Friday, January 21, 2011

Are Farm Subsidies Wasteful Spending?: Technology vs Subsidy

I did some research on the subject, and thanks to USAspending.gov and EWG.org, as well as many other websites that want to broadcast government info, found that the US government awarded about $2.5B for agriculture-related research and about $16.4B for farm subsidies including crop insurance in 2009.  The less widely broadcasted info is why this continues, and apparently the whole subject is more twisted than you might expect.  Foremost, institutions at the cutting edge of crop technology- including and especially those that create new GMOs- can then trademark the discovery and turn around and charge farmers a much higher price for their product (see an interesting article about this in usatoday.com and usagovernmentspending.com for more raw data).  Farmers must then be subsidized at higher rates or their insurance subsidy must be raised in order to compensate for the increased value of the crops.  So basically, the government funds research to increase efficiency, helps the discoverers make millions by granting a patent, and then pays the extra cost that has been passed down to the farmers throu the subsidies.  It looks to me like an absolute disaster. 

BUT: Agencies such as WHO and UN come into play on the research side, saying that the food supply will need to increase to meet the demands of a rapidly growing population, as well as to grow crops to survive disasters such as flooding and global warming.  (The disasters ironically would be good for market prices, however).  So for short-term market, I would vote on the side of decreasing research funding immediately and over the long-term decrease subsidies.  The way I see it now, without the constant input of fresh technology, the cost of insurance would eventually decrease and the prices would go up, lowering the need for subsidies.  Plus with prices going up and fewer subsidies paying farms to under-produce, the supply would increase.

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