End Farm Subsidies
That is the opinion of Dean Kleckner, who headed the American Farm Bureau for 14 years. In his role with the biggest farm lobby he used to support the subsidies. He has had a major change of heart. As he points out, the US has lost yet another case in front of the World Trade Organization over farm subsidies. The rules of that organization now make it possible for Brazil to impose higher tariffs against American goods other than agricultural products. Mexico and Canada are gearing up to file their own complaints. It doesn't have to be this way.
I know all about subsidies. For years, I took them myself for my corn and soybean farm. I didn’t really enjoy it, but they were available and I rationalized my participation: Other industries received payments and tax breaks — why shouldn’t I? In addition, I spent 14 years as the head of the American Farm Bureau, the leading farmers’ lobby and a prime player in the creation of the subsidy system.
In the 1990s, however, a trip to New Zealand made me realize that eliminating subsidies was not just a free-market fantasy, but rather a policy that could work in an advanced industrial nation. New Zealanders had stopped subsidizing their farmers, cold turkey, in 1984. The transition was controversial and not without its rough spots, yet it succeeded. On that visit and several later ones, I never met a farmer who wanted to go back to subsidies.
Today, it’s obvious that we need to transform our public support for farmers. Many of our current subsidies inhibit trade because of their link to commodity prices. By promising to cover losses, the government insulates farmers from market signals that normally would encourage sensible, long-term decisions about what to grow and where to grow it. There’s something fundamentally perverse about a system that has farmers hoping for low prices at harvest time — it’s like praying for bad weather. But that’s precisely what happens, because those low prices mean bigger checks from Washington.
The Washington Post ran a series of articles that savaged the farm subsidies late last year. John Stossel has written about it. But those articles all focused on the payments themselves. Kleckner points out that the subsidies to farmers also end up damaging other sectors of the American economy when aggrieved countries impose punitive tariffs on other products. This is a classic lose-lose scenario all the way around. Prices are skyrocketing - why are American taxpayers being forced to hand money over to farmers?
By feeblemind, Monday, 15 October , 2007 @ 6:58 am
Subsidy payments will be way down this year. There will be no LDP (loan deficiency payments) or countercyclical payments. There will still be a payment on base acres, but that is a small percentage of the total. Of course the CRP (Conservation reserve program) goes on, paying landowners not to farm their land. Millions of acres there. Those payments will have to go up or those acres will come back into production as contracts expire. Be interesting to see what the Government does.
By sam, Monday, 15 October , 2007 @ 11:32 am
I have always hoped that farm subsidies would eventually go away, but have been continually disappointed. I was also hoping that the bio-fuel boom would lift commodity prices like corn or soybeans enough to reduce the perceived need for subsidies. That doesn’t seem to be the case so far. Mostly it has led to griping about high tortilla prices.