Agriculture Subsidies on the Chopping Block

Agriculture Subsidies on the Chopping Block

Politicians look to Ag subsidies as a bipartisan budget cut.

    

      During the course of the present recession, many industries have been largely stagnant, with periodic fits of growth and stalling out. However, one area in which there has been steady growth is among agricultural commodities. This is party due to large subsidies by the government to big agribusiness. However, that may be a thing of the past as politicians look to continue cutting expenditures.

     Paul Ryan (R-WI), chairman of the House Budget Committee and the Republican poster-child for fiscal conservatism came out last month saying that the government should not be giving large corporate farms billions in subsidies. Ryan's budget proposal included a $30 billion cut to farms and agribusiness.

     The tough economic environment has pushed many law-makers to find spending cuts that will be most efficient to enact (see: bipartisan and easily swallowed on both sides of the aisle.) Many conservative lawmakers have accused farm subsidies of interfering in a free commodities market. The Heritage Foundation, a conservative think-tank, found that subsidies do almost nothing to lower the cost of food for consumers (as evidenced by our grocery bills) and most of the money ends up in the profit margins of major corporate farms, which don't need them.

     On the other hand, liberal environmental groups have argued for years that ag subsidies encourage destructive over-farming practices; making farmers careless because they often receive subsidies regardless of crop prices. Liberals also complain that the family-farmer doesn't often receive the subsidies, not helping the people that need it.

     Some subsidies have powerful backers, making it difficult to repeal them even with the rising values. The government's ethanol subsidies have been highly criticized. Environmental mandates regarding bio fuels have made ethanol (an alcohol derivative of corn) highly in-demand, yet ethanol producers and corn-growers receive enormous subsidies every year.  Newt Gingrich, although a self-described free-market Republican, has come out strongly in support of maintaining ethanol subsidies regardless of the bubble it's created in corn commodities.

     Some of the existing power structures in Washington are starting to feel the threat of an recession-induced death sentence. Agribusiness spends hundreds of millions in lobbies each year, but many of the politicians they've funded in big agro-states have been replaced by more Tea Party-minded freshmen that see subsidies as a form of corporate welfare.  They're not alone, either, as Democrats from all backgrounds have accused the ag subsidies of growing from a farmer's  safety-net into agribusiness pocket-lining.

     It's likely that the next farm bill will contain large cuts to several commodity subsidies, but farmers' tend to be a conservative bunch and understand the needs for cuts, even though it may hurt them in the short-term. One farmer in Iowa said he understands the need, according to an article in the Omaha World Herald, but would like to see the subsidies cut only for corporate farming enterprises. On the other hand, the white-collar agri-crats, and the politicians that benefit from agribusiness campaign dollars, are likely to put up a stink...and it won't be the smell of money.