Farm subsidies have never made any sense. Despite almost a century of entrenchment, this remains as true today as it ever was — and I will show you specifically how: how and why, I should say, the subsidization of agriculture devastates the vital, beautiful industry of farming and agriculture.
My notions are not just theory. The world has plenty of examples — including the United States, in times and in sectors when and where it’s been left free — but here are two of the recent examples outside the United States:
In New Zealand, farms were liberated from state interference following an agricultural crisis back in the 1980s. Farmers were left without subsidies after the market reforms, ultimately resulting in Kiwi agriculture booming into one of the most diverse and efficient markets in the world.
Not only were prices decreased, but previously ignored sectors popped up as well — including the now-booming New Zealand wine industry.
In Australia, it’s much the same story.
Like New Zealand, Aussie farmers are among the world’s least subsidized. Also like New Zealand, the Australian agricultural economy is diverse and efficient, resulting in the gross value of production in that sector reaching record levels this year at AU$62.8 billion.
Seeing how unsubsidized farmers flourish down south, one is forced to question why we stick with protectionism in Europe and the US.
Implementing protectionist principles in the agricultural sector raises prices for consumers, promotes overproduction, damages developing economies, and lowers efficiency and innovation.
On the other hand, free farming results in diversification, growth, and efficiency. Consumers pay less for better products, and healthier foods are more readily available. Diversification also leads to new markets and sectors, resulting in a higher availability of jobs.
Let’s stop pretending that agricultural protectionism helps anybody — especially the poor and working class. Europe and the US need to follow in our Southern Hemisphere cousins’ footsteps: Free the farms, and feed the poor.
Did you know that the federal government of the U.S. spends more than twenty-billion dollars annually on subsidies for farm businesses?
Roughly forty percent of the nation’s 2.1 million farms receive subsidies, the overwhelming majority of that money, however, going to the large government-crony producers of corn, soybeans, wheat, cotton, and rice.
Federal aid for crop farmers is deep, complex, and comprehensive — dating back to at least 1862, when the Morrill Act of established the land-grant colleges to teach agriculture and other subjects.
The Hatch Act of 1887 funded agricultural research, and the Smith-Lever Act of 1914 funded agricultural education.
The Federal Farm Loan Act of 1916 created cooperative banks to provide loans to farmers, which in-and-of-itself is no big deal, but that developed into today’s Farm Credit System — a thoroughly government-sponsored financial system with more than $280 billion in assets.
Also, “the Agricultural Marketing Act of 1929 created the Federal Farm Board, which tried to raise crop prices by buying up and stockpiling production. That did not work, and after spending $500 million this early agricultural boondoggle was abolished in 1933.”
And yet it was during the Great Depression of 1930s and FDR’s disastrous policies that the socialization of agriculture really began in earnest and included wage-and-price controls, commodity price supports, supply regulations, import barriers, and much more. And this, not coincidentally, is when farming conditions started to become horrific.
Among numerous other things, all this taxpayer money shields farmers against price-and-market fluctuations and seasonal yields, as it also funds their insurance coverage, marketing, export sales, research (however whimsical), and other activities.
Agriculture is no more (or less) risky than any number of other industries, and, like all other industries, it does NOT require a complicated maze of government subsidies and regulations.
United States farm subsidies are promoted as “saving family farms and protecting the food supply,” but in actuality, in terms of sheer numbers of dollars spent, they’re America’s largest crony-corporate welfare program in existence, surpassing even healthcare.
These subsidies also burden American families with higher taxes and higher food prices.
Yes, I know: farm subsidies are intended to alleviate farmer poverty, but I know also that the majority of subsidies go to commercial farms with individual net worths of nearly $2 million.
Most damaging of all is not how undeniably costly farm subsidies are to taxpayers, but in how these subsidies harm the economy and the environment and diversity of food:
Subsidies and socialization discourage farmers from innovating, cutting costs, diversifying their land use, and taking other actions needed to prosper in a vibrant, competitive economy.
Laissez-faire market forces, on the other hand, as with all other goods and services, create a food-and-agricultural sector that is free to diversify and flourish when left alone, as it has and does in New Zealand, for instance. This, in turn, results in readily available, inexpensive food for all.
The problems, as usual, only come when the state gets involved — the state, that “coldest of all cold monsters, which bites with stolen teeth.”
Agricultural protectionism comes in many shapes, sizes, and forms. Farm subsidies are the most common, and they almost invariably result in overproduction and waste, but there are plenty of others:
Tariff and nontariff barriers to foreign entry are also common and aim to prevent farmers from foreign countries from providing cheaper products and undercutting local producers (ironically almost exactly what subsidized farmers do after overproducing).
Blocking foreign competition, however, usually results in higher prices for agricultural goods due to a lack of competition. As a result, consumers in protected economies usually wind up paying more for foodstuffs than if the market were free.
There’s even evidence that subsidies contribute to obesity. In the United States, the majority of farm subsidies go to crops like corn, wheat, and soy — primarily used as food for livestock and as sweeteners — whereas subsidies for fruit fall far shorter.
As a result, unhealthy foods have their prices artificially lowered while the healthy stuff stays expensive. Thus, poorer members of society are not only made to pay more, but they often have to [to some extent] forgo a healthy diet to do so.
My point is the usual point — the eternal point:
It’s government that creates the problems to begin with and then the “free-market” (that doesn’t actually exist) is the one blamed so that deeper government controls can then be demanded, and then the problems worsen, and the cycle begins anew, et cetera ad infinitum.
And so it goes.
My point is this:
“Let it be and let goods pass: the world goes by itself.”
Human society contains within itself the capacity for ordering and managing its own path of development, without that monstrous apparatus which democrats and republicans alike love so much:
“Government is solely an instrument or mechanism of appropriation, prohibition, compulsion, and extinction; in the nature of things it can be nothing else, and can operate to no other end….” (Isabel Paterson, The God of the Machine, 1943).
Because one of the greatest ironies of agricultural-socialization-versus-laissez-faire is that some of the loudest voices calling for more and ever more and ever bigger government are also some of the loudest lamenters of the horrible farming and agriculture conditions which have been created by the very big government they’re calling for MORE of.
It is at this point beyond all rational argument that FDR’s policies of unadulterated socialism wrecked farming for decades and decades which have stretched into the present day.
As Jeffrey Tucker once put it: we should all be more conscious of the cause-and-effect relationships operating in the world of human action, which give rise to the unbelievably elegant order of that thing called the free economy: an order, as he said, “fueled by human choices, entrepreneurship, relentless learning, experimenting, imitating, copying, private property, and the freedom to trade; for these are the institutions bestowing miracles on us ever day. We also need to be aware of its opposite, the gargantuan apparatus of compulsion and coercion called the state that operates on principles that are anachronistic to the core. Its principle is violence, and its contributions to the social order are prisons, economic upheaval, and war. It is lumbering, stupid, and angry as hell, and it is the main drag on the world today. The contrast with laissez-faire is overwhelming.”