[jadenPete]

This question may be naive, but why is the agricultural industry so subsidized? I understand the moral argument, but why, economically, does subsidizing farms result in a more efficient allocation of resources? I've heard that it's because farming as a business is full of unpredictability, but if that were the case, wouldn't there be a significant market for private insurance, and wouldn't the cost of that insurance be priced into the cost of food?

[ggm]

1. Farmers vote. And, Farmers live in states where the value-per-vote is high under both state-vote balancing, and gerrymander. Farming is politically useful.

2. Food is part of national security. It's sensible to keep the sector working.

3. Consumers hate variability in food pricing. So, general sentiment at the shop is not in favour of a strong linkage of cost of production to price, and under imports, there's almost always a source of cheaper product, at the socialised cost of losing domestic food security: Buy the cheese from Brazil, along with the beef, and let them buy soy beans from China and Australia to make the beef fatter. -And then, you can sell food for peanuts (sorry) but you won't like the longer term political consequences, if you do this. See 1) and 2).

[seanmcdirmid]

America has a surplus of soy beans, it’s China that needs to import from us or Brazil. The mess farmers are in now is that China has decided Brazil is a better source for them given the current trade war going on.

China actually imports a lot of food from us, they seem to be the biggest consumer of chicken and pork feet, for example, which we don’t seem to have much use for. The current subsidies are because that export trade, which farmers have depended on and invested in, has basically disappeared now.

[TimorousBestie]

I agree with you that the food supply chain is vital to (any country’s) national security, but I don’t think anyone with any real power takes this seriously.

[bawolff]

Not everything is about economics. As the romans said - you need bread and circuses to stay in power. Keeping food cheap serves an important political function. It also serves an important security function to keep food domestic because if you are at war with where your food is grown, you are not going to win that war.

[JumpCrisscross]

> As the romans said - you need bread and circuses to stay in power

“One thing, however, that I will note that Juvenal does not say is that the panem et circenses are either how the Roman people lost their power or how they are held under the control of emperors. Instead first the people lose their votes (no longer ‘selling’ them), then give up their cares and as a result only wish for panem et circenses, no longer taking an interest in public affairs” [1].

[1] https://acoup.blog/2024/12/20/collections-on-bread-and-circu...

[jollyllama]

It keeps the farmers politically subservient and makes them dependent on the continuation of the establishment. Otherwise, they could become a power bloc unto themselves that could act against the establishment.

[ryuker16]

The romans got their grain cheap from egypt.

[scheme271]

Egypt and the north african provinces were a part of the Roman empire fairly early on. They were also some of the wealthiest and most important provinces in the Empire.

[silisili]

You have to realize the vast majority of farmland is in states suceptable to floods, droughts, hurricanes, pests, frosts, etc. You can read stories of an off year where locusts were so bad they darkened the skies, for example.

Compounding this, farm equipment is freaking expensive. It's not abnormal for a large farm to have hundreds of thousands in payments on machinery. In a good year they make hundreds of thousands. In a bad year they're on the hook for hundreds of thousands. It can take only one bad year to wreck a farm, which is why their suicide rate is so high.

It's hard to imagine as a dev. But imagine you make 200k. Then next year, because of ransomware your boss installed, they tell you you owe 200k through no fault of your own. What would that do to your finances?

Insurance is a parasite. I'm usually against subsidies, but for as something as important as food, it seems reasonable.

[elsjaako]

You've repeated the part that the parent poster claimed to understand ("I've heard that it's because farming as a business is full of unpredictability"), but skipped over the part they didn't understand ("wouldn't there be a significant market for private insurance?") with the statement that insurance is a parasite.

Can you explain more why insurance is a parasite? Maybe a state-run insurance would be better?

Subsidies (AFAIK, please correct me if I'm wrong) typically either get paid when farming supplies (tractors, seeds, fertilizer, land etc.) are bought or when the final product is sold. So they are paid when things go well for the farmer, but not (or less so) when the farmer has a bad year.

I feel like the risk of bad years would be better managed by paying farmers when bad years happen. You know, like insurance.

[silisili]

Fair! My comment was probably more dramatic than it needed to be, but I was trying to paint a picture as it kinda irks me when a lot people act like farmers are 'welfare queens' just taking money and living the good life. Not that OP did that, but it makes subsidies a 'dirty word.'

Subsidies is a hugely loaded term that would take more than a few comments to even begin to cover, but yes, they do cover those things that you mentioned, but a lot more than that. Heck they even sometimes pay farmers not to grow things at all - we used to get a check not to grow tobacco. I was a child then, I don't remember all the details.

Importantly, subsidies already include a federal crop insurance program that the government pays most of. That would cover most reasons for loss of crops. But there's also payments when say, you had a great year, but prices crashed through no fault of your own. And separate payments for say, farm animals catching disease and dying, or natural disasters. And separate payments for things like the messy situation COVID created. And a lot, lot more.

My comment was mainly with the lens of 'get rid of subsidies and buy your own insurance', and well, we see how well that works with health insurance. "Oh sorry Mr Smith, those cicadas were underground when you bought the farm, pre-existing condition, denied."

[elsjaako]

I see your point a bit better. I definitely agree that insurance can be terrible. I will say that with US health insurance you've pretty much picked the worst possible insurance to compare it to.

