The Bottom Line: Should farm subsidies be reduced?
It is widely agreed upon by economists that farm subsidies in the US and Europe have the following economic effects:
- Redistribution of wealth from taxpayers to wealthy landowners and farmers
- Dead-weight loss due to inefficient distribution of capital.
- Environmental damage because with farm subsidies, farmers overproduce and need more farm land. More farmland=less forest.
- Disadvantaged farmers in countries who do not have farm subsidies and must compete with US/EU farmers in exporting their product in the world market. Developing countries and those where agriculture is the main industry are hurt the most.
- Ill-natured competition between countries to trying protect their own farmers, with the mindset that “if we do not have farm subsidies, our farmers will be in a disadvantaged position.”
Thus, we argue that farm subsidies should be gradually reduced in both US and EU.
(President Obama visits Michigan State University to address the nation on the most recent draft of the Farm Bill before signing it into law.)