Agriculture subsidies: threat or menace?

http://www.aei.org/docLib/20070515_OverviewFinal.pdf

An interesting analysis of agriculture "policy." Any comments on the facts, analysis, and conclusions? It seems pretty sensible to me, but I admit that I have a natural aversion to Big Brother manipulating the food supply.

I've only skimmed. It seems sensible. Current Ag policy is about as stupid as it gets, so almost any change would be an improvement.

[Robin Garr]

Big Brother manipulating the food supply.

Well, there's no better way to deep-six a potentially intelligent discussion than by polarizing the issue on either side of the aisle.

In farm policy as in just about every other form of regulation, there's a wide spread of possible policy - some of it quite reasonable - between Stalinist collectivism on the one extreme and The Grapes of Wrath on the other.

It would by nice, but impossible, if the government could monitor prices by crop and add or subtract subsidies as needed. For example, corn does not need a subsidy right now.

Robin, I'm heartened by your trust in the same people that brought you... well, everything you're against.

That notwithstanding, let me ask you seriously what you think is right and what you think is wrong with current policy, in general terms (I'm not interested in a program by program dissection, but rather an overall philosophy).

It would by nice, but impossible, if the government could monitor prices by crop and add or subtract subsidies as needed.

Well, I definitely see the "but impossible" part of this!

[Robin Garr]

Robin, I'm heartened by your trust in the same people that brought you... well, everything you're against.

That notwithstanding, let me ask you seriously what you think is right and what you think is wrong with current policy, in general terms (I'm not interested in a program by program dissection, but rather an overall philosophy).

I could have answered this question a lot more intelligently about 15 years ago when I was working in related fields.

On the whole, though, I'll stick with liberal shibboleths: I think that when the Eisenhower Administration under Ag Sec Ezra Taft Benson decided to shift policy in the general direction of agribusiness for macroeconomic benefit, they underestimated the impact of this policy on small farms and farm towns.

I'm not smart enough to know what they could have done different, but a degree of protectionism for smaller businesses - or a bit more skepticism about vertical integration of the meat and grain industries - might have allowed an agricultural policy with room in it for ConAgra AND Farmer Jones.

I understand that many people say that if Farmer Jones was too stupid to compete, he deserves his current place in a homeless shelter in a Seattle Skid Row. But I'd like to think that policy-makers could come up with smarter solutions than that.

I understand that many people say that if Farmer Jones was too stupid to compete, he deserves his current place in a homeless shelter in a Seattle Skid Row.

I see they taught you the False Dichotomy in J-school. Do you really think Farmer Jones had only one other option? There was NOTHING else he could do except end up in the workhouses?

Agribusiness has done much of its market takeover because of subsidy policies, not in spite of them. There's a reason that Bob Dole was called "The Senator from ADM." I find it interesting that there are far more artisinal producers today than years ago, despite government inhibition (try growing some peanuts!). The sectors that have been dominated by conglomerates are commodity ones, where their economy of scale cannot be denied. The alternative is something protectionist which will certainly make staples more expensive for the poor.

I think that if Farmer Jones, Jr, was a little more flexible than the Old Man, he'd have traded his 1,000 acres in South Dakota for a 10 acre arugula and Heirloom tomato patch in a more hospitable clime. Weep because, "We've always been wheat people and now we have to grow these damn yuppie vegetables" not because, "There are simply no agricultural opportunities suitable for family farming." That's not as dramatic an image as the Skid Row bum, I'm afraid, but indeed, as one part of the market goes away, other parts open. Unless our betters have already decided for us that there can't be any more peanut farms.

sheesh; there are way too many issues here. but conservatives are usually pro family. so what is with the 'more flexible' and 'more to a more hospitable clime'. move from your family and friends. move from your culture. this sort of thing may be good for the 'economy' as if that were the only important thing; but it certainly isn't good for people and families and stability and traditional values. just like the authors of that article, stuart can't think about human behavior and interaction except in 'market' terms. we MUST behave in whatever way the market dictates. or die.

So you'd subsidize the auto industry, too? Because people who have put generations into GM ought not to have to find other work, and we tax everyone to support the bad decisions of GM's management?

My second question is entry. If a price support or subsidy is lucrative, how do we bar everyone who wants a subsidy from jumping in? Do we make it a guild or closed shop so that, "If your family is in the biz, you've got a guaranteed spot for life, if not, go pound sand?" Or is there someone (inevitably in the pocket of lobbyists) who decides exactly how much wheat, soy, and corn needs to be grown, where, and who should be allowed to do it? Can you see a potential problem with that?

one issue at a time, please. we started with agriculture - not a situation where corporate people made decisions that affected tens of thousands of employees. in addition i am certain that someone as smart as you could solve the entry problem. absolutely certain.

Yes, no subsidies and no restrictions on competition.

But I didn't think you'd like that answer.

no, the issue was 'if we have subsidies can we solve the entry problem'. yours isn't an answer to THAT question.

Some amount of subsidy, restriction, and protectionism is helpful. (IMNSHO, a small amount, but not zero.)

Wide-open capitalism makes a few too many casualties.

With respect to subsidies, I see nothing wrong with asking "How much is it going to cost? Who is going to pay? Who benefits? Who suffers?" If those questions were answered honestly and without the usual emotional baggage, I think we would see many fewer subsidies. Nothing is free.

I have mixed feelings about the issue. There may be a good historical basis for using subsidies to encourage a stable, reliable agricultural industry in the face of seasonal or climatic uncertainties, as well as unpredictable markets. As science and economies of scale took hold, these incentives have given way to politcal, such as protecting family farms or biding the will of big factory farm lobbyists.

There is a strategic need to maintain the viability of a self-sustainable food supply. I would not want our nation to put our food supply to the unpredictability and possible manipulatability of global markets. To this end, I would support government interventions in large-scale industrial farming only to protect self-sufficiency.

I think that we need to encourage the sustainability of smaller-scale, decentralized agriculture. Whether this is accomplished though subsidy or tax advantages or low interest loans is a tactical matter. This is partly as a hedge against energy/transport costs and partly as a way to enhance biodiversity of our food supply, both of which are scientifically defensible motivations for this type of intervention in the marketplace.

The problem I have with free market ideologues is that they put irrational faith in the marketplace to arrive at strategically preferred solutions, usually without a reasonable cause-effect basis. In fact, the market has shown itself to be incapable of responding to global or national crisis for a number of reasons, not the least of which is the risk associated with supply getting too far in front of demand - and demand not being able to change quickly enough to target the most viable solutions to a crisis.

In other words, macroeconomic momentum creates latency in the marketplace that hinders rapid response to crisis without governmental interference. Therefore, I support government agricultural support to move the supply side to a more sustainable, delocalized, more energy efficient supply. It does not mean there should be a free for all susbsidy grabbag, but a nuanced set of programs that help small producers get established, stay on their feet, turn a profit and repay their loans.