Explain to me concept of Agriculture Subsidies, Libs/Cons chime in with pro-cons too

[outrun]

Okay I have a very weak understanding of farm subsidies...most of my reading is foreign and security policy.

I know its a big deal in the european union with there common agricultural policy.

Also here in the states its a big political powder keg numering in the billions$$

Obviously, i know both domestically and internationally subsidies have something to do with market price stability or something.

Can you explain the reasoning and chime in for and against farm subsidies?

 

[jthorner]

Personally I feel that they are completely unjustified and are nothing but vote buying. There are lots of Senate seats and Electoral College delegates to be had in farming heavy states and regions.

John

 

[labman]

Agricultural subsidies are a big distortion of our economy and of other nations and world trade. True liberals hate them because they are socialism for the rich. Most of the money ends up, not in the pockets of the family farmers, but large agribusinesses. True conservatives hate them because they are government intervention distorting the economy. The taxpaying consumer takes it both ways in the ear, higher prices and higher taxes. The sugar subsidy/import quota system has created a few very rich families, while holding sugar prices in America above the world market price. Forbes magazine has denounced it, and I am sure some liberal ones I don't read have too. Blame it on Bush, Clinton, the first Bush, Reagan, Carter, Ford, Nixon, Johnson, and I don't remember how far back. Neither party has done anything about it even when they held the presidency and both houses of congress.

 

[Pablo]

quote:

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Explain to me concept of Agriculture Subsidies

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They can't be explained. THAT's the problem!!

But it really isn't a USA only problem. To me it's a form of protectionism, honed to a razor blade. It doesn't just involve cash (for not growing) crops. Japanese rice farmers hold a popular cartel. Danish pig farmers have an outlet in the USA (I'm sure they do like a strong dollar).

In simple form if a farm commodity X = $1/#, some magic government formula says the price of X really should be $1+Z/# so the "farmer" gets Z...via cash, tax incentives, crop size limits, import barriers, etc..

I'm no expert on the subject matter and I'm not for killing off our farms, but some of these should just be eliminated by popular revolt...

 

[TooManyWheels]

Horner, Labman and Pablo have captured the essence of it. The only possible good thing to say about them is that rather than have our food produced by a cheaper foreign country we retain control of the production, and are not in a situation such as we are with oil. However if we were truly worried about that, we could take an oil related approach and have the Strategic Rice and Bean Reserve.

Dr. Deming's take on them was "If subsidies make sense, then why don't we pay automakers not to produce cars?"

[ June 08, 2004, 08:32 AM: Message edited by: TooManyWheels ]

 

[Gary Allan]

I agree with the "banana and sugar baron" effect. Not only do we pay for this ...so does every other nation. That is one of the big complaints. We're so good at growing so much food at such a falsely low price that many third world nations can't effectively feed themselves or compete...further taxing their struggling economies with more revenue outflow or lack of viable exports.

Aside from money and jobs..I think food is our biggest export.

 

[davidfarming]

In 1974, wheat sold for $3.25/bushel. Today, wheat is selling for $3.47/bushel. A good tractor 30 years ago cost around $30-50,000. Today, a tractor cost around $150,000. If it were not because of family, I would get out.

 

[Shannow]

It's not a way to run a so called competetive economy.

Interesting article in New Scientist a few months ago showing how subsidies on cotton and grains were effectively stopping third world farmers getting a foot up by being able to produce goods for profit rather than subsistance. Also went on to how eliminating subsidies and tarrifs would reduce the requirement for rich countries to provide economic aid, as they would have an income stream.

I don't get how Australia subsidises cotton and rice growers in what is about the driest place on Earth. These subsidies are generally in the form of huge allocations of water, something that we can scarcely make ends meet with as it is.

 

[Gary Allan]

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Also went on to how eliminating subsidies and tarrifs would reduce the requirement for rich countries to provide economic aid, as they would have an income stream.

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You've got to look at a lot of that foreign "aid". A good bit of it is in the form of "conditional" aid. Typically, under the somewhat realistic pretence of "limiting corruption", a US "consultant" must be attached to such aid. This may require $10,000 a month to be paid to the consultant.

This is also how many of the "loans" that are masked as "aid" work as well. Many are merely "trade credits" and the nation just pays the interest on the "loan".

If you have access to it and can find it ...rent the movie "The Ugly American".

 

[Bob Woods]

http://www.ewg.org/farm/ is a good place to start reading.............

 

[JohnnyO]

It's a little hard without a blackboard, but here goes. Think microeconomics. Now then, if all farmers have a good year and good weather the bushel price of soybeans, wheat, etc. will drop because supply is UP. Therefore, they will sell more crops at a lower market price. #bushels x price = farmers' $. It is very possible that the market price can drop below the cost of production because of the so-called bumper crop and INCREASED cost of harvesting, etc. If farmers produce less, either from crappy weather or the govt telling them not to grow so much of something, then the reduced supply will lead to a higher per bushel price, theoretically. Less #bushels x higher price = same overall revenue (maybe), however the farmers' costs MAY be lower. Subsidies are basically a way to pay the farmers and agribusineses for not growing stuff and to fill in the gap. Subsidies and price supports (like minumum milk prices) are different sides of the same coin. The farmers' problem is that they plant a given amount of stuff at a certain cost without necessarily knowing how much will be sold at what price in the end. I'm not saying I agree with all of what I just said, but that's the theory behind it as I understand from one of my economics professors way back in the day who was a part-time professor and full-time farmer.