is usually BS.

And that has nothing to do with what I said. I was wondering how subsidies result in higher prices as claimed in the post I was replying to. That would seem to be more likely from protectionist tariffs and not subsidies.

The claim was that subsidies resulted in higher sugar prices, not that the taxers for the sugar subsidies made it to expensive to run a candy company in Chicago.

I really have no idea how this relates to my post you quoted.