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Farm Subsidies - A Necessary Evil?


Subsidies are payments, economic concessions, or privileges 
given by the government to favor businesses or consumers. In the 
1930s, subsidies were designed to favor agriculture. John Steinbeck 
expressed his dislike of the farm subsidy system of the United States 
in his book, The Grapes of Wrath. In that book, the government gave 
money to farms so that they would grow and sell a certain amount of 
crops. As a result, Steinbeck argued, many people starved 
unnecessarily. Steinbeck examined farm subsidies from a personal 
level, showing how they hurt the common man. Subsidies have a variety 
of other problems, both on the micro and macro level, that should not 
be ignored. Despite their benefits, farm subsidies are an inefficient 
and dysfunctional part of our economic system.
 The problems of the American farmer arose in the 1920s, and 
various methods were introduced to help solve them. The United States 
still disagrees on how to solve the continuing problem of agricultural 
overproduction. In 1916, the number of people living on farms was at 
its maximum at 32,530,000. Most of these farms were relatively small 
(Reische 51). Technological advances in the 1920's brought a variety 
of effects. The use of machinery increased productivity while reducing 
the need for as many farm laborers. The industrial boom of the 1920s 
drew many workers off the farm and into the cities. Machinery, while 
increasing productivity, was very expensive. Demand for food, though, 
stayed relatively constant (Long 85). As a result of this, food prices 
went down. The small farmer was no longer able to compete, lacking the 
capital to buy productive machinery. Small farms lost their 
practicality, and many farmers were forced to consolidate to compete. 
Fewer, larger farms resulted (Reische 51). During the Depression, 
unemployment grew while income shrank. "An extended drought had 
aggravated the farm problem during the 1930s (Reische 52)." Congress, 
to counter this, passed price support legislation to assure a profit 
to the farmers. The Soil Conservation and Domestic Allotment Act of 
1936 allowed the government to limit acreage use for certain 
soil-depleting crops. The Agricultural Marketing Agreement Act of 1937 
allowed the government to set the minimum price and amount sold of a 
good at the market. The Agricultural Adjustment Act of 1938, farmers 
were given price supports for not growing crops. These allowed farmers 
to mechanize, which was necessary because of the scarcity of farm 
labor during World War II (Reische 52). During World War II, demand 
for food increased, and farmers enjoyed a period of general prosperity 
(Reische 52). In 1965, the government reduced surplus by getting 
farmers to set aside land for soil conservation (Blanpied 121). The 
Agricultural Act of 1970 gave direct payments to farmers to set 
aside some of their land (Patterson 129). The 1973 farm bill lowered 
aid to farmers by lowering the target income for price supports. The 
1970s were good years for farmers. Wheat and corn prices tripled, land 
prices doubled, and farm exports outstripped imports by twenty-four 
billion dollars (Long 88). Under the Carter administration, farm 
support was minimized. Competition from foreign markets, like 
Argentina, lowered prices and incomes (Long 88). Ronald Reagan wanted 
to wean the farm community from government support. Later on in his 
administration, though, he started the Payments In Kind policy, in 
which the government paid farmers not to grow major crops. Despite 
these various efforts, farms continue to deal with the problems that 
rose in the 1920s.
 Farm subsidies seem to have benefits for the small farmer. 
"Each year since 1947, there has been a net out-migration of farm 
people (Reische 53)." American farm production has tripled since 1910 
while employment has fallen eighty percent (Long 82). Small family 
farms have the lowest total family incomes (Long 83). Farming is 
following a trend from many small farms to a few large farms. 
Competition among farmers has increased supply faster than demand. New 
seed varieties, better pest control, productive machinery, public 
investments in irrigation and transportation, and better management 
will increase farm output. The resulting oversupply of farm products, 
which creates a low profit margin, drives smaller farms out of 
business. Smaller farms lack the capital and income to buy the 
machinery they need to compete with larger farms (Long 85). Many 
see this tendency towards consolidation and mechanization of farms to 
be harmful to the United States in the long run, and they see 
subsidies as a way of achieving a social desire to preserve the family 
farm. "If the family farm represents anything, it's a very intimate 
and fundamental relationship between people and resources (MacFadyen 
138)." Fewer farms mean fewer jobs and a higher concentration of 
wealth. Ten 30,000-acre farms may produce as much food as a hundred 
3000-acre farms, but the former supports machinery; the latter, 
community (MacFadyen 138). Farm subsidies are designed to prevent the 
extinction of the small farmer. Despite the social benefits, subsidies 
have many problems. The subsidy system is often wasteful; the 
government finances irrigation systems in the California Imperial 
Valley, and then pays farmers not to grow crops on it (Solkoff 27). 
Some benefits hurt the small farmer. Marketing orders and tax breaks 
hurt small operators by giving more money to bigger farms. Big farms 
can then overproduce and undersell using advanced machinery, driving 
lesser farms out of business (Fox 28). Subsidies also allow foreign 
markets to become competitive by artificially raising market prices 
(Long 91). Artificially raising market prices create a surplus that 
would normally be solved by the free market system. In a theoretical 
free market, overproduction would drive excess farms out of business, 
until equilibrium would establish itself for both price and quantity 
of farm products. Subsidies allow inefficient farms to continue to 
exist, which creates an inefficient economic system. Subsidies also 
increase the cost of other consumer products, while also increasing 
taxes to pay for them. Perhaps most importantly, subsidies do not 
fulfill their social role. "About 112,000 large farms-- equivalent to 
the number of farms in Minnesota alone-- produce half the nation's 
food and fiber (Long 82)." The many government subsidy policies do not 
preserve the family farm, and the number of small farms has almost 
continuously been on the decline. Subsidies are impractical in the 
economic and the social aspects.Despite perceived benefits, farm 
subsidies are an inefficient and dysfunctional part of our economic 
system. Their goal, nonetheless, is noble. Writers like John Steinbeck 
made people aware of the plight of the small farmer, and subsidies 
were the only solution he government could think of. If there is some 
way to prevent the decline of small farms that does not carry the many 
subsidy problems, the agricultural policy would undoubtedly change. 
Perhaps the same anti-trust laws that prevented the monopolizing of 
industry could be used to prevent the consolidation of farms. Until 
some other system is developed that can deal with the problems of the 
farmer, subsidies will continue to be used.

Works Cited

Blanpied, Nancy. Farm Policy. Congressional Quarterly: Washington 
D.C., 1984.

Fox, Michael. Agricide. Schoken Books: New York, 1986.

Long, Robert Emmet. The Farm Crisis. Wilson Co.: New York, 1987.

MacFadyen, J. Tevere. Gaining Ground. Holt, Reinhart, and Winston: New 
York, 1966.

Reische, Diana. U.S. Agricultural Policy. Wilson Co.: New York, 1966.

Solkoff, Joel. The Politics of Food. Sierra Club Books: San Francisco, 



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