{"id":826,"date":"2015-04-25T11:08:38","date_gmt":"2015-04-25T16:08:38","guid":{"rendered":"http:\/\/huewhite.com\/umb\/?p=826"},"modified":"2015-04-25T11:08:38","modified_gmt":"2015-04-25T16:08:38","slug":"the-free-market-and-food","status":"publish","type":"post","link":"https:\/\/huewhite.com\/umb\/2015\/04\/25\/the-free-market-and-food\/","title":{"rendered":"The Free Market and Food"},"content":{"rendered":"

The things you learn on the Internet.\u00a0 At the Volokh Conspiracy Ilya Somin reports on a case in front of SCOTUS regarding the raisin crop<\/a>:<\/p>\n

Things did not go well for the federal government in today\u2019s oral argument<\/a> in Horne v. US Department of Agriculture<\/i><\/a>, the raisin takings case. Nearly all of the justices were highly skeptical of the government\u2019s claim that forcible confiscation of large quantities of raisins somehow does not qualify as a taking of private property that requires \u201cjust compensation\u201d under the Fifth Amendment. The forced transfer is part of a 1937 program that requires farmers to turn over a large portion of their raisin crop to the government so as to artificially reduce the amount of raisins on the market, and thereby increase the price. Essentially, the scheme is a government-enforced cartel under which producers restrict production so as to inflate prices.<\/p><\/blockquote>\n

It can be quite a jolt when you realize how far the United States is from a real free market.\u00a0 It would be interesting to know exactly which program, and its breadth.<\/p>\n

But, of course, the real question is this: should there be a real free market in food?\u00a0 It should be well-known that the government regularly buys up excess corn; and, back in the 90s, the GOP briefly attempted to eliminate the agricultural subsidies.\u00a0 The Economist provides a quick light-weight summary here<\/a>:<\/p>\n

To this day, to be treated as a farmer in America doesn\u2019t necessarily require you to grow any crops. According to the Government Accountability Office, between 2007 and 2011 Uncle Sam paid some $3m in subsidies to 2,300 farms where no crop of any sort was grown. Between 2008 and 2012, $10.6m was paid to farmers who had been dead for over a year. Such payments explain why Tom Vilsack, the agriculture secretary, is promoting a rule to attempt to crack down on payments to non-farming folk. But with crop prices now falling, taxpayers are braced to be fleeced again.<\/p>\n

American farm subsidies are egregiously expensive, harvesting $20 billion a year from taxpayers\u2019 pockets. Most of the money goes to big, rich farmers producing staple commodities such as corn and soyabeans in states such as Iowa.<\/p><\/blockquote>\n

The conservatives tend to maintain a skepticism about ag subsidies which I sometimes agree with and sometimes believe is rooted in an ignorance of how people might behave in the face of food shortages.\u00a0 The Cato Institute provides this debate<\/a> from 2007 on the subject of ag subsidies and how the dismantling of New Zealand’s subsidies impacted the country.\u00a0 Daniel T. Griswold asserts the conservative case:<\/p>\n

There is no dismissing the New Zealand experience. The government largely dismantled its farm programs and none of the consequences Bob predicts came true. Its citizens did not suffer any shortages or disruptions of food supplies. Productivity of New Zealand farms accelerated after reform and they now compete successfully in global markets, especially as dairy and livestock producers.<\/p>\n

In contrast, the output and income of America\u2019s most supported crops have lagged behind the performance of non-supported products that compete in free and open markets. According to the U.S. Department of Agriculture, cash receipts for the most supported crops, including corn, soybeans, wheat, cotton, sugar beats, and sugar cane, rose an unimpressive 14 percent from 1980 to 2005. Meanwhile, cash receipts for non-supported crops, including fruits, vegetables, nuts, and greenhouse products, soared by 186 percent. Subsidized farmers are selling out their future competitiveness in the market for the sake of federal handouts.<\/p><\/blockquote>\n

Bob Young provides the opposition:<\/p>\n

The New Zealand and Australia cases are held up to us on a fairly regular basis. Australia has had, and continues to have, support programs for their producers. They are now in the middle of providing disaster assistance to their producers \u2014 assistance their producers certainly need. They also operated their wheat market under a single-buyer\/single-seller framework up until the very recent past. New Zealand made the jump they did when their entire economy and government were on the brink of bankruptcy. They undertook massive government reforms that cut across literally every agency. Dan might be willing to entertain such an idea, but I\u2019m not so sure that we as a nation are ready to make that leap.<\/p>\n

Finally, Dan talks about the farm programs as producing environmental degradation. In part because of the rules a producer must operate under to be eligible to participate in farm programs, and in part because farmers are the best day-to-day environmental stewards in this country, the average erosion rate from an acre of farmland has dropped from 7.2 tons in 1982 to 4.7 tons in 2001. Wetland protection has increased sharply and wildlife habitat has expanded significantly. Even on those disgusting corn acres \u2014 the acres that provide the feed for our livestock and are helping with our nation\u2019s energy supply \u2014 the nitrogen used to produce a bushel of corn fell from 1.3 pounds in 1983 to 0.94 pounds in 2006.<\/p><\/blockquote>\n

