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State and Local Government / Transparency

The Federal Farmer’s Market?

By Christine Harbin on Sep 29, 2009

As the saying goes, if all of the world’s economists were laid end to end, they wouldn’t reach a conclusion.

Unless, of course, the topic of discussion is federal agricultural subsidy programs. Economists largely agree that agricultural subsidies negatively affect practically everyone except for the farmers who receive them. On Sunday, John Combest linked to an article in the Lebanon Daily Record on this subject.

The program described therein would reward farmers for producing products that consumers don’t want, and then it would give them an incentive to produce even more. In the status quo, there is already a low demand for these products. By shifting the supply curve to the right, these subsidies would drive the quantity of demand even lower. The program’s solution, apparently, is to give the product away for free:

Another point of the program outlined by Hagler would allow those who receive food assistance through the Electronic Benefits Transfer program to receive additional funds each month for the exclusive purchase of meat, milk or dairy products.

This, of course, would be underwritten by taxpayers, at artificially inflated prices.

The agricultural industry already receives a tremendous amount of federal assistance. According to the Environmental Working Group, the USDA awarded $177.6 billion in subsidies between 1995 and 2006. By itself, the dairy industry received $3.6 billion during this period.

Instead of lobbying their friends in Washington for more money, perhaps the farmers’ time would be better spent improving their operations or determining what consumers actually want.

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Christine Harbin

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