After the Federal Agriculture Reform and Risk Management, widely known as the Farm Bill, failed to pass in the House of Representatives, there was a lot of finger pointing.
But the finger should be pointed at every Congress since 1933 — the year the Agricultural Adjustment Act was passed to help small farms with crop insurance, price supports, import barriers and other forms of aid to farmers who were earning barely enough to survive.
Unfortunately, like most government-administered programs, agricultural subsidies have become grossly perverted, and they no longer serve the constituencies for which they were designed. This Congress was voting on a bill worth almost $500 billion, where the majority of the money now goes to food stamps and to giant agricultural concerns, not small farms.
Preserving farm subsidies and driving up prices to American consumers is the devious work of the powerful farm lobby. We'd be more likely to convince corporate farmers to trade their tractors for dray horses than suffer the end of federal handouts that have turned into the worst form of corporate welfare.
Agricultural subsidies are just a bad idea. When the U.S. government guarantees American farmers a minimum payment for certain commodities, it encourages over-production of these commodities. This drives down market prices, forces even higher subsidies — paid by taxpayer money — and creates surpluses that we then dump around the world, choking off local farmers in their home markets.
To make matters worse, as a condition for providing loans to developing countries to help them service their foreign debt, international lending agencies, such as the International Monetary Fund, insist that developing countries keep their tariffs low. Low tariffs allow American agricultural exporters to sell millions of tons of food below the cost of production and wipe out local farmer's livelihoods.
So how is the average consumer impacted by farm subsidies?
In 2011, the American Enterprise Institute sponsored a workshop that studied subsidies for two key commodities: sugar and dairy products. They proposed that as a result of federal policies, U.S. families pay nearly twice the world price for sugar and other sweeteners. U.S. sugar programs cost the average family $40 per year in higher food costs, and these increased costs have created the high-fructose corn syrup industry.
"As for dairy policy, government policies increase the price of milk for U.S. consumers and increase the income of some milk producers. These programs hurt large, efficient dairy farmers and limit innovation, and they should be substantially reformed," AEI said.
The United States is far behind in getting a handle on subsidies. In recent years, Argentina, Australia and New Zealand have all done away with farm subsidies.
Washington Post columnist Robert Samuelson made a strong case for eliminating farm subsidies: "Symbolic of the debate we're not having about government's size and role — the essence of the deficit problem — is the future of farm subsidies. Running $10 billion to $15 billion annually, they don't do much good. For starters, they haven't saved small farms. Since the 1930s, when subsidies began, the number of farms is down 70 percent. Nor do farmers need subsidies to stay profitable. Farmers' income for 2011 and 2012 ($135 billion and $133 billion, respectively) were the highest and second-highest ever and would have been without subsidies."
In short, it is difficult to see how agricultural subsidies serve Americans other than the mega-farmers, or anyone else around the world. They don't serve the labor community, which must be fuming over these payouts as factories close all over the country.
They don't serve those of us who care about the environment, as huge farms receive incentives to employ techniques that degrade the land.
And they certainly don't serve the entrepreneurs who struggle without government aid to make a profit and employ as many people as possible.
The way we subsidize a certain class of our farmers hurts people all over the world and runs smack against the ideals that Americans claim to espouse. Such hypocrisy harms us and diminishes us.
We need to address farm subsidies, and although it will be a struggle — a battle within our borders as tough as any in which we engage with a foreign nation — we must choose to fight and must be determined to win.
I love this quote from Grover Norquist: "Every time you cut programs, you take away a person who has a vested interest in high taxes and you put him on the tax rolls and make him a taxpayer. A farmer on subsidies is part welfare bum, whereas a free-market farmer is a small businessman with a gun."
© 2013 Moneynews. All rights reserved.