Posted by: beyonddinner | March 1, 2009

more on direct payments to farmers

On page 2 of the Week in Review section of today’s New York Times, it sums up parts of Obama’s speech this week and says this about farm subsidies (quoted here since I can’t find it on the Times’ web site):

The News: The president proposed making deep cuts in farm subsidies, phasing out direct payments – those that are not connected to crop prices – to farmers who gross more than $500,000 and capping payments at $250,000 a year for each farm, for a savings of $9.8 billion over a decade.

Behind the News: Farm subsidies have long been criticized as wasteful, hurting consumers, the Treasury and foreign trade far more than they help family farms.  But politically they have been all but untouchable, not least because of Iowa’s pivotal role in the presidential nominating process.  Only about 5 percent of farms, those with the highest revenues, would likely feel the cuts.

I’m not sure if I’m understanding this right – so it looks like agribusiness is still getting all the benefit of inexpensive corn, soybeans, etc.  (subsidies based on crop prices), but the farms that are bringing in lots of money will have cuts in subsidies?  Since everything I’ve read says that it’s been impossible to change the subsidy system, I’m encouraged that some small step has been taken.  I have a lot to learn about how our agricultural system works!

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Responses

  1. Have you read Omnivore’s Dilemma? In it, Pollan describes rather clearly why the payments that *are* connected to crop prices are such a huge problem. The glut of corn (for example) leads to a drop in real prices. To the farmer getting paid the same regardless of the real price, it only makes sense to still produce as much as possible. The subsidized farmers thereby create a further glut and further drop in the global price. For all of our countries love for the “free market”, this policy is just crazy.

    I really hope Obama tackles those payments next. It’s understandable that we don’t want to shock the agricultural system, but I don’t see any other way. Like you/the article said, the cuts he’s proposing now are just not going to change a lot of the system’s abuses.


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