Pros And Cons Of Agricultural Subsidies

Agricultural subsidies is a very complex and controversial economic topic today. It will continue to be a hot topic as government continues it. It is largely debated in the United States as well as in other countries. The reason it is so largely debated is because it literally have an effect on the entire world market. Not to mention that the farm has been booming the last 5 to 10 years. This topic also tends to draw strong opinions in our area in particular due to the large agricultural community in our region. However, even within different states there are many supporters as well as opponents to these government subsidies.

American family farmers produced goods for the global economy; however, after 1870, the depression struck the nation, meaning that the produce families grew for the market and economy would be sold for at a lower price. A family who had contributed themselves to the nation’s economy would find themselves in an event of possibly, and most likely, losing their farm since at that time farming insurance wasn’t available. Ownership of farms were not secure or stable during this time of depression.

America’s agricultural economy had already been suffering for a decade when nature conspired against the country to exacerbate the Great Depression. From 1931 through 1939,

The increase in corn production and acreage that comes from FAIRA is yet another slap in the face to the American farmer. By allowing for increased corn production on top of the already surplus of corn that domestic farms already produce, the government is actively lowering the price of corn on the market, making it less profitable for farms to grow and forcing a lot of farms to close down. In the Great Depression era, the United States government under President Roosevelt took to subsidizing and buying up excess stores of corn to maintain crop prices and prevent the collapse of the farming industry in the United States (Pollan 49). This protects farmers and allows them to make a living while also providing reasonably priced crops to feed the country with. The Nixon administration began the trend of deregulation in the 1970s, preferring a free

Following the Civil War, a second industrial revolution in America brought many changes to the nation’s agriculture sector. The new technologies that were created transformed how farmers worked and the way in which the sector functioned. Agriculture expanded and became more industrial. Meanwhile government policies, or lack of them for a while, and hard economic conditions put difficult strains on farmers and their occupation. These changes in technology, economic conditions, and government policy from 1865 to 1900 transformed and improved agriculture while leaving farmers in hardship.

In an effort to help boost the economy, the government provided cheap federal farm policies which allowed many people to take on the job of farming. In order to maximize profit,

Throughout the 19th century, the American market saw drastic changes in infrastructure and production. The agriculture sector was no different, as new technologies and modes of transport led the way for farmers to sell goods and work their land, easier and faster. New laws and regulations also paved the way towards cheaper food throughout America. However, as prices dropped, and production flourished, a minority of Americans suffered the consequences of starvation, while farmers suffered low gains. The agricultural picture of the 1800s paints an image of new technologies and a transformed transport sector, which gave way to lower consumer prices and hardships for farmers.

FDR in response to the farmer’s distress created the Agricultural Adjustment Act (AAA). It protected farmers from price drops by providing crop subsidies to reduce production and educational programs to teach methods of preventing soil erosion.(New Deal Programs) Also the intent of the AAA was to restore the purchasing power of American farmers to pre-World War I levels. [ (AAA: Agricultural Adjustment Act) ] The money to pay the farmers for cutting back production by about 30% was raised by a tax on companies that bought farm products and processed them into food and clothing. The AAA evened the balance of supply and demand for farm commodities so that prices would support a decent purchasing power for farmers.

In the late nineteenth century, many American farmers were experiencing economic insecurity. There were various factors that contributed to why farmers were facing financial hardships in this particular time frame. The fundamental factors were the commercialization, overproduction, and mechanization of agriculture. These factors are by no means all of the driving forces that lead to this time of financial insecurity, but they are large contributors to say the least. After the Civil War, subsistence farming was gradually morphing into commercialized farming. Instead of farming to support oneself or one's family at a minimum level, farmers began leaning towards making large profit off of their crops.

Although farm subsidies all have their roots to one major piece of legislation, there are multiple variations that are common. One of such subsidy programs allows farmers to counter fluctuations in various aspects of their production. If prices for a crop take astounding hikes or fall dramatically, subsidies can provide in time of need. This is the most well-known farm subsidy program, but there are other aspects that get remarkably overlooked. Even insurance coverage, product marketing, research and conservation efforts are subsidized under the current Farm Bill. With the present situation, many Americans believe that the government carries too much control in the agricultural market. For a more detailed breakdown of where the funding in the Farm Bill goes to, see the pie chart below for a reference. These numbers are accurate as of the 2014 Farm Bill, per the National Sustainable Agriculture Coalition.

Martin Jr. argue that the Agricultural Adjustment Act was instrumental in improving lives of farmers in southern United States and was effective in ending the downturn in farming economics occurring in the early 1930s. The main goal of the Agricultural Adjustment Act was to fix the farming crisis by raising crop prices, and it is indisputable that the Act succeeded in this. For example, the price of wheat almost doubling from 55.1 cents per bushel in 1932 to 106.0 in 1935, only three years (See Appendix). This was also evident in many other crops such as cotton and peanuts. From this evidence, it is obvious that the Act did achieve its goal of increasing crop

Arguing that the majority of farmers during the Great Depression benefitted from the government policies produced through President Roosevelt’s New Deal is an inaccurate claim. While history textbooks highlight the improvement of finances for people in rural areas in the United States of America, the personal experiences of family farmers contradict those textbooks. Writers of textbooks about American history should consider looking further into the delicate topic of how the Great Depression effected common farm families. In the West, farmers endured the Dust Bowl. In the North, people in rural areas competed to make a profit. Although statistics show the most economic damage of the Great Depression beginning at the end of 1929, small farm families refer to the effects of the Depression dating back as early as 1925 since government policies mostly benefitted large farm industries as small farms were forced to foreclose.

Alongside the growth of large farms, crops are being subsidized which leads to the prices of the goods being kept at a low price (Toews). For a family farm, this means producing a crop that is not cost effective which eventually drives the family farms out of business. Once these large corporations produce the crop, it is then shipped to the manufacturers

The Agricultural Adjustment Act in Great Depression Era in 1933 was a the United States federal law, part of the New Deal, which reduced agricultural production by paying farmers subsidies not to plant on part of their land and to kill off excess livestock. Its purpose was to reduce crop surplus in order to effectively raise the value of crops. This act represented a transformation about government’s role playing in the country. Before the period, the government only taxed import or export; it didn’t touch economy. But the AAA showed that government started to have power to change its economy.

Supply and demand are the rulers of price in the capitalist economy of the United States, and farm goods rely on these factors as much as any other commodity. The demand for food remains relatively stable although slightly increasing year to year, but the supply fluctuates greatly depending on