by Kelly Lester
Policy Analyst for the Center for Food, Power, and Life | John Locke Foundation
With the upcoming 2023 federal Farm Bill currently in the works, it’s a good time to talk about some of the negative consequences of farm subsidies, which we will most likely see an increase in. American farm subsidies have been a contentious issue for decades, with many arguing that the negative consequences outweigh the benefits. One of the most significant ways in which American farm subsidies are detrimental is by raising the price of food for consumers. This is especially concerning because it disproportionately affects low-income families, who are already struggling to make ends meet.
Farm subsidies incentivize overproduction, which can cause an oversupply of certain crops and a subsequent drop in prices. However, once the surplus is exhausted, the price of those crops often increases above what would have been the market price in the absence of subsidies.
Another way in which farm subsidies raise the price of food is by setting minimum prices for certain crops. The government often sets a minimum price for crops that is higher than what would be considered the market price. According to the American Enterprise Institute, setting a minimum price for sugar costs consumers almost $4 billion per year.
In addition to causing higher prices for subsidized crops, farm subsidies can also lead to increased production costs for farmers who do not receive subsidies. This is because many of the practices and equipment that are subsidized by the government are more expensive than alternative approaches. According to a report by the Environmental Working Group, from 1995 to 2021, the top 10% of farm subsidy recipients received 78% of all subsidies, while the bottom 80% received only 9 percent. This unequal distribution of subsidies can lead to a consolidation of the agricultural industry, which can lead to even higher food prices as large corporations exert greater control over the market.
Furthermore, the use of American farm subsidies can have negative environmental effects. By encouraging the overproduction of certain crops, subsidies can lead to the use of more pesticides and fertilizers, which can have negative effects on soil health and water quality. Additionally, many of the crops that are heavily subsidized, such as corn and soybeans, are used to produce unhealthy processed foods that contribute to the obesity epidemic. Agribusinesses spent over $160 million on lobbying in 2021 alone, much of which went towards advocating for policies that benefited the industry at the expense of the environment and public health.
Finally, the use of American farm subsidies can lead to a decline in the quality of food. When farmers are incentivized to produce as much as possible, they may prioritize quantity over quality. According to a report by the Union of Concerned Scientists, the use of synthetic nitrogen fertilizers, which are heavily subsidized, has led to a decline in soil health and a decrease in the nutritional value of crops.In conclusion, American farm subsidies have negative consequences for consumers, the environment, and the overall economy. By incentivizing overproduction, setting minimum prices, and increasing production costs, subsidies contribute to higher food prices that disproportionately affect low-income families. Policymakers must reconsider the current system of farm subsidies and find ways to support sustainable and environmentally friendly farming practices that provide affordable, nutritious food to all Americans.