Two Subsidies Don’t Make a Free Market

The billions of dollars that the federal government doles out in agricultural subsidies each year — most of which go to a few large corporations, influential politicians, and wealthy landowners — do a lot of damage to the economy. The subsidies insulate businesses from the market forces that would, if left unfettered, force them to innovate and improve. They encourage overproduction and irresponsible farming practices: As farmers try to increase their yields in reaction to artificially high crop prices, they expand their farms into less-fertile land that must be blasted with chemicals if it’s to grow anything at all. And the subsidies make it harder for small farmers to enter the market and compete against the corporations that are propped up by price supports and shielded from risk.

Agricultural subsidies are harmful, no doubt about it. But is there a way to mitigate them? Activists say yes. They contend that new laws would counter the subsidies’ damage. To open the agricultural sector to competition, activists suggest — among other ideas — enacting preferential food policies that require school districts to purchase a set percentage of their cafeteria food from local sources. This, it is argued, would take power away from the corporations and undo some of the subsidies’ bad effects.

As much as I oppose subsidizing corporate agriculture, I can’t support the local food mandates. Ordering schools to buy local food is a poor antidote to corporate subsidies, for these reasons:

• There’s nothing to stop corporations from farming near school districts and touting their produce as “local.” Remember, a farm doesn’t have to be small or unsubsidized to count as local; it only has to be nearby. Just as agricultural corporations have stepped up to claim a large share of direct payments and other kinds of farm aid, they’ll also be eager to sell local food — at a premium, because districts won’t have the option to walk away from the sale and buy from businesses located farther away instead.
• Preferential treatment for local farmers could cause as much environmental damage as traditional subsidies. It would lure farmers to grow food near school districts, whether or not the land is suitable for crops. A district’s closest farmer might not always be the most responsible with pesticides and fertilizers. Even if you look around and see that your local farmers are environmentally conscious today, the situation might change when new businesses move in to be near a school district and have a guaranteed customer.
• Local food mandates place an unfair burden on school districts. District administrators didn’t engineer the mess in the agricultural sector, and fixing it shouldn’t be their job, either. They should be free to focus on their main goal — educating children. Let’s not take money that could go toward teachers’ salaries or building repairs and instead use it to pay a higher price for local food, when healthy food is available at a lesser expense from somewhere else.

Local food mandates, by guaranteeing customers for some farmers through public school policy, are themselves a form of subsidy. Neither the market nor the environment will be well served by adding yet another subsidy to the already over-subsidized farming sector. The real solution is to end government aid for agriculture. When farmers are free to compete on their own merits rather than on their political influence, we may see the market change in favor of farmers who were previously overlooked — including, possibly, farmers near your home or school.