Agricultural Subsidies

This video from ReasonTV talks about the government's agricultural subsidies.

Agricultural Subsidies Ken Gallaway: I see subsidies as part of the equation of the government overspending in areas where they need to cut back. The government is bailing out the banks but my question is whose going to bail out the government? Nick Gillespie: In response to the current economic crisis, our government has decided that taxpayers should bail out failing businesses. This is nothing new. During the great depression, the Federal Government started subsidy programs to get farmers through the hard times. Those programs are still in place today even though farmers are in 30% more than the national average and total farm income has more than doubled since 2002. Ken Gallaway is a cotton farmer in Olton, Texas. Ken Gallaway: We’ve been always small farmers. When my father retired, that’s when I took over and up in farming since ‘96. This is one of my cotton fields. I love farming. It’s what I love to do. Nick Gillespie: But Ken isn’t your typical farmer. Ken Gallaway: I’m unique and I’m one of the free farmers that’ll talk out against subsidies. The problem is the subsidies make the farmer relying on the government. And the extent they’re bad. Nick Gillespie: Al Motna grows rice near Sacramento and serves as the President of the California State Board of Food and Agriculture. Al Motna: To be in anyone of the major commodity crops. The subsidy system is really a major part in our income. We see them as an investment and more and more see it less as investment our national security. Nick Gillespie: In recent years, farm subsidies had become increasingly unpopular. Groups like Oxfam on the left and the Heritage Foundation on the right. Our critical or farm subsidies as Dan Sumner, an economist at the University of California at Davis. Dan Sumner: The only decent reason to have this subsidy program is because we’ve always had them. There’s no other reason you can’t think of. Aback on the old Soviet Union, you had people growing all kinds of stuff that nobody wanted while we have this same thing here. We have a bunch of rice that costs 65 cents a pound to produce and the market isn’t willing to pay anymore near that, that’s simple ways. That’s taking real resources that we have as an economy and throwing them away. Nick Gillespie: Many people who sup port subsidies are concerned about the plight of small family farmers. Barack Obama: “We celebrate the family farm not only because it gives us the food we eat but it also maintains a way of life.” Nick Gillespie: When Franklin Delano Roosevelt introduced farm subsidies in the 1930s, 25% of the population lived on farms. Today, less than 1% of Americans live on farms that are larger, more efficient and more productive than ever before. Al Motna: We’ve been involved to this highly capital intensive industry. Ken Gallaway: If you’re small, you either get bigger or you don’t quit farming because you can’t make money. Nick Gillespie: Since 1985, Willie Nelson and his friends at Farm Aid have raised more than $33 million to have saved the small family farm. But despite what you may have heard, the vast majority of the $20 billion or so that our government tolls out on subsidies each year ends up in the pockets of the richest farmers in America. Dan Sumner: They were never designed to be subsidies to help poor people. Nick Gillespie: Most farmers including those who grow our fruits and vegetables don’t receive any subsidies at all. While the lion share goes to huge agri-business firms like Archer Daniels Midland and Cargill and yet this, the long list of farm subsidy recipients includes Billionaire’s like David Rockefeller, Fortune 500 companies and lots of people who’d lived in Manhattan. To get a sense of how ridiculous farms subsidies are, let’s take a look at the sugar program. Dan Sumner: What we do here in the United States is keep out sugar from the rest of world. The market price’s sugars about 10 cents a pound their average price around the world. Cost production is in 20 cent per pound ranger a little higher her in the United States. We could buy it from places that are good at producing sugars say Brazil for 10 cents, we pay 20 cents. That’s a waste. Nick Gillespie: So were paying twice the world price for sugar while the sugar industry gets rich. Why don’t we get rid of these tabs? Dan Sumner: The cane farms are very large and so each farm has millions and millions of dollars riding on keeping this stirrups at place. Nick Gillespie: In fact, the sugar industry donated around 3 million dollars to democratic and republican members of congress each year. And the cotton program is no better. Dan Sumner: Cotton farms in the United States, almost all of them that grow up and cotton gets subsidies, the total cost of the tax payer are tensed to run around $2 or $3 billion a year. It’s about half the total revenue for the industry. Nick Gillespie: Like all farm subsidies, the can program is form of corporate welfare. But US tax payers are not the only ones who pay the price. Ken Gallaway: If you have a strong subsidy as they did in the past in Cotton, then they encourages when the process are low. People over produce which simply holds the prices down. It keeps them down low, they’re the course seem packs foreign countries, poor countries at Mali and West Africa considerably. I went to Mali about two years ago, we went to the Rice Awareness of the plot of farmers in third world countries like Mali. Of course the poverty level there is very extreme. Dan Sumner: The farms are very small there. So it did affected on the families income maybe $100.00 or $200.00 a year from the depressed prices they get cost by the US Cotton Program. But that one or $200.00 a year is enough to feed the child. It’s enough to send kids to school. It’s enough to buy the feed the child. It’s enough to send kids to school. It’s enough to buy the school. It’s enough to buy the medicine for the family for a several years. Nick Gillespie: The US government refusal to scale back its farms subsidies has lead to accusations of hypocrisy and highly contentious World trade Organization talks. Al Motna: Unfortunately this latest round, the WTO round more or less fell apart. Nick Gillespie: The WTO talks fells apart because developing countries demanded an ends to the protections policies of rich western nations. Speaker: We will not be a puppy to any consensus that have not recognized our rights to grew and trade and to survive in this world economy. Nick Gillespie: US farmers like Al Motna are sympathetic because they have to compete against heavily subsidized farmers in other countries. Al Motna: Our competitors are subsidized, Europe to the highest levels and Japan to the highest levels. Nick Gillespie: If you can believe it, a cow in Europe for suits a subsidy for around $200.00 per day which is twice the income of a typical cotton farmer in Mali. Al Motna: US agriculturalists will much rather compete in a free trade environment. And if we would open those doors as promised by many administrations for democratic and republican, we would achieve that goal. And the need for a safety under county, under US agriculture will greatly diminish. Nick Gillespie: So why doesn’t our government do the right? Set a good example and end farm subsidies once and for all. Dan Sumner: Most of the members of congress pay almost no attention to these programs and in the districts where there are cotton farmers, each of those individual cotton farmers are getting hundreds of thousands or if not million of dollars from the program. They really care, they make sure their member of Congress knows that. The other reason they’re able to keep them in place is that the detail of the actual legislation is mind nominally complicated and frankly boring. Nick Gillespie: Complicated, boring, and really bad public policy especially in this troubled economic times. For Reason TV, I’m Nick Gillespie.