Could US farmers go without subsidies?
May 4, 2008 7:36 PM   Subscribe

Could US farmers go without subsidies?

Without subsidies, could farmers in the United States make a profit growing the crops that they currently do? If all farm subsidies were lifted tomorrow, how much crop production would be outsourced?
posted by andythebean to Law & Government (23 answers total) 7 users marked this as a favorite
Most of my dad's side of the family are farmers. I don't know specifics, but they seem to almost lose the farm every year, so I'm guessing the margins aren't that good.

I doubt that much would be outsourced, but the mega farms would buy out the remaining small family farms.
posted by hwyengr at 7:39 PM on May 4, 2008 [1 favorite]

In the short run, no, but in the long run, yes. Here's my wholly speculative version of what I think would happen:

Subsidies go away
Family farmers are driven into bankruptcy
Production falls
food prices rise.
Farmers with resources enough to weather the short-term storm (almost certainly a megacorp) come in and acquire the assets of the bankrupt smaller farmers at rock bottom prices.
Production ramps up again
Prices fall, but not to the level they were before

I don't think there would be much outsourcing, though - that's a pretty tough job to outsource.
posted by deadmessenger at 7:49 PM on May 4, 2008

I don't think there would be much outsourcing, though - that's a pretty tough job to outsource.
I don't think the OP means that the job of working on US farms would literally be outsourced, but that crops would be imported from somewhere else. I don't see what would be hard about that.
posted by peacheater at 7:55 PM on May 4, 2008

Several major crops (e.g., apples, pears, and green beans) are unsubsidized, and they do just fine. Large agricultural corporations have the resources and diversification (both in terms of geography and crops) to weather the end of subsidies. What small family farms are left might not, but they could just shift production away from formerly subsidized crops and into more niche produce. Failing that, subsidies could be limited to true family farms.

So, yes, perhaps some short-term pain for a few, but it could be limited. In the long run it would be better for the US and the world both economically as well as environmentally.
posted by jedicus at 8:08 PM on May 4, 2008 [1 favorite]

The issue isn't short term, despite what others say above. The issue is long term -- that is, year-to-year security.

* Good weather give you a good harvest this year? Kick ass! Food is plentiful and cheap.
* Bad weather ruin the crop? Suck balls. Food is expensive and what's more, the farmer is out of business.

That being said, U.S. federal management of agriculture is absurd. There's only about 300,000 real farms in the U.S. -- and by real farms, I mean, they're farming a cash crop, not some hippie commune or victory garden. Yet there's about 100,000 employees of the Department of Agriculture. It'd probably be better if we sent half of them around to the farms themselves doing tractor maintenance, rather than paying for them to sit in an office and do whatever it is they pretend they're doing.
posted by Cool Papa Bell at 8:23 PM on May 4, 2008 [4 favorites]

Response by poster: I'd love if anyone could find stats, studies, or other data about what and how many crops would likely be grown in other parts of the world if US subsidies were lifted.
posted by andythebean at 8:41 PM on May 4, 2008

Well, if the subsidies disappeared and were replaced by nothing? That would be pretty bad in the short- and medium-term, obviously. Long-term, I dunno.

Incidentally, the documentary King Corn is available on NetFlix streaming. It talks a lot about corn subsidies, though I'm not sure it directly answers your question.
posted by meta_eli at 8:45 PM on May 4, 2008

They would be fine.

American farms are highly productive.

In the two most unprotected agriculture countries in the developed world, Australia and New Zealand there are still plenty of farms and a lot of production.

Even European farmers would get along without massive EU subsidies. Some would go bankrupt, there would be a lot of conglomeration of farms, but it would work.

Japanese farmers probably couldn't get along without their subsidies, but even there it'd probably be surprising.

The subsidies Americans pay to make their sugar expensive and their corn cheap are ludicrous.
posted by sien at 8:51 PM on May 4, 2008 [1 favorite]

In my country (New Zealand) we removed all agricultural subsidies in 1984. What happened afterwards was more or less what deadmessenger says, BUT without the megacorps buying farms - probably because the farmers still sold through a co-operative single seller which effectively spread the load of marketing and distribution. It was harrowing for rural people at the time. There were suicides. But most farmers did make it through. There's been a long term shift away from meat to dairying, which is more profitable, and some diversification into horticulture, exotic crops and animals. "Megacorps" are starting to move in now, mind, but that's 20 odd years later.

