A brief musing on farm subsidies

Perhaps it is time to reconsider farm subsidies? Paying large farms vast sums of money not to grow crops seems counterproductive when commodity prices are rising to all time highs.

For example: Corn is trading at $302/ton, which is over 75% higher than the price at this time last year and over 100% (double) the average price of corn for the last 30 years. Soybeans, wheat, sugar, beef, and cotton (just to name a few) are all currently trading close to 100% above their 30 year average, with nearly all of the increases coming in the last 4 years. Salt is currently over 300% higher than its 30 year average (although it is still lower than it was during the height of the "economic crisis").

The damage caused by this vast jump in the price of basic food products could be catastrophic to places where the people don't have the opulent luxury of eating four course meals or even the option of grabbing a dollar cheese"burger" for a quick lunch. If what the World Bank is peddling is true, that the price increases are due to higher demand and severe weather in vulnerable nations, then why not allow the aptly named "Breadbasket" of the United States roar to life this summer? Subsidies were put in place to maintain a stable price in the market so that the market didn't consume itself and drive the price of crops to unsustainably low levels for farmers. If the prices have risen due to increased demand and the supply is being artificially limited by subsidies, then the subsides have become a double edged sword, disemboweling both the agricultural capacity of the United States and those too poor to afford food all over the world.

One of the problems is the agricultural lobby, its difficult to pass up getting paid to not produce anything. The average annual payout in farm subsidies over the last ten years is over 16Billion/yr (yes, with a B and a lot of zeros) (2009 numbers). With budget cuts and "austerity" becoming the new mantra for the government, and the global price of commodities flirting with their all time highs (many of which were set in 2009), keeping subsidies at their current levels seems...absurd.

I am by no means an expert on this issue, and I welcome all criticism and feedback that can help me understand it better.