Corporate Farmfare

Francis Cianfrocca at the New Ledger makes a startling point writing on an issue I have addressed at some length before: the excessive government involvement in America’s farm policy. He argues that if you look at the numbers, the Agriculture Department’s budget is larger than the profits of the entire U.S. agriculture sector.
I don’t agree with his provocative conclusion that the industry would vanish without subsidies, but it would surely be compelled to adapt.

2 thoughts on “Corporate Farmfare”

  1. In Agriculture, generally speaking, net income flows to the most fixed resource, which is land. Farmers rent most of their ground, so most of the subsidies flow ultimately flow to landlords. Obviously, if you don’t have control of the land, you can’t farm. If you doubled the subsidy tomorrow, by Spring it would be reflected in cash rent and land prices. Conversely, if you eliminate the subsidy, rents and land values would decline, but a game of chicken would first ensue between producers. If you lose control of land you may never get it back, so producers will hang onto it, even in a losing situation for as long as they could. The ones with the deepest pockets would win. So the bottom line is that agriculture would adjust to no subsidies, but there would be much tumult in the process as farmers get weeded out.

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