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Monday, November 22, 2010

Road Trip redux

In an earlier report on a five week road trip, I pointed out that three of the Obama administration's failures were visible from the road. One was bad roads, two was overweight people and three was ag subsidies for corn. Well, it turns out that numbers two and three are closely tied together. Read this piece to see how.

Who Eats Cotton Anyway?

Updated November 21, 2010, 07:00 PM

Brian Riedl is the Grover M. Hermann Fellow in federal budgetary affairs at the Heritage Foundation.

Farm subsidies represent a solution in search of a problem.

Fruit, vegetable, livestock and poultry operations receive nearly no payments, yet still produce two-thirds of the farm economy.

We are told the farm economy cannot function without subsidies. However, nearly all subsidies go to growers of just five crops: wheat, cotton, corn, soybeans and rice. By contrast, fruit, vegetable, livestock and poultry operations receive nearly nothing, yet still produce two-thirds of the farm economy, with stable prices and healthy incomes. Why can’t the Big Five crops function in the same free market?

We are told food is too vital to national security to leave to the free market. This is the same misguided logic that has induced calls for a federal takeover of health care. It’s unclear how a centrally planned, bureaucratic, economically illiterate farm subsidy system that doesn’t help the farm economy aids national security. (And who eats cotton, anyway?)

We are also told that subsidies alleviate farmer poverty. Setting aside the Norman Rockwell imagery, farm subsidies are America’s largest corporate welfare program. Congress targets most subsidies toward large commercial farmers, which report an average annual income of nearly $200,000.

By promoting corn and soy, rather than fruits and vegetables, subsidies contribute to obesity and rising health costs.

More than merely ineffective, farm policies impose substantial harm. They cost Americans $25 billion in taxes and another $12 billion in higher food prices annually. Environmental damage results from farmers overplanting crops in order to maximize subsidies. By undermining America’s trade negotiations, subsidies raise consumer prices and restrict U.S. exports. Cotton subsidies undercut African farmers, keeping them in desperate poverty. And as Michael Pollan, author of “The Omnivore’s Dilemma,” has written, by promoting corn and soy (from which sugars and fats are derived) rather than healthier fruits and vegetables, farm subsidies contribute to obesity, rising health care costs, and early death.

The real problem is that farmers’ incomes fluctuate yearly due to crop and weather unpredictability. This can be solved inexpensively with Farmer Savings Accounts and improved crop insurance. With a $1.2 trillion deficit, outdated, unnecessary farm subsidies must be included in broad-based budget reforms.

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