and do we still destroy food to manipulate market prices, like in Steinbeck’s In Dubious Battle?
Yes.
and I don’t think we have to do that anymore…the price is manipulated w/o the need to destroy anything.
Yes, and no… we actually pay the farmers not to grow food with the intent of keeping the supply lower than it might be- that way we don’t have to destroy the surplus to keep prices higher. Or at least that’s the way they’ve explained it in the economics courses I’ve taken.
This isn’t as evil as it sounds- if every farmer grew as much as they could, the supply would be huge, and prices would drop through the floor. This would benefit consumers, but would drive many farmers out of business due to an inability to grow and sell enough to make ends meet at such low prices. This goes for the whole world- US farmers could essentially wreck the world price for wheat, corn or rice and wipe out lots of farmers in other countries (except the EU, where they subsidize like crazy because their farmers aren’t anywhere near competitive).
So how do I become one of these farmers who get paid for not farming?
All you have to do is invest a couple million in land and equipment.
Was that TIC? The US has one of the highest overall farm subsidy rates in the world due to inefficiency.
In all seriousness, there’s recently been in the news here a rather interesting study.
The Farm Crisis, Bigger Farms, and the Myths of “Competition” and “Efficiency” (warning - large pdf file)
While the study is from an undeniably biased source, the National Farmer’s Union, its central argument is straight out of econ 101. Namely, that the intense competition amongst the many, many farmers, and the near non-existent competition between the ADM’s and Cargills of the word have led to the latter having enough market power to swallow up any efficiency gains made by farmers. The study does focus on the Canadian situation, naturally, but my understanding of the US system is that it is essentially similar, but with the agribusiness multinationals sucking out even more profit from the agriculture subsidies.
To my knowledge, farmers are not paid not to grow food in the US or Canada. Current subsidies all favour higher production, not lower.
So why not subsidize cobblers?
“Cause we don’t eat shoes”
No, really.
I didn’t deny that we don’t, but the EU certainly is higher. According to this article in the Hindu Business Line: “On a per hectare basis the producer support estimate in the EU is more than euro 700 and in the US around $125 in 2001.”, so even if you double the $125, like the 2002 Farm Bill would, it’s still 700 euros to $250 per hectare, almost 3 to 1 more for the EU subsidies.
This is way too complex to ever be addressed in a message board. When you say “pay not to grow food” you probably mean the old “soil bank” program which is not in effect anymore. This paid farmers to keep land out of production.
However, there are other programs which impact the amount of a certain commodity a farmer grows. When there is a direct subsidy (price support) allotments are established to control how much a farmer can grow and still qualify for the price supports. This was very widespread but now is mostly limited to certain crops where the US is not competitive with the rest of the world. Sugar and cotton come to mind. Allotments work in conjunction with import limitations and tariffs. Farmers aren’t directly paid not to produce, they just aren’t subsidized if they produce too much.
The system can apply to a lot of other products, including corn, soybeans, etc. but US producers are generally competitive with world producers on a lot of products so there isn’t a lot of control.
To make it more confusing, there are also various environmental programs which will compensate farmers for taking certain land, such as wetlands, out of production. There is a big push to take more of Florida’s sugar growing areas out of production and return it to the Everglades since sugar isn’t competitive anyway.
So, I think the real answer is “yes and no”.
If I’m not growing anything, why do I need land and equipment? Where’s my money? 
It’s worse than you imagine. I have a friend that bought farmland to build a house on. It was around 25 acres, quite a bit woods, but also some that used to be farmed. She and her husband got paid by the government to not grow crops on some of their land. They were never farmers.
She knew better than to even talk to me about it, it made me so mad.
Here is searchable database of U.S. farm subsidies. You can look up individuals, company names, zip codes, states, etc. and see how much the government pays individual farmers or companies.
However, I don’t believe it separates payments by type; that is, for not growing something or just agricultural financial assistance lumped together. According to that site’s FAQ, it shows
I’m no economist, but if you take subsidies away, farmers then overproduce, prices then fall, some go out of business and then should the market stabalize?
I think the true source for subsidies today is the “simple” politics of winning votes and caving to lobbyists.
Why doesn’t anyone pay me to not write software? We seem to have an overabundance of IT professionals right now. Maybe us IT guys should start a Washington D.C. lobbying group.
I just get irked when the government subsidizes an industry year in and year out. Why do certain professions get special treatment in this area?
Two conerns about this. One is that if the market won’t stabilize. Agriculture is an inherently cyclic industry. Weather, disease, changing technology, etc. all contribute to mean that crop production won’t be the same from year to year. As a result, some farmers overproduce and some underproduce in any given year. Take away the protection of subsidies, and more farmers will go bankrupt more quickly.
The second concern is what happens to the land after the farmer goes bankrupt. In a classic economic model, other producers step in and increase production.
But in the U.S., Europe and many other countries, marginal farmland is being converted to conserfation uses (wetlands, forests, etc.) and good land is being urbanized. Thus, when a farm fails, its basic production unit (the land) is often sold and converted to a non-farm use.
Once enough of that happens, a country loses its capacity to feed itself. In the U.S. and Canada, this is seldom considered a problem, because the remaining capacity is so large. However, European countries experienced food shortages during World War II, when they were not able to import food. European countries want to have at least a symbolic self-sufficiency in food production, and there is a very strong pro-subsidy lobby in many of those countries.
If country A subsidizes an industry, then country B will feel compelled to, to remain competitive.
For a classic example of what can happen when subsidies are ended abruptly, I suggest looking at when the U.S. sugar subsidy program was allowed to expire in the 1970s. Foreign producers took advantage of the suddenly free market to rush in huge amounts of (subsidized) sugar, lowering the price. Many U.S. producers (particularly sugar beet producers in the northern states) could not compete and went out of business. At that point, remaining sugar producers raised prices. The retail price of surgar, as well as the cost of sugar in processed foods, roller-coasted down and up. Within a few years, the U.S. Congress reinstated a sugar subsidy program and prices stabilized.
It seems to me, another non-economist, that the much ballyhooed (by capitalists) “free market” means “when convenient”. Sometimes it just doesn’t work. Look at the airlines.
Musicat, I looked up my firend’s name on that web site and it showed how much money they received and had it separated it into conservation, commodity, or disaster. Their’s was all in conservation. Still doesn’t change the fact that it was their yard, they weren’t going to grow anything in their front yard.
I can see some value in payments to actual farmers but not to people who obviously have no intention of doing anything with the land.
Hmmmmm…my yard was a farm three years ago, maybe I can get some money.