(From the Ask Dr. Ruwart section in Volume 18, No. 23 of the Liberator Online. Subscribe here!)
QUESTION: If you remove all farm subsidies, what happens to the farmer when drought or flood hits and he losses his crop for one year?
MY SHORT ANSWER: Like other business people, farmers plan for bad years through savings, insurance, etc. If they fail to make such plans, they suffer the same fate as other businesses operating on the edge — they go under in tough times. They are bought out by someone who manages better. The displaced farmers find an occupation more suited to their particular talents.
Subsidies discourage good management and encourage inefficiency. As a result, consumers pay more for less.
LEARN MORE: Suggestions from Liberator Online editor James W. Harris for additional reading on this topic:
* “Five Reasons to Repeal Farm Subsidies” by Chris Edwards, Cato Institute, May 31, 2013.
EXCERPT: “Why is farming so coddled by the government? It’s a risky business, but not uniquely so. Industries such as high technology, newspapers, and restaurants are very risky, yet they don’t rely on government handouts. Farming faces certain risks such as adverse weather. But high-tech companies are vulnerable to rapid innovations by competitors, and restaurants are vulnerable to changing consumer tastes and intense competition. … If farm subsidies were ended…a stronger and more innovative agriculture industry would emerge that would be more productive and more resilient in the long run.”
* “GOP Hypocrisy and the Farm Bill” By Michael Tanner, Cato Institute, Huffington Post, July 12, 2013. In this op-ed Tanner dissects a federal farm bill and shows the anti-market, anti-consumer nature of farm subsidies — and the shockingly huge conservative support for them.
EXCERPT: “In 2011, the last year for which full data is available, the average farm household had an income of $87,289, 25 percent higher than the average for all U.S. households. And about a third of the farm subsidies go to the largest four percent of farm operators. If you want to see real ‘welfare queens,’ look no further than Pilgrim’s Pride, Tyler Farms, and Riceland Foods.”