Subsidies Part 2: They only benefit big agrobusinesses who buy elections?

So I started this thread last week about subsidies. I was asking why, after years of controlling all branches of gov’t, subsidies weren’t an issue, since it seems to go against conservative fiscal ideology, not to mention that the countries that accept quite a lot of aid from the US may may benefit more from increased competition than they do from that aid.

Most all of the responses on the thread said that subsidies did go against conservative economics, but politicians (dem and rep) supported them because it gets them the rural vote.

Then, Maeglin, said that it actually had nothing to do with getting the farm vote. Rather, the large agro-businesses that can yield the kind of quantities that make subsidies profitable are the ones who keep subsidies in place by buying politicians:

I’m curious if most people believe this is the case.

This take is too cynical and, like most analyses that include the phrase “bought and paid for” when referring to politicians, is false.

I used to work on Capitol Hill for a farm state Senator and the people coming in and lobbying on this issue were farmers, many from old-time farm families. They believed in these subsidies and they benefitted from them. I’ll admit that large agribusinesses benefit more, but that’s because they do more of the farming. That does not mean that so-called “family farmers” do not benefit, however.

To say that people from rural states or the farm belt don’t care about the farm vote shows a shocking amount of ignorance about politics. Of course they care about the farm vote. These guys kiss the ass of farmers to an amazing degree. Which is why these outrageous farm bills get passed. Of course, it is not only to benefit farmers. A politician cannot oppose a subsidy-filled farm bill because he will be portrayed as the enemy of the farmer and the “traditional way of life.” He will be portrayed as opposing efforts which keep rural areas from being de-populated. This type of messaging plays way beyond farmers and taps into the mythic view of America as a country of independent farmers and rural folks making it on their own. No politician wants to be in opposition to this.

part of why the gov. pays out subsidies; they US goverment wants to keep food prices cheap-for two big reasons:
-the USA exports a huge amount of food (animal and human); one of the few areas where we are competitive. We run a surplus 9in food exports) to places like japan and China.
-the goverment wants to keep food prices low, to support the poor living in central cities. many a poor family lives off surplus cheese, pork, cormeal, etc., which is sold (or given away). Many inner-city schools provide free or reduced price meals with USDA-subsidized foods.
That aside, subsidies have had a devastating effect upon the ecology-they encourage surpluses, and one-crop farming. They also drive local, small farmers 9like NE dairy farmers0 into poverty.
But, you are unlikely to ever see agricultural subsidies done away with-the farm lobby is too big and too powerful. Firms like Con-Agra, ADM, Kerr-McGee pay LOTS to senators and reps-and they want a return on their investments!

I am not shy about admitting to the tendentiousness of my analysis. I would appreciate it, Renob, if you could stick to the content rather than the rhetorical window dressing.

I concede that if farm subsidies disappeared next year, a lot of people would lose their jobs in the legislature. This is not a huge leap, since the sudden disappearance of farm subsidies would drive the farm belt into bankruptcy and drive up the prices of commodities that Americans rely very heavily on.

The important questions are why are subsidies in their current form and who benefits the most.

Before Earl Butz, Nixon’s Secretary of Agriculture, dramatically altered the agricultural subsidy structure, the farm vote was already captured by the legislators under the old subsidy regime. The subsidy structure did not need to be changed in order to deliver this vote. After all, the price of agriculture was well supported by the pre-Butz loan system. This bears endless repeating.

In a nutshell, Butz was tasked to reduce the price of agricultural commodities. He succeeded magnificently, encouraging industrualization, monoculture, and consolidation. In his exact words to farmers, “get big or get out.” This took the wind out of the price of corn and soybeans, satisfied Nixon’s industrial agribusiness backers, and essentially made the family farm dependent on the government for continued survival.

This change did not occur to deliver the farm vote.

The family farmers “benefit” only insofar as if there subsidies were taken away, they would be ruined. As a matter of fact, the National Family Farm Coalition is dead set against current US agricultural policy. George Naylor, a family farmer and president of the NFFC in 2005, had this to say about the current subsidy regime:

No farm belt legislator wants to look like he isn’t supporting the family farmers, which is why no one ever talks about making the subsidies go away.

Imagine trying to run for office against our current farm policy in a farm belt state. Say that state has fewer than five million people, one or two major cities, and thus very low A&P costs. Suppose again that the major employers in this state are large agribusiness firms. What do you think your prospects for victory are?

I fully agree that farm subsidies are counter-productive, harmful, and do more to help big businesses rather than family farmers. However, I also know that this program – like so many other government programs – stays alive based on rhetoric, not on reality. In the public mind, farm subsidies = help for struggling family farmers. For politicians, perception is reality, and so they will only support programs that are more generous for these farmers.

I’m not defending the farm subsidy program, I’m simply defending politicians against the claim that the only reason they support these subsidies is because they are “bought and paid for” by agribusiness.

