How subsidies hurt farmers

Thank you for your editorial about U.S. farm subsidies ["Bringing it home,” Sept. 18]. It is important for taxpayers to know how their money is being spent. However, I strongly disagree with your assertion that subsidies “are good for farmers, at least in the short term.”

U.S. agriculture is in a policy-caused economic crisis. In the 1996 Farm Bill ("Freedom to Farm"), Congress abandoned traditional market stabilizing tools, such as supply management in the form of “set-aside” programs, in favor of decoupled payments and trade liberalization. Since then, U.S. commodity prices have plummeted, taking world prices along with them. Government payments are up over 100 percent, and net farm income has declined anyway. Economists told us exports would save us, but U.S. farm exports have been down to flat for the past two decades. Continuation of current farm policy will only lead to more of the same: Prices received by farmers will be below the cost of production, leading to large government payments, continued dumping of agricultural products on the world market, and depressed crop prices worldwide.

How did we get here? Well, think about who benefits from low commodity prices. It’s not the farmer. Large grain companies, such as Archer Daniels Midland and Cargill, are the ones who benefit from the low prices induced by U.S. ag policy! The 1996 Farm Bill was designed to generate a steady supply of cheap grain to fill the bank accounts of Cargill and ADM. They don’t have to pay the full cost of production if they can get taxpayers to do it for them.

So should we just eliminate all the subsidies? If we do, according to the Agricultural Policy Analysis Center (APAC) at the University of Tennessee, by 2011, net farm income will drop by 25 percent as prices remain flat, increasing only 2 percent by 2020. This is not an acceptable solution for rural areas such as ours, with our high unemployment rates and financially strapped local governments.

How do we get out of here? I don’t pretend to know enough economics to answer that question. However, other people do. APAC recently released a study entitled, "Rethinking U.S. Agricultural Policy: Changing Course to Secure Farmer Livelihoods Worldwide." I encourage everyone interested in how their tax dollars are spent to read this research. It takes a comprehensive look at how U.S. ag policy affects global trade, low commodity prices and poverty. Things are bad now, but the policy blueprint laid out in the APAC report could be a step in the right direction. Might I suggest that the News & Review do a bit of thinking about ag subsidies, rather than just taking a superficial look at them?