U.S. farm subsidies: welfare that resists reform

The U.S. House of Representatives recently passed another multibillion-dollar farm support bill. The Senate now has its own version under discussion. And we can probably expect that the compromise bill that passes will cost at least $286 billion, says Victor Davis Hanson, Professor of Classics Emeritus at California State University.

These payouts are neither logical, nor moral, says Hanson:

The farm subsidy programme currently in place pays out over $7 billion directly to larger farmers for a few select crops like corn, cotton, rice, soy and wheat.

The bill pays nothing to most other – often smaller – farmers of fresh fruit and vegetables.

Yet the former group of farmers is hardly in more need of welfare than the latter; and soy or rice isn't more critical to the American diet than fresh fruit and vegetables.

Worse are the handouts producers of ethanol will receive, says Hanson, given that the fuel isn't the panacea it's made out to be:

Along with the energy consumed to make ethanol, the switch over of millions of acres to corn fuel production has already meant crop shortages and high returns to farmers, from cotton to wheat and soy.

If the U.S. really want ethanol to supplant gas, it would be far cheaper to let Brazil export sugar-based ethanol to it without high tariffs.

The $280 billion-plus farm bill is not the largest waste of federal funds, but it is the most unnecessary – and dishonest, says Hanson. The U.S. is running federal budget deficits – this year's is about the size of the proposed multiyear farm bill – and are engaged in two costly wars in Afghanistan and Iraq, and spending billions in anti-terrorist security at home. They don't need to be giving away more billions to the affluent of an industry that, overall, is doing quite well.

Source: Victor Davis Hanson, Farm Subsidies: Welfare That Resists Reform, Investor's Business Daily, November 2, 2007.

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FMF Policy Bulletin/ 13 November 2007