What is The Purpose of Farm Subsidies?

[Stevendsmith]

I have a general idea, but could someone explain.

[kclown]

1. Basically, to put a floor under agricultural products' prices,

to protect farmers against loss, allowing "family"
farmers to remain on the land.  Not many "family"
farmers today; most subsidies go to outfits like ADM.

[Wonco_the_Sane]

2. Government guarantees fair prices

to the farmers. A price is set for your apples/cotton/wheat/corn, whatever.
--If flood, tornado, frost, whatever wipe you out...you didn't just work for a whole year for NOTHING.
--If all goes fantastic for all (over-producing), the price of your goods will plummet to non-profitability, and the government makes up the difference, taking you back to your guaranteed price.

Basically it keeps the price of food stable.

[Flightful]

3. Should be obvious

They do it to buy votes with your money. Because they can.

[leftyandproud]

4. to keep prices high for everyone who buys groceries..

no really...that IS the purpose.

[Guinness]

7. Exactly.

More corporate welfare.

The government should not be micromanaging the economy.

[Maurkov]

5. My completely unbiased opinion

Farm subsidies are transfer payments to agribusiness and therefore serve to redistribute wealth to rich people. They are also used as pork to buy the Midwest's senatorial votes. They ensure that the third world is at a competitive disadvantage for growing anything other than coffee, coca, or opium, and as a bonus, they entrench bad policy on alternative fuels, guaranteeing our continued dependence on foreign oil.

Cheers.

[rapier]

6. notes

Setting aside the direct political considerations the main reason for farm subsidy is to gurarantee surplus.

I know this sounds crazy but hear me out.

I'll start by noting that we are so used to the abundance of food that few even consider that food abundance is possibly the most important job of any government. Government itself first arose with agriculture itself in of all places Iraq, and the Fertile Crecent. This was not coincidence.

Admittedly America has always had abundance oweing to it's huge amount of good land and relatively low population but the point is still valid concerning the purpose of subsidy.

The desire of people and government for low prices and abundance, which are two sides of the same coin, is the fact that high prices and high profits in a market system rely upon a balance of supply and demand. Because of the variation is supply due to annual weather and other factors it is contingent upon governments to encourage surplus to help guarantee againt shortage from bad years. Again, surplus works against high prices and high profit from farming.

In the modern world agriculture is dependent upon credit. The huge costs of land and planting and storage and the fact that crops come in only once a year make it necessary for farmers to borrow a lot of money. When farmers can't pay off because of low prices the result is the familiar pictures of auctions and abondonment.

In a perfect free market there would be no subsidy or programs to help farmers and so the market would work like markets are supposed to. When a farm depression hit the farm lenders would go belly up and the land under tillage would drop dramaticly, setting up future shortage and high prices which would then lead to over produtction and so on and so on.

This is not acceptable. Free markets are not acceptable for food. High food prices or the horrors of shortage are a nuclear bomb for governments, something to be avoided at ALL COSTS. With good reason. How would you feel about a food shortage and high prices?

While American farm subsidies have had many differnt faces over the years the result has been to keep a floor under prices, which in turn has kept the bottom from dropping out on prices which would have caused a rolling depression in farm areas as lenders and farmers went bankrupt and caused land to fall fallow.

Farm subsidy as a result acts as a guarantee of adequate supply by discouraging the bust aspect of 'free' markets.

[papau]

8. Agree - plus farm markets are not free market anywhere - so without a

worldwide agreement as to the level of price/subsity, we end up with folks afraid one nation will "buy" the local market - throwing local farmers out of work.

Indeed free market could make environmental problems worse - if you assume today's runoff and other practices are maximized against the environment and toward profit because theCorporations feel they can afford to do "good" because of the subsity.

OK - not a great arguement -

but our farmers are screwed by other nations subsities.

Except in Sugar - where we need votes in the south!