Tag Archives: subsidies

The Problem of Farm Subsidies for the Environmental Movement

“Free-markets” and “environmentalism” aren’t terms normally thrown together in conjunction these days. If you’re well enough in tune with various right-wing and free-market think tanks you will no doubt be aware of institutions like PERC (Property and Environment Research Center) which offer a free-market look at environmental issues. But all in all environmentalism, the green movement, and locovores are usually seen as the domain of the left, not the domain of the right or even those with a libertarian bent.

For that reason I was pleasantly surprised to meet a libertarian the other week who was quite interested in the concept of sustainable farming (in fact, her desire to one day run a sustainable farm influenced her towards libertarianism). A Political Science major at Boise State, she was quite knowledgeable about the ways in which government was, paradoxically, holding back the green movement in favor of large corporate farms.

Sustainable farming is the idea that farming today should leave future generations better off. It emphasizes environmental sustainability, animal welfare, biodiversity (many sustainable farms do not use any chemical pesticides), and so forth. In other words, it’s a popular buzz-word amongst the left and something you would likely hear tossed around casually at one of those hip downtown coffee shops that all the fashionable liberals like to frequent. Not that there’s anything wrong with that, of course. Sustainable farming is certainly a viable alternative to large-scale agribusiness, at least in theory.

Although one could no doubt argue back and forth about how efficient or realistic organic and sustainable farming really are, that isn’t the point of this post. As my libertarian friend went on to point out, due to the system of agricultural subsidies in the U.S. large, well established farming corporations are continually subsidized by the Department of Agriculture at the expense of smaller farms (many of which practice sustainable farming). As it turns out, the top 10% of the largest farms received close to 75% of all subsidies from 1995-2009. The USDA has shelled out close to a quarter trillion during that time period.

Aside from the fact that these subsidies lead to huge amounts of surplus agricultural products (inefficient use of resources) at taxpayer expense, they also directly destroy the livelihoods of third world farmers the world over. The U.S. Government, through its incredibly dubious “Food for Peace” program, buys this surplus food from U.S. farmers and sends it into third world countries at very low, discounted prices thereby ensuring small indigenous farmers are unable to make a living. The entire system is quite plainly awful.

But back to the subsidy’s effects on the domestic market.  What USDA subsidies do is not only encourage inefficiency through an ex ante declaration of market winners (those farms that get the subsidies), but they also ensure that Joseph Schumpeter’s creative destruction never happens. Creative destruction, remember, is a the idea that capitalism is constantly reinventing itself through the process of competition. Goods and services come and go; old businesses die while new ones are born, and so forth. USDA subsidies have the effect of maintaining large agribusiness while new, innovative farming firms (like those engaged in sustainable farming) flounder because they just cannot compete. It is not only a complete injustice- it is completely wrongheaded from an economic perspective. Not because sustainable farming is better than the traditional large-scale corporate farm, but because we don’t know which one is better. The only way to know is to let the market process work. If those subsidies are never removed, consumers will never know if my libertarian friend’s sustainable farm will be able to better satisfy their demands, as well as help the environment. USDA farm subsidies are neither fair nor efficient.