To Revive Rural America, We Must Fix Our Broken Food System

[PeterG]

Ag products prices would be higher if farmers weren't given subsidies. The subsidies encourage overproduction. I hear and read quite frequently about how the milk pricing mechanisms are broken - that the price ought to be set based on the cost of production plus a profit margin. I think the idea is quite absurd - if farmers are going to flood the market with milk when there's no profit in it, how would raising the milk price possibly help the situation. But that is basically what subsidies and crop insurances do. They encourage farmers to invest much more into greater overproduction.

It's even worse than that—in some cases agricultural subsidies result in higher prices because of the way they restrict trade. Sugar subsides are a good example. (Sharpen your pitchforks, everybody, that's a link to a National Review article. Boo, hiss!)

[mike]

What's the definition of corporate agribusiness? Any large farm? A lot of small farms are members of co-ops which might be considered corporate agribusinesses but are made up of family farms. Then there are family farms where the family is farming a thousand acres.

Fair point. That was some sloppy talk on my part.

But I still suspect that agricultural subsidies have disproportionately and unfairly benefited the big guy at the expense of the little guy (to use the correct technical terminology). According to the American Conservative article (which links to the webpage of Rep. Ron Kind), 80% of the subsidies go to 20% of farmers. I can imagine scenarios in which that wouldn't be so bad, like if that 20% were also responsible for 80% of agricultural production, but it seems off. And much as you said earlier, a larger business could theoretically leverage its scale to maximize its benefit from subsidies in a way that smaller operations couldn't. That's one thing if we're talking about good old fashioned operational efficiency, but something else when we're talking about subsidies that those smaller operators are helping to pay for.

To be clear, I haven't done my homework on this, and I'm mostly guessing. And I would be only slightly less grouchy about subsidies if I thought they disproportionately benefited the little guy, in which case I would transition my rhetoric away from the crony capitalism, robber baron angle and shift to denouncing socialist redistribution of wealth.

I'm no expert either. I simply don't know enough to say whether subsidies benefit larger producers in ways that smaller operators are, as you say, actually helping to pay for. That seems like a bit of a stretch to me, but may be true. Keep in mind there is a lot of evidence, which I linked to, that smaller operators also are also clearly benefiting from government subsidies.

Would you argue that larger producers already have so many advantages simply due to their size, such as buying power and other benefits of scale efficiency, that they should not receive any government subsidies, while smaller ones should?

[Wade]

I'm of the perspective that any subsidies hugely affect the publics idea of the value of food. I don't think many understand what food is actually worth...

[mike]

I'm of the perspective that any subsidies hugely affect the publics idea of the value of food. I don't think many understand what food is actually worth...

The best way to understand what food is actually worth is to grow some. We spend a lot of our spare time in spring and summer to grow an amount of food that doesn't even begin to meet the food needs of our family. And that is not totally because it's even economically more sensible to grow our own food. Land and garden tools and farming equipment is expensive, and it would probably make more sense money-wise to just buy the food. But there are still valid reasons to grow food. It's the the freshest you can get, and if you have the land and tools already, the food is practically free.

[PeterG]

Would you argue that larger producers already have so many advantages simply due to their size, such as buying power and other benefits of scale efficiency, that they should not receive any government subsidies, while smaller ones should?

Horrors, no! Subsidies are just bad all the way around.

[steve-in-kville]

The food system in the US isn't really broken, but corrupt. I can tell stories. The FDA and its regulations is definitely against the small manufacturer and caters to the "big boys." I work in the food industry and watch this everyday.