We're a net food exporter though, that's how our economy works, so I'm not sure that things would go the same way in the US.
posted by i_am_joe's_spleen at 8:51 PM on May 4, 2008 [1 favorite]

Subsidies for farms have less to do with the market price of farm commodities and more with the idea that family farming and agrarian society is worth protecting. I mean these are commodities we are talking about. There is a futures market and there are complex instruments to help deal with year to year volatility. France is somewhat infamous for supporting industries which build to what it is perceived as its natural character. Once in awhile I'll hear a story about some cheese maker being subsidized because they are making the last kind of cheese in their pay, or something like that. This is more or less what we do.
posted by geoff. at 9:11 PM on May 4, 2008 [1 favorite]

This is more or less what we do

No, it isn't - at least that's what I've been reading recently.

Originally US agriculture subsidies were seen as a way of protecting the national food supply in case war or other world events forced the country to rely on its own resources. Later, it has become a way for agribusiness to siphon taxpayer money into private hands. While it is marketed to the taxpayer as a way to protect family farms, this is far from the reality, and family farmers do not receive the majority of subsidies. (My source on this is Michael Pollan's Omnivore's Dilemma, which I don't have to hand but which goes over this in some detail).
posted by i_am_joe's_spleen at 9:29 PM on May 4, 2008

I hope no one still believes these subsidies are protecting family farming, small farmers, or the agrarian way of life. Even my subsidy-mongering professors from the Corn Growers association have stopped sprouting that lie.

I work with small to medium size farmers and none of them, from dairy to sweet potatoes to apples, gets subsidies. In fact, most of the really large farmers I've dealt with, who grow actual food instead of industrial corn, don't get anything.

Farm subsidies make it hard to shift to new markets or for new farmers to start out, since they impose restrictions on land and increase land prices.

If you removed all distortions, from subsidies to tariffs, some prices would increase (corn), but others would decrease (sugar). We'd import more of certain things, and less of others. We'd have a lower tax bill.

In most cases, subsidies do nothing to stop consolidation. The best hope for small farmers are private distribution cooperatives like Organic Valley. Thankfully, they are growing.

If you want to know predicted effects, you'd have to sift through all the gajillion programs from ethanol subsidies to sugar tariffs and posit what would happen.
posted by melissam at 9:42 PM on May 4, 2008 [6 favorites]

There are a lot of misconceptions about subsidies and who gets them in this thread.

We often see the near-impoverished, mortgaged-to-the-hilt "family farm" held up as the example of what subsidies are meant to protect. In fact, the subsidies are there to protect big agribusiness and export crops. The types of farms that grow most food other than corn - for instance, produce like fruit and vegetables - generally receive no government subsidies or only certain amounts through specific grant programs and initiatives. The "family farm" is invoked to play on the emotions and the general support for small-scale farming in the U.S. Small-scale farms, at present, depend on market price for their produce without the price-floor guarantee that subsidies represent.

The vast bulk - 90% or so - of subsidy money goes to growers of "the big 5": corn (feed corn), wheat, rice, soy, and cotton. The meat, dairy, and produce you eat is not usually supported by subsidy programs. Instead, the farmers who produce those direct-to-consumer products end up footing the bill for the feed ingredients they need for livestock -- the commodity grower has the price floor as a buffer, but the produce/livestock farmer does not -- and at the same time, the food farmer is competing for fertilizer and other resources with subsidized farms who have more disposable cash, meaning a higher price for the consumer in the end. Subsidies are not a friend to smaller-scale, food farmers - probably what most people think of when they think "family farm."

One effect of eliminating subsidies would be to discourage the growth of large-scale farms, since there would be less incentive to acquire the acreage to grow internationally traded commodities like the big 5. Farms would find that their markets changed: rather than growing food to the degree of surplus for world markets, artificially driving crop prices down worldwide, they would have an incentive to focus on local and regional markets and to re-develop the capacity to grow crops that are seasonal and locally desired, or to exchange with other regions within our borders.

