Thursday, July 12, 2007

one more voice for fixing US ag policy

In today's WaPo, George Will's column addresses the farm subsidy fiasco. He points out something that's relevant to the discussion of biofuels: price supports foster overproduction. His focus is entirely domestic and aimed at eliminating welfarestate-ism, but others point out that agricultural protectionism in the US prevents poor nations from hoping to compete in world agricultural markets -- with government subsidies, US prices are always too low. Will says:
Fifty-seven percent of farms receive no payments and two-thirds of those that do receive less than $10,000. The largest 8 percent of farms receive 58 percent of the payments. Farms with revenue of $250,000 or more receive payments averaging $70,000. Lugar wants to redirect the flow of federal funds from subsidizing favored crops to rural development, because fewer than 14 percent of residents in rural areas work on farms.

Under the continuing New Deal approach, five commodities -- corn, soybeans, cotton, rice and wheat -- got about 90 percent of last year's $19 billion in subsidies. This is a perverse incentive for overproduction of the five, which depresses prices, which triggers federal supports.
Here's the citation:

The Farmer to Fix Farm Policy
By George F. Will
Thursday, July 12, 2007; Page A23

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