Beer prices are rising, Thanksgiving is coming and it’s time to talk about America’s food law: the farm bill.
“…For my money, you can cut out the ‘allegedly.’”
You already know that Congress is ripping you off. You probably also realize that even if you read this whole article to find out just how Congress is hustling you this time, it’s not going to stop, and that it will just get worse in the future.
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This isn’t your grandfather’s farm subsidy. Photo by willia4 on Flickr.com, licensed under Creative Commons. |
This scam, however, is kind of goofy in its brazenness. Farm subsidies have been going on since the New Deal in the 1930s. Every five years Congress adds more money to the ploy. This year, the farm bill will take about $286 billion from us taxpayers and give it to some people who have owned farms. The intended and unintended consequences of the spending are often surprising, usually far-reaching and almost always bad.
Meet the bribees
“Some people who have owned farms” is a weird way of putting it, I admit. But “farmers” doesn’t quite capture my meaning.
Some farm subsidy recipients (such as David Letterman and the Utah Jazz owner Larry Miller) have day jobs. A 2006 study by the Washington Post estimated that $1.3 billion have gone to non-farming farmers between 2000 and 2005.
Other farm subsidy recipients used to, but no longer, own the farms because they’re — you guessed it — dead. The Government Accountability Office estimated that between 1999 and 2005, $1.1 billion went to the companies or estates of dead farmers.
I said “some people” because most — about three-quarters — of the money goes to the richest 10 percent of farms. (Gasp! Congress cynically buys votes by spending tax money!)
MohairMo’problems
If I produced mohair, would you buy it? No. Who wants mohair? What the hell is mohair?
But if the government sent me a check for producing mohair, I’d produce mohair even if no one wanted to buy it. (This is funny because this actually happens.)
The government hands out much bigger checks for corn, wheat, cotton and soy. No doubt someone will leave a comment on this article saying, “But food is necessary and there are starving people who we have to feed. Mohair is a bad example.” Yeah, but when you want food, you pay for it. When you don’t want mohair (or food), you don’t pay for it. That’s how the market knows how much food (or mohair) to make.
The government is sending farmers checks even when no one wants to pay to consume their crops. Indeed, according to the Wall Street Journal, Americans pay $12 billion more for food a year than we would without farm subsidies (not to mention the taxes we pay to support the subsidies).
The Grapes of Cash
On the other hand, farming is a risky business. A year of bad weather can put your farm in a tough spot for the next year since farming requires high capital investment up front. Subsidies are supposed to provide stability to food prices to keep farmers afloat in bad years, such as 1932.
David Glass, a Justice Department lawyer who has represented the government in numerous agriculture cases, argues that over its history, farm subsidies have contributed to greater production and that “the problem is calibrating the amount of aid to the need.”
“We’re better at that than we used to be, because you no longer hear about warehouses of surplus food that the government has bought to keep the price up,” he said.
Nevertheless, farming nowadays differs from farming during the Dust Bowl of the 1930s. Agricultural businesses are now larger and more productive compared with the family farms of the Depression era. A bad year nowadays won’t cause mass famine, and the negative side effects of farm subsidies outweigh farmers’ fear of competition (pansies, the lot of them, I tell you).
“It wouldn’t surprise me if there are certain companies or individuals who profit from the system beyond their need,” Glass said. “That seems always to happen with income transfer programs.”
Ten things I hate about you
(Not you. The farm subsidies.)
All that income being transfered reprograms the economy in some surprising, seemingly disconnected ways. Consider the following:
1. Congress likes alcohol more than college students do. Much like the rum we’ve all been chugging at wild parties, the kind of ethanol that Congress mandates be put into gasoline should be made from sugar cane because it’s six times cheaper than making it from corn. Instead, 30 percent of US corn will go to ethanol production by next year. (I’ll let you guess why.) That drives up the price for corn (more demand and all that). Higher corn prices even push up the price of meat since low-grade corn used for feed is also used for ethanol. That’s a major reason food prices have climbed so fast recently.
2. Weather hurt barley and hops yields this year, so beer prices could as much as double. Major-brand crappy beer won’t get too expensive — especially “honeymoon on the beach” (fucking close to water) beers because they contain so little hops — but subsidies aren’t helping any because they encourage farmers to switch from barley and hops to less interesting, more subsidized plants. Mainly corn, though, because of ethanol mandates. (Congress mandates the use of ethanol in fuel so beer prices go up. Supply, demand and irony.)
3. American farmers are more productive than the farmers in rural Africa. That means that African farmers have to work harder to compete with American farmers in the international market. American subsidies make it yet harder for African farmers to compete. So while Americans are growing more than enough food, Africans are growing too little, and the deadweight loss from subsidies means that the quantities won’t balance out. (Not that there are any Africans who need to eat more or anything).
4. Ever read the ingredients on junk food? Toward the top of the list you’ll likely find “partially hydrogenated soybean oil” or “high-fructose corn syrup.” You guessed it: your tax dollars are subsidizing America’s obesity epidemic. Fruits and vegetables receive little to no subsidy compared to corn and soybeans.
5. All the extra farming takes up marginal lands that could be left to nature (such as wetlands), adding to erosion and farm pollution (e.g., cow farts). Additionally, our farm subsidies violate international trade rules and slow trade negotiations with our allies. Not to mention, people farming more than the market demands means that land prices are too high.
Two-hundred-eighty-six billion dollars.
What a rip off.