It still seems to me that you are only comparing two cases, current farm policy or no subsidies at all. I believe that politicians are supporting our current farm policy versus an alternative that would benefit actual farmers the same amount or more because these policies, and thus their sponsoring legislators and supporters, were purchased by their agribusiness constituents. Unfortunately, opensecrets seems to categorize all agriculture as “agribusiness,” so it is not trivial to try to beak out the contributions of industrial agribusiness versus grouns like the NFFC.

This topic interests me because I was raised on that mythical family farm and because I grew up in an area of the country that used to be heavily agricultural.

For good or for ill (and, frankly, I think it’s for ill), the “family farm” is as much a thing of the past as the “local hardware store” and the “mom and pop grocery”. I do not like the idea of hogs and chickens living in facilities that force them to be in constant physical contact with their bretheren, and I do not like thinking about dairy cows that will never see grass pasture. On the other hand, I do like $0.89/pound pork, $2.00 spicy chicken sandwiches from Wendy’s, and $2.05 half-gallons of 2%.

Unless you regularly shop at a farmers market (and I’m now waiting for the twelve people who regularly shop at farmers markets to dispute this), the vast majority of the food you buy at the grocery store is financed by a corporation of some sort. This is a simplification, but Gold ‘n’ Plump (a large midwestern poultry company) essentially rents “growing space”. They contract with a guy with a chicken barn, provide chicks, provide feed, and catch market chickens. They divide the number of live chickens into the number of chicks provided and pay the difference. Hogs and turkeys work the same way.

I am not enough of an economist to estimate the effects of turning off subsidies tomorrow, but I do know that there are precious few “family farmers” left and I sincerely doubt that the number of people put out of work by turning off those subsidies would approach the chaos of Detroit losing the auto industry or Pittsburgh losing the steel industry. I believe that after a short period of market fluctuation pork would go up to $1.09 a pound, spicy chicken sandwiches would go up to $2.19, and a half-gallon of 2% would increase to $2.45.

And ten years from now some disease will wipe out 50% of the tightly-packed hogs and pork will go up to $25.00 a pound, but that’s the price you pay for treating live animals (or plants) as a commodity rather than a living thing.

Unfortunately the farming industry is prone to massive fluctuations in supply and hence fluctuations in prices.

In Economics a good illustration is something called ‘The Hog Cycle’

  • the price of pigs goes up, so farmers move into pig production, but pigs take time to grow, so that by the time pigs are ready for market, there is massive oversupply
  • the price of pigs plummets
  • nobody produces pigs - so the price soars

If one makes the fundamental decision that it is wise to have a farming sector that is capable of producing food, then it is a small step to work out that some form of government intervention is needed.

One method is price control, but that leads to massive over production, and things go squirrelly if you don’t buy up the overproduction to maintain the price, but doing so resulted in the European Wine Lakes and Butter Mountains.

Another method is subsidies, to some extent market forces control supply and demand is flexible as the end price can fluctuate.

Personally I think that it is wiser to maintain a farming sector that is stable and deliberately working below full capacity.

The new European method, and definitely the new UK method, is to pay farmers for ‘being custodians of the land’ - basically bung them cash per acre, enough to keep them happily in business, but not enough for them to cease any form of activity.

Of all forms of intervention, subsidies strike me as the least worst, and a spot of intervention buying (for export) can iron out some fluctuations.

The Free Market is far from perfect, but to fight it is futile.

  • with subsidies you can roll with it.

The vast over-production of corn is an example. We are literally bursting at the seams-which is why corn syrup goes into virtually all processed foods. The over-production of feed corn means that processors have a vast source of cheap sweeteners-whci also happen to stimulate obesity in the people that consume them. If we got away from this insane subsidy program, then we could have healthier foods-instead, the corn is used to:
-pump up cattle at feelots 9resulting in high-fat, high-cholesterol meat
-make the production of sweetened soda drinks cheap (why obesity rates are zooming among highschool age kids0

The bad effects don’t end there-monoculture of corn is causing topsoil depeltion in the farm belt, and erosion as well. but, who cares? as long as ADM, Carghill, etc., get their money-who gives a damn that diabetes will be the most common medical condition, and obesity rates are shyrocketing? tha’s the way Washington wants it! :smack:

There is no such thing as "conservative fiscal ideology"any longer. Nor “liberal fiscal ideology”. It’s “catering/pandering to your voter block”. Farm states= GOP voting block= farm states get the cash. And, traditionally, in the USA, farmers are viewed through rose colored glasses by the media and public.

GoP used to be “cut taxes and spending”- now they are “cut taxes and increase spending”. Gawd only knows what a Dem controled House will be. Can’t be worse, I suppose.

…in the USA economy, for example: instead of buying 3rd-world farm produce, we undercut the 3rd world and poverproduce-which cause poverty in mexico-and leads to illegal immigration.
Really, a LOT of problems can be traced to US DOA poicies. i’m most concerned that small farms cannot survive (because ofthe subsidy programs)-so we have the worst of both worlds: overproduction of low-quality foods, obesity 9caused by cheap carbohydrates0, and the non-viability of farming 9unless you are a giant agri-business farm). :smack:

Didn’t Australia or New Zealand basically cut off farm subsidies and the doom and gloom predictions didn’t come true?

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