The subsidies are coming out of taxpayer pockets, so the public funds the present system, creating a hidden cost. If subsidies were dropped, this funding could be made available in a variety of ways: to subsidize individual consumers' purchases, to create grant programs enabling safer practices for workers and the environment, to rebuild regional food systems so natural disaster or attacks on the transportation infrastructure or fuel prices would be less likely to devastate a region's food supply. The funds could be distributed more equitably and with more direct impact on people who eat food in this country.

Because the US has been wrangling over the 2007 Farm & Food Bill for a while, there is a lot of information easily accessible and understandable all over the web. Google around.
posted by Miko at 9:47 PM on May 4, 2008 [7 favorites]

Response by poster: Thank you all so much for all the offered information. Having read The Omnivore's Dilemma and Free Lunch among other sources, I am aware of the nature of current subsidies: Money goes from tax-payers largely to big corporations while the programs are being sold as help for small family farms.

Melissam said:
If you want to know predicted effects, you'd have to sift through all the gajillion programs from ethanol subsidies to sugar tariffs and posit what would happen.

Has any person/institute/governmental body etc tried to do this?
posted by andythebean at 10:01 PM on May 4, 2008

It's quite brief, but The Economist ran this piece that talks somewhat about some of the other issues surrounding farming (tariffs, etc.)
posted by !Jim at 10:22 PM on May 4, 2008

I think the answer to your second question is no.

What people miss when they talk about what crops don't get direct subsidies is that the current program gives, say apple growers, subsidies in the form of decreased competition. Iowa used to be one of the biggest apple-growing states. Now it's barely on the radar. Corn and soybean subsidies took a lot of the risk out of that sector, so farmer across the Midwest stopped growing fruit in favor of corn (as mentioned by Miko above). This opened a huge market for farmers without decent corn-growing climates or soils to provide fruit to the rest of the country. If you took subsidies away, there would be some farms going under in the Midwest, but there would probably also be diversification of crops. Farmers in some of the now-traditional fruit growing regions would also feel the knock-on effects of Midwestern farmers planting strawberries, apples, and pears on a large scale.

The ethanol movement might cloud things a little, but if you remove the subsidies to corn-based ethanol too, there wouldn't be much call for it (what with switchgrass and algae seeming to be more efficient and cheaper).
posted by the christopher hundreds at 10:23 PM on May 4, 2008

It might be worth also looking at Canada, which I think has less subsidies than the US (please correct me if I'm wrong).
posted by sien at 10:25 PM on May 4, 2008

The Environmental Working Group are heavily interested in this and have lots of hard numbers about where the money goes and who gets it and for what.

They've been using FIA requests to get, and put online, complete information about it every year. By "complete" I mean a listing of every single check, how much it's for, and who received it.
posted by Class Goat at 10:46 PM on May 4, 2008

If you want to know predicted effects, you'd have to sift through all the gajillion programs from ethanol subsidies to sugar tariffs and posit what would happen.

Has any person/institute/governmental body etc tried to do this?

I'd look at the Environmental Working Group's site. Maybe some conservative think-tank too. The classes I took used a hand full of textbooks from Ag and Food Policy (terrible book, unless you can get it cheap or somehow get the 4th ed.) to International Trade and Ag. All contained examples of policies and diagrams of traditional economic theory showing their effects and what would happen without them.

There are also plenty of economic papers on the subject you can find in google scholar.
posted by melissam at 10:47 PM on May 4, 2008

Some more:

Farm and Food Policy Project
Food First
Gristmill is good for news, updates, and links to reports
posted by Miko at 6:25 AM on May 5, 2008 [1 favorite]

Thank you, Miko!

Other relevant blogs:

The Blog for Rural America
posted by stet at 8:24 AM on May 5, 2008

Response by poster: Thanks all! These will prove most useful. :)
posted by andythebean at 9:37 AM on May 5, 2008

Really good series of articles from the Washinton Post.
posted by vegetableagony at 4:17 PM on May 12, 2008

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