Are agricultural subsidies a good thing?

Agricultural subsidies in the United States are currently over $30 billion annually according to the WorldWatch Institute. In the United States primarily give agricultural subsidies to corn, wheat, cotton, sugar, and soybeans producers with corn receiving the largest set of subsidies. While the question of agricultural subsidies has been a pretty stock debate in the past, a case for using subsidies to offset the costs of tariffs between China and the United States has thrown a modern twist on the age-old question.

Historically subsidies have been used to help increase production of crops. It has helped to improve the number of crops produced. Some analysts predict that the world will need nine times the amount of currently farmable land by 2050 to be able to properly sustain an exponentially increasing population. Especially in an era when food security is becoming a larger and larger issue, increased production is increasingly important. These subsidies are able to help farmers due to inherently high costs of farming. Studies cite: 1,000 acres of corn requires a “crop loan” of a half-million dollars.

However, some argue that agriculture production in America does not resolve the problem but rather creates new ones. Specifically: World Resource Institute cites that as a result of overproduction developing countries are harmed. The issue is that farmers have to either lower prices to the point that it is below production cost or they get outcompeted and cannot sell exports. We have seen that agricultural subsidies have wrecked the Mexican corn industry as they just get out produced by America. Developing countries are often uniquely sensitive because they tend to rely on one export and most households tend to rely on that one export. For example in Burkina Faso, 85% of the population depend on cotton production, but as a result of US competition, they saw export earnings drop by 12%. In total, subsidies cost developing countries $24 billion each year.

The issue is that while agricultural subsidies may be extremely helpful to American farmers, it hurts developing countries on a global scale, leading to the question: what do we prioritize? Most would probably say to stop agriculture subsidies as it hurts these developing economies, but unfortunately, that logic probably won’t stop the government.

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