In 2013, Bloomberg Business<\/a> joined in:<\/p>\n

A Depression-era program intended to save American farmers from ruin has grown into a 21st-century crutch enabling affluent growers and financial institutions to thrive at taxpayer expense.<\/p>\n

Federal crop insurance encourages farmers to gamble on risky plantings in a program that has been marred by fraud and that illustrates why government spending is so difficult to control.<\/p>\n

And the cost is increasing. The U.S. Department of Agriculture last year spent about $14 billion insuring farmers against the loss of crop or income, almost seven times more than in fiscal 2000, according to the Congressional Research Service.<\/p><\/blockquote>\n

The Bloomberg article is quite long and indicates the implementation of our current ag subsidies is making everyone unhappy:<\/p>\n

With new farm legislation stalled on Capitol Hill, largely over Republican demands for deeper cuts in food stamp spending, the cost of crop insurance is drawing fire from both ends of the political spectrum.<\/p>\n

The Environmental Working Group says the insurance encourages farmers to make riskier plantings, secure in the knowledge they will be paid even if the crops fail. The free-market Club for Growth, meanwhile, derides the program as a government handout for millionaire farmers.<\/p><\/blockquote>\n

Then there’s this gem:<\/p>\n

\u201cWe shouldn\u2019t look at crop insurance as the least evil policy,\u201d says Josh Sewell, senior policy analyst with Washington-based research group Taxpayers for Common Sense. \u201cIt\u2019s not like our choice is to send checks one way or send checks another way. We could just not send checks.\u201d<\/p><\/blockquote>\n

As many have said before me, common sense is neither.\u00a0 My observation over the years has been that if the name of a group includes “taxpayers”, then it’s a bunch of guys who are only concerned about their wallets.<\/p>\n

While I’m sure that such a wart on what we like to think of as a free market is hard to integrate with the market – and can lead to fraud, as many engineers would consider this an instability in the system<\/em> – I don’t think they really make the case for eliminating ag subsidies, only reforming them (and on that, no opinion<\/em>).\u00a0 On the conservative side there seems to an assumption that this is about economics, not about assuring the food is available on a regular basis.<\/p>\n

So how much food do we produce?\u00a0 The EPA has this page<\/a>:<\/p>\n

In round numbers, U.S. farmers produce about $ 143 billion worth of crops and about $153 billion worth of livestock each year.<\/p><\/blockquote>\n

And what about California, recently the subject of water rationing<\/a>?\u00a0 Richard Cornett at Western Farm Press, in 2013, gives his thoughts<\/a>:<\/p>\n

So a loss of California ag production would hit hard consumers\u2019 wallets and their diets would become less balanced.This is because our state produces a sizable majority of American fruits, vegetables and nuts; 99 percent of walnuts, 97 percent of kiwis, 97 percent of plums, 95 percent of celery, 95 percent of garlic, 89 percent of cauliflower, 71 percent of spinach, and 69 percent of carrots and the list goes on and on.\u00a0A lot of this is due to our soil and climate. No other state, or even a combination of states, can match California\u2019s output per acre.<\/p>\n

Lemon yields, for example, are more than 50 percent higher than neighboring states. California spinach yield per acre is 60 percent higher than the national average.\u00a0 Without California, supply of these products in our country and abroad would dip, and in the first few years, a few might be nearly impossible to find.\u00a0 Orchard-based products specifically, such as nuts and some fruits, would take many years to spring back.<\/p>\n

Soon, the effect on consumer prices would become attention-grabbing. Rising prices would force Americans to alter their diets. Grains are locked in a complicated price-dependent relationship with fresh fruits, vegetables and meats. When the price of produce increases, people eat more grain. When the price of grain rises, people eat more fruits and vegetables. (In fact, in some parts of the world, wheat and rice are the only \u201cGiffen goods\u201d \u2013 a product in which decreasing prices lead to decreasing demand.)\u00a0 Young people and the poor in America, more than others, eat less fresh fruit when prices rise.<\/p><\/blockquote>\n

In some respect, I hope the ag subsidies act to spread farming out, rather than concentrating it.<\/p>\n","protected":false},"excerpt":{"rendered":"

The things you learn on the Internet.\u00a0 At the Volokh Conspiracy Ilya Somin reports on a case in front of SCOTUS regarding the raisin crop: Things did not go well for the federal government in today\u2019s oral argument in Horne v. US Department of Agriculture, the raisin takings case. Nearly \u2026 Continue reading → <\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-826","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/huewhite.com\/umb\/wp-json\/wp\/v2\/posts\/826","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/huewhite.com\/umb\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/huewhite.com\/umb\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/huewhite.com\/umb\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/huewhite.com\/umb\/wp-json\/wp\/v2\/comments?post=826"}],"version-history":[{"count":2,"href":"https:\/\/huewhite.com\/umb\/wp-json\/wp\/v2\/posts\/826\/revisions"}],"predecessor-version":[{"id":828,"href":"https:\/\/huewhite.com\/umb\/wp-json\/wp\/v2\/posts\/826\/revisions\/828"}],"wp:attachment":[{"href":"https:\/\/huewhite.com\/umb\/wp-json\/wp\/v2\/media?parent=826"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/huewhite.com\/umb\/wp-json\/wp\/v2\/categories?post=826"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/huewhite.com\/umb\/wp-json\/wp\/v2\/tags?post=826"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}