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Tuesday, January 20, 2009 More Reasons to Cut Farm Subsidies By Monica @ 8:02 PM As if we didn't have enough reasons already. But here is a good article from the Cato Institute on some of the perhaps unintended effects of farm subsidies. I've already discussed some of the effects. Here are some more: » Farm subsidies damage the economy. In most industries, market prices balance supply and demand and encourage efficient production. But Congress short-circuits market mechanisms in agriculture. Farm programs cause overproduction, the overuse of marginal farmland, land price inflation and excess borrowing by farm businesses. » Farm programs are prone to fraud and scandal. The Government Accountability Office found that improper farm payments amount to as much as $500 million each year. Since 2000, the government has paid $1.3 billion in subsidies to people who own "farmland" that is not even used for farming. The government also frequently distributes disaster payments to farmers who don't need them and often didn't even ask for them. » Farm subsidies are a serious hurdle to progress on global trade agreements that could help productive U.S. exporters. Agricultural trade barriers also damage U.S. security and global stability because they hinder the ability of poor countries to achieve stronger economic growth. » Farm programs damage the environment. Subsidy programs and trade barriers draw marginal farmland into production and encourage the overuse of fertilizers. Lands that might otherwise be used for parks, forests or wetlands get locked into farm use. Florida sugar cane cultivation, for example, causes substantial damage to the Everglades, yet it thrives only because of import protections. » Some farm programs raise food prices and hurt consumers directly. Federal controls on the dairy industry raise milk prices to consumers. Controls on the sugar industry raise U.S. sugar prices to about twice the world level, pushing up consumer costs for breakfast cereals, chocolate and other food products. » If farm subsidies ended, U.S. agriculture would continue to thrive. Farms would adjust, planting different crops and diversifying their sources of income. A stronger and more innovative agriculture industry would emerge, as occurred in New Zealand after it repealed all its farm subsidies in 1984. Labels: Subsidies, Trade, Why the USDA is Not Your Friend E-mail Monica    PermaLink      0 Comments: Post a Comment Subscribe to Post Comments [Atom] << Home