“Many people who depend on agriculture for their survival, both as a source of nourishment and a means of acquiring wealth, perceive US farm policy as part of an anti-American narrative in which Washington wants to keep the rest of the world locked in poverty.” – The Big Handout
As Coronavirus takes its toll on meat processing plants across the US, carnivores race to the market to buy up what’s left of the dwindling supply. And since grilling season is just around the bend, it’s time to look at the state of meat processing to see if they’ll be anything left to toss on the barbie. With plants closed or at limited capacity, beef, pork, and poultry growers are forced to kill millions of their animals to manage the oversupply. This predicament has prompted an emergency bill in Congress, the PRIME Act (Processing Revival and Intrastate Meat Exemption) that would allow local farmers to sell directly to consumers, restaurants, and grocery stores. USDA regulation requires all commercial sales to be inspected before they are approved for market. Yet, excessive regulations make it impossible for small ranchers and farms to sell their stock while waiting for the reopening of virus-ridden facilities. Sadly, this is only the tip of the proverbial iceberg, as the story of the meat industry and most agriculture products is a tale of subsidies, distortions, and higher overall costs for the public.
Subsidies are government (taxpayer) money allocated to preferred industries to assist in keeping the cost of their products low. This naturally distorts the true price of what goods would be without them. Taxpayers subsidize the agricultural business to the tune of 20 billion dollars each year. To further assist American farmers, the government has placed significant tariffs (a tax) on foreign goods, making those products even more expensive. This allows domestic producers to keep their own prices higher. With all this charity, it’s hard to believe we went subsidy-free for the first 150 years of our nation’s existence until Hoover’s Federal Farm Board and FDR’s New Deal intervened to artificially stabilize prices and thereby influence the sales of agricultural products.
The USDA was founded in 1862 by Abraham Lincoln to support the working man at a time when 53 percent of the labor force was in agriculture, and 80 percent of the citizenry resided in rural areas. Lincoln called the new venture, the People’s Department, believing that government involvement was needed to keep wages high. The modern-day USDA is housed in a 2 million square foot building in Washington DC with 100,000 employees nationwide and a budget of 151 billion dollars. Yet today less than one percent of the economy is in agriculture, and the working man is no longer the benefactor of most of the largesse.
The reality is the majority of the food supply in the US comes from factory farms that unnaturally enhance products. Eighty percent of the grain exports are controlled by Big Ag: Cargill, ADM, ConAgra, and Monsanto while 71 percent of farm subsidies go to the top 10 percent of largest corporate farms. Big Government gives subsidies to Big Agriculture that turns around and gives political contributions back to Big Government. The subsidy game at its worst.
In Thomas M. Kostigen’s 2011 book, “The Big Handout”, Kostigen provides a comprehensive review of the food industry, its reliance on government subsidies, and its negative impact on the prices we pay every day at the market. This system of subsidies creates unhealthy food that contributes to poor health while increasing damage to the environment. Kostigen also shows how US agriculture policy plays an unlikely role in terrorism and anti-American sentiment in some of the poorest places on earth.
One of the most outrageous examples of taxpayer subsidies in Kostigen’s book involves a rice producer in California. Rice isn’t indigenous to America, nor is it a food staple for American eaters. Yet because of subsidies, the US is a leading supplier. Rice is best grown where rainfall is abundant and labor costs are low. Average rainfall in the US is 17 inches per year; and 23 in California. Alternately, the average annual rainfall in tropical Vietnam is 55-94 inches per year. Despite its inhospitable environment, America exports as much rice as Vietnam. Rice production in the US requires enormous subsidies for both water and crops. In fact, it costs twice as much to grow and mill rice here in the US as it does in southeast Asia with US taxpayers covering nearly two-thirds of the cost. Tariffs are then used to further inflate the price of rice imports from other countries, another government assist to increase rice prices worldwide. Subsidies continue to roll in and price distortion continues to mislead keeping this particularly California rice producer in business for more than 100 years.
Governments subsidizing domestic producers makes trade among nations unfair and contributes to persistent poverty around the globe. What started as an innocent attempt to help the least of us, has morphed into a grotesque display of corporate greed and preferential treatment to the deepest pockets. We can start to remedy this disparity by passing the PRIME bill and allowing local farmers and ranchers to sell their wares to local merchants and residents. Americans should know and pay the actual cost of the goods they purchase whether it originates domestically or internationally. Free and unfettered exchange among all is the right road back to sanity.
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