Farm Bill 2014: Business As Usual For Big Agriculture

A common question that has been asked nowadays is how much importance should the government be given in subsidizing farmers and corporations? To provide a little background, an agricultural subsidy is governmental financial assistance paid to those of the agricultural field to enhance their income, manage the famer’s supply, as well as influence commodities. According to “Farm Bill 2014: Business as Usual for Big Agriculture” the United States currently pays 20 billion per a year to farmers in direct subsidies as a stabilization to farmer’s income. The particular amount depends on market prices for crops as well as other external factors. The U.S. Department of Agriculture provides subsidized crop insurance, agricultural research endorsements, as well as marketing support. Overall,

Getting the balance right between rules predetermined and spur of the moment decisions made after the event is important. Otherwise, hasty recourse to unplanned decisions will undermine the contingency plans. Governments also need to avoid creating moral hazard, for example that farmers fail to take certain precautions because experience has taught them that whatever happens the government will step in. With farm subsidies, there is a direct effect of transferring income from the general tax payers to farm owners. It has been noted, however that export subsidies, driving down the price of commodities provides cheap food for consumers in developing countries, but the low prices are harmful to farmers that do not receive the subsidies. Since wealthier countries can afford domestic subsidies, it is argued that it promoted poverty in third world nations by artificially getting rid of the world crop prices. Usually, developing countries have a comparative advantage in producing agricultural goods but lower crop prices tend to support the developing countries to depend on the wealthier