Subsidies

Subsidies refer to the assistance set aside by governments to boost producers of commodities or to avert a decline of industries. Moreover, governments can provide subsidies to control production of certain products. Different governments have granted subsidies to agricultural products to support the agricultural industry. Subsidies to farmers and landowners reach them in various forms such as direct payments and price supports through government storage and purchases. Moreover, some governments create regulations minimizing prices for farm inputs, crop insurance and disaster response. These subsidies have varied effects of the general economy and do not benefit everyone. Therefore, there are those who support the subsidies while others do not.

Farm owners are part of the group that supports subsidies in agriculture. The prices for renting land that receives subsidies from the government are higher than for a farm that does not receive subsidies (Alston and Jennifer, 1697). Farm owners in farms receiving subsidies are, therefore, supportive of the subsidy programs. Stability of food prices is necessary so that people across income levels can afford it. Without subsidies, monopoly players in the market can dominate food markets and raise prices. This would make food commodities costly and unaffordable to many people. Given the critical role that food security plays in a nation’s well-being, farmers’ income should be ensured. Moreover, they should be properly shielded from harsh economic conditions that would lead them to go out of business. The government encourages farmers to plant crops that conserve the soil for sustainability through subsidies’ programs. Farming takes place mostly in the rural areas that are less developed than urban centers. Subsidizing agricultural products encourages development in the rural areas such that the countries’ development becomes uniform. Consequently, people in both rural and urban locations are able to enjoy relatively good standards of living.

On the other hand, subsidies seem unattractive because they concentrate the farm economy’s dependency on the government. Economists opposed to the subsidies argue that market forces would be more efficient and less expensive than the government in regulating prices and production (Wuerthner and Mollie, 58). Subsidies encourage individual farmers to acquire extra land so that they can have additional subsidies from the government. Consequently, the subsidies concentrate production in the control of few corporations, which undermines the family farm concept. The primary objective of government subsidies is to control production. However, critics of subsidies argue that they have not been able to achieve the objective (Wuerthner and Mollie, 20). The failure to achieve the primary objective results from the farmers who should keep part of their land out of production. The farmers put aside the least product piece, leaving the most productive parts in production, despite having received subsidies. Subsidies transfer taxpayers’ money and income from consumers to the wealthy land owners. This is undue advantage granted to farmers and land owners at the expense of the general population. In addition, the society bears the losses incurred in the farm lands in the form of dead weight losses. Opponents of subsidies assert that there are no known broad social benefits that accrue from this distribution of losses.

Subsidies have both benefits and negative consequences, depending on the effects they have on various people (Alston and Jennifer, 1694). Moreover, there are divergent opinions pertaining to their legitimacy and effectiveness in achieving their primary objectives.

Works Cited

Alston, Julian and Jennifer S. James. ‘‘The Incidence of Agricultural Policy’’. Handbook of Agricultural Economics Vol. 2.1 (2002): 1689–1749. Print.

Wuerthner, George, and Mollie Matteson. 2002. Welfare Ranching: The Subsidized Destruction of the American West. Washington, D.C.: Island Press. Print.

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