Farm Subsidies
Subsidies are payments, economic concessions,
or privileges given by the
government to favor businesses or consumers. In
the 1930s, subsidies were
designed to favor agriculture. John Steinbeck
expressed his dislike of the farm
subsidy system of the United States in his
book, The Grapes of Wrath. In that
book, the government gave money to farms
so that they would grow and sell a
certain amount of crops. As a result,
Steinbeck argued, many people starved
unnecessarily. Steinbeck examined farm
subsidies from a personal level, showing
how they hurt the common man.
Subsidies have a variety of other problems, both
on the micro and macro
level, that should not be ignored. Despite their
benefits, farm subsidies are
an inefficient and dysfunctional part of our
economic system. The problems of
the American farmer arose in the 1920s, and
various methods were introduced
to help solve them. The United States still
disagrees on how to solve the
continuing problem of agricultural overproduction.
In 1916, the number of
people living on farms was at its maximum at 32,530,000.
Most of these
farms were relatively small (Reische 51). Technological advances
in the
1920's brought a variety of effects. The use of machinery
increased
productivity while reducing the need for as many farm laborers. The
industrial
boom of the 1920s drew many workers off the farm and into the
cities. Machinery,
while increasing productivity, was very expensive. Demand
for food, though,
stayed relatively constant (Long 85). As a result of this,
food prices went
down. The small farmer was no longer able to compete,
lacking the capital to buy
productive machinery. Small farms lost their
practicality, and many farmers were
forced to consolidate to compete. Fewer,
larger farms resulted (Reische 51).
During the Depression, unemployment
grew while income shrank. "An extended
drought had aggravated the farm
problem during the 1930s (Reische 52)."
Congress, to counter this, passed
price support legislation to assure a profit
to the farmers. The Soil
Conservation and Domestic Allotment Act of 1936 allowed
the government to
limit acreage use for certain soil-depleting crops. The
Agricultural
Marketing Agreement Act of 1937 allowed the government to set the
minimum
price and amount sold of a good at the market. The
Agricultural
Adjustment Act of 1938, farmers were given price supports
for not growing crops.
These allowed farmers to mechanize, which was
necessary because of the scarcity
of farm labor during World War II (Reische
52). During World War II, demand for
food increased, and farmers enjoyed a
period of general prosperity (Reische 52).
In 1965, the government
reduced surplus by getting farmers to set aside land for
soil conservation
(Blanpied 121). The Agricultural Act of 1970 gave direct
payments to farmers
to set aside some of their land (Patterson 129). The 1973
farm bill lowered
aid to farmers by lowering the target income for price
supports. The 1970s
were good years for farmers. Wheat and corn prices ripled,
land prices
doubled, and farm exports outstripped imports by twenty-four billion
dollars
(Long 88). Under the Carter administration, farm support was
minimized.
Competition from foreign markets, like Argentina, lowered
prices and incomes
(Long 88). Ronald Reagan wanted to wean the farm community
from government
support. Later on in his administration, though, he started
the Payments In Kind
policy, in which the government paid farmers not to grow
major crops. Despite
these various efforts, farms continue to deal with the
problems that rose in the
1920s. Farm subsidies seem to have benefits for
the small farmer. "Each
year since 1947, there has been a net out-migration
of farm people (Reische
53)." American farm production has tripled since
1910 while employment has
fallen eighty percent (Long 82). Small family farms
have the lowest total family
incomes (Long 83). Farming is following a trend
from many small farms to a few
large farms. Competition among farmers has
increased supply faster than demand.
New seed varieties, better pest
control, productive machinery, public
investments in irrigation and
transportation, and better management will
increase farm output. The
resulting oversupply of farm products, which creates a
low profit margin,
drives smaller farms out of business. Smaller farms lack the
capital and
income to buy the machinery they need to compete with larger farms
(Long 85).
Many see this tendency towards consolidation and mechanization of
farms to be
harmful to the United States in the long run, and they see subsidies
as a way
of achieving a social desire to preserve the family farm. "If the
family farm
represents anything, it's a very intimate and fundamental
relationship
between people and resources (MacFadyen 138)." Fewer farms
mean fewer jobs
and a higher concentration of wealth. Ten 30,000-acre farms may
produce as
much food as a hundred 3000-acre farms, but the former supports
machinery;
the latter, community (MacFadyen 138). Farm subsidies are designed to
prevent
the extinction of the small farmer. Despite the social benefits,
subsidies
have many problems. The subsidy system is often wasteful; the
government
finances irrigation systems in the California Imperial Valley, and
then pays
farmers not to grow crops on it (Solkoff 27). Some benefits hurt the
small
farmer. Marketing orders and tax breaks hurt small operators by giving
more
money to bigger farms. Big farms can then overproduce and undersell
using
advanced machinery, driving lesser farms out of business (Fox 28).
Subsidies
also allow foreign markets to become competitive by artificially
raising market
prices (Long 91). Artificially raising market prices create a
surplus that would
normally be solved by the free market system. In a
theoretical free market,
overproduction would drive excess farms out of
business, until equilibrium would
establish itself for both price and
quantity of farm products. Subsidies allow
inefficient farms to continue to
exist, which creates an inefficient economic
system. Subsidies also increase
the cost of other consumer products, while also
increasing taxes to pay for
them. Perhaps most importantly, subsidies do not
fulfill their social role.
"About 112,000 large farms-- equivalent to the
number of farms in Minnesota
alone-- produce half the nation's food and fiber
(Long 82)." The many
government subsidy policies do not preserve the family
farm, and the number
of small farms has almost continuously been on the decline.
Subsidies are
impractical in the economic and the social aspects.Despite
perceived
benefits, farm subsidies are an inefficient and dysfunctional part of
our
economic system. Their goal, nonetheless, is noble. Writers like
John
Steinbeck made people aware of the plight of the small farmer, and
subsidies
were the only solution he government could think of. If there is
some way to
prevent the decline of small farms that does not carry the many
subsidy
problems, the agricultural policy would undoubtedly change. Perhaps
the same
anti-trust laws that prevented the monopolizing of industry could be
used to
prevent the consolidation of farms. Until some other system is
developed that
can deal with the problems of the farmer, subsidies will
continue to be used.
Bibliography
Blanpied, Nancy. Farm Policy.
Congressional Quarterly: Washington D.C., 1984.
Fox, Michael. Agricide.
Schoken Books: New York, 1986. Long, Robert Emmet. The
Farm Crisis.
Wilson Co.: New York, 1987. MacFadyen, J. Tevere. Gaining Ground.
Holt,
Reinhart, and Winston: New York, 1966. Reische, Diana. U.S.
Agricultural
Policy. Wilson Co.: New York, 1966. Solkoff, Joel. The
Politics of Food. Sierra
Club Books: San Francisco, 1985.