Capital Commentary is the weekly current-affairs publication of CPJ, written to encourage the pursuit of public justice.
Agricultural Subsidies and Public Justice
July 12, 2013
By Eric Hilker
The recent failure of the 2013 farm bill to pass the House is an oddity in US political history. Farms bills typically pass with bipartisan support-- the 2008 bill passed with enough support to overcome a veto from President Bush. Farm bills are broadly made up of two parts: Supplemental Nutrition Assistance Program (the food security program commonly known as “food stamps”) and various agricultural subsidies for US farmers. The farm bill presents us with a range of public justice issues, and agricultural subsidies in particular have profound effects on domestic farmers and the developing world. On the whole, the proposed farm bill makes a few steps in the right direction in justice issues surrounding agriculture subsidies, but more progress is needed. While the arguments for and against subsidies are often stated in obvious terms, the reality is complex and requires thoughtful consideration of both sides.
Historically, subsidies have been distributed along the lines of farm size and commodity produced. Less than half of farmers receive subsidies; the largest and wealthiest farms producing wheat, corn, cotton, rice, and soybeans receive most of the money. With low income/low wealth farms receiving about 1% of the total support payments from the government, agricultural subsidies are not meant to support poor farmers. Instead, the government payments tend to bolster their competition. If Americans want to see local farms and locally sourced food continue, subsidies will need to be tailored for small farmers growing crops other than the field crops noted above. The proposed 2013 farm bill takes one small step in this direction by including measures that support local farmers’ markets.
While large farms garner most subsidies in the United States, the popular depiction of corporate farms dominating the agricultural landscape is not accurate. Large farms do make up the majority of agricultural output, but most are still family owned. In fact, non-family corporate farms make up only 6% of agricultural sales in the United States, according to a 2010 account by Robert Paarlberg in Food Politics. Subsidies help the income of family farms keep pace with other sectors of employment, giving incentive for new generations to continue farming. The proposed bill strikes a middle ground, ending a hefty section of subsidies to prosperous farmers while providing incentives geared toward young farmers and offering crop insurance programs to protect farmers’ livelihoods.
Beyond the domestic borders, agricultural subsidies in rich countries can hinder economic growth efforts in the developing world. Agricultural sector growth in economically developing countries provides food security, creates employment, and generates local capital as a foundation for further development. But when rich countries subsidize their own farmers, it can lead to an overabundance of crops produced within their borders, crowding farmers in developing nations out of the world market. Many of the poorest countries exist in areas of the world well suited to agriculture and with longer growing seasons than the developed nations of the north. But the comparative advantage given by the geography of these poor countries is taken away by agricultural support within developed nations.
For example, cotton is the main source of income for many West African families living on less than $1 per day. But US subsidies increase cotton exports from the United States, lowering the world market price and bringing down the income of West African cotton farmers. Mozambique, one of the world’s poorest nations, is one of the most efficient producers of sugar. Sugar production constitutes Mozambique’s largest source of employment but it is severely hampered by competition with subsidized sugar suppliers from wealthy nations, the United States among them. To serve a larger international public good, US sugar and cotton subsidies would do well to end, but sugar subsidies remain untouched and cotton subsidies avoid cuts for the next two years.
However, sugar and cotton are more the exception than the rule. The net impact of wealthy nation subsidies on the poorest developing nations is small and perhaps even beneficial, since many poor nations are net food importers and can be helped by the cheaper prices. In reality, most of the world’s food is consumed in the country in which it was grown and subsidies have more impact on trade between wealthy nations than on the development of the poorest nations.
Although it leaves more to be desired, the 2013 farm bill proposed to the House does include significant reforms to agriculture policy that will address some of the justice concerns noted above. It remains to be seen if the House can come together to pass it.
— Eric Hilker is a student of political science and biblical studies at Gordon College.
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Capital Commentary is a weekly current-affairs publication of the Center for Public Justice. Published since 1996, it is written to encourage the pursuit of justice. Commentaries do not necessarily represent an official position of the Center for Public Justice but are intended to help advance discussion. Articles, with attribution, may be republished according to our publishing guidelines.”