Agricultural subsidies cost an average American family of four about $200 a year, a UNC-CH doctoral candidate told a luncheon sponsored April 21 by the John Locke Foundation.
Jenna Ashley, also an intern at the Foundation, spoke about what she considered to be the scandal of farm policies in the United States and the European Union. The policies include price supports, quotas, tariffs, and subsidies. While the United States differs from Europe in the implementation of the policies, their effect is the same: less food at higher prices.
Ashley explained that price supports are the governmental practice of buying a certain amount of farm product at a certain price. The supports artificially inflate demand and prices. Quotas usually pertain not to how much food to produce or not produce, but how much of other countries’ products are allowed to be imported. By limiting imports, the government forces consumers to buy products domestically, even if another country can provide a better quality product at a cheaper price.
Tariffs have a similarly negative effect upon competition between countries. When producers must pay a high price simply to sell in certain markets, the price of their product is increased to cover the cost. Subsidies, such as grants, and sometimes, blank checks, are not as easily calculated into the bottom line price of food because their effects are indirect, Ashley said.
Reality: Large firms receive most subsidies
Ashley warned that while agriculture may conjure up the rustic image of a small Mom and Pop farm receiving relief during hard times, the reality of American farming today is large conglomerates qualifying for governmental aid in good market times. Whether directly or indirectly, each one of the policies distort the world market. Consumers absorb the cost, either through taxes or inflated prices.
How has the farm industry remained so well protected while it has evolved away from the small family farms, which these policies were created to protect? The answer Ashley offered is the old political axiom, “See who gets what, when, and how.”
She explained that in the United States, farmers are disproportionately enfranchised because they are highly organized, motivated, and involved constituents. People in farm communities vote at higher rates than average Americans and are over-represented in the Senate because rural states have the same number of senators as other states.
Although European agricultural policies are not set by elected officials, Ashley said a different phenomenon dictates government action. About 20 percent of Europeans have a “strong agricultural attribute, including being a member of a farm family, retired farmers, or former farmers who have changed occupations,” she said.
Even those not directly involved with farming in Europe have a strong sentiment for the rustic farm life, Ashley said. Ashley pointed to laws passed to protect the “esthetics” of farm towns, such as farmers having the right to veto construction of highways or billboards visible from their land.
Free-trade agreements would be a positive first step toward reform, Ashley said. While the United States eliminates obvious barriers to free trade, such as tariffs, Ashley said, the nation must also remove all policies that distort markets and artificially raise food prices.
Hood is an editorial intern at Carolina Journal.