Farmers typically have more knowledge and more budget for good advisors than consumer health insurance buyers. There are all kinds of business insurance, and I think these are not usually considered as horrible as health insurance. Also, with good insurance you've got a partner who is very invested in understanding the risks you're taking and letting you know (in the form of how much you have to pay).

Some subsidies are probably a good idea, especially where you want to encourage behaviors that would not naturally be encouraged by the market (e.g. getting farmers to not grow crops that you don't want them to grow, or do things that are good for the environment but not legally required).

Sometimes it's probably neutral, where the food is cheaper in the supermarket but taxes are higher and in the end it's just the consumer paying anyway. My guess is that this usually isn't the most efficient way to get money from consumers to farmers.

And sometimes subsidies are actively harmful, like when they encourage growing crops beyond what the market requires.

[itake]

You can't eat private insurance.

The consequences of not being able to produce enough calories is severe. It is much better to overproduce and everyone gets fed than producing just enough and a climate event erases out 20% of our calorie production.

[thinkcontext]

The US produces an unbelievably enormous calorie surplus way beyond what is needed for the health of the country and in fact its detrimental.

The biggest is not even used as food, over half of corn acreage is used for ethanol. That's an amount of land that's truly beyond comprehension. Its a horrible program as well, corn ethanol is worse than the gasoline it replaces in terms of carbon footprint when taking land use into account. And it raises the price of food. And we even subsidize it multiple times, we subsidize the crop as corn and then we subsidize it as ethanol. Biodiesel and renewable diesel (different products) have spiked in recent years as well, most of that is made from soy, canola, or corn oil. They have similar problems though aren't as bad as corn ethanol.

Another huge negative surplus is the amount of liquid calories, mainly soda, that are consumed. Most nutrition science that I've read points to the enormous amount of liquid calories as the part of the US diet that is driving obesity epidemic. There are of course other aspects to the obesity as well.

Finally, substituting some of the US consumption of beef with chicken and some of the chicken with beans.

To recap US overproduces calories to the point that it hurts the country. It damages the land, the ocean with dead zones, the climate with carbon. We pay for it multiple times in subsidies and with higher food prices. It hurts our health which we pay for in suffering, shortened lives and health costs.

[9rx]

> over half of corn acreage is used for ethanol.

That doesn't mean much without more details. Corn is used as a tool in the crop rotation to enable growing foods for humans to eat. As we learned before ethanol's time in the sun, farmers are going to grow it anyway to support their rotations. The only question is if it is better to recapture that into usable energy or to let it rot out in the field.

> ... when taking land use into account

But if not taken into account? The harsh reality is that ethanol plants are unable to pay cost-of-production-level prices for corn. It now typically costs $5+ to produce a bushel of corn, while ethanol plants generally start to lose money as the price rises above $4.50 per bushel. You're not growing corn for ethanol. You accept selling corn to ethanol buyers when you can't find a better home for it.

Corn especially is a tough one to predict. A couple of years ago yields around here were nearly 100 bushels per acre higher than normal! Even if we put in the mightiest effort to grow exactly the right amount of corn for reasonable food uses, that 100 bushel surprise means a good 1/3 of your crop has no predetermined home right there. Of course, it can go the other way too. If you end up 100 bushels per acre short of what you expected...

Between needing to grow extra to protect against unexpected low yields, combined with unexpected high yields, half to the corn crop having no home (and therefore ending up as ethanol) isn't that far outside of what cannot be reasonably controlled for.

> To recap US overproduces calories to the point that it hurts the country.

That's fair. We don't have the technology to do better, unfortunately. Maybe once LLMs free up software developers once and for all they can turn their focus towards solving this problem?

[thinkcontext]

> Corn is used as a tool in the crop rotation to enable growing foods for humans to eat. As we learned before ethanol's time in the sun, farmers are going to grow it anyway to support their rotations. The only question is if it is better to recapture that into usable energy or to let it rot out in the field.

This doesn't make sense in light of the large expansion of corn acreage that corresponds to ethanol policy.

https://afdc.energy.gov/data/10323 https://ycharts.com/indicators/us_corn_acres_planted

[9rx]

> large expansion of corn acreage

Corn acres have expanded, but the same is also true of other crops. Given corn's role in the crop rotation, it stands to reason that when other crops expand, corn comes with it. There are a lot more mouths to feed nowadays. The world's population has grown by approximately 30% since the last change in ethanol policy.

> that corresponds to ethanol policy.

The ethanol subsidy in the last policy change ended in 2012, yet, as you point out, corn acres have continued to expand, which seems contrary to what you are trying to suggest. What specific correspondence are you finding?

[casey2]

corn->ethanol is government subsidized robbery. I paid for those nutrients let them rot. Now consumers have to buy more and eat more calories to get the same nutrition. All so we can have net negative ROEI ethanol?

[9rx]

> corn->ethanol is government subsidized robbery.

There was that brief period where subsidies were enacted to spur on construction of ethanol plants to take up the excess corn that was rotting leading up to that time. They have long since come to an end. You could still call E10 requirements a subsidy, but you'd only be paying for that if you willingly chose to consume the product.

> Now consumers have to buy more and eat more calories to get the same nutrition.

Why?

> All so we can have net negative ROEI ethanol?

I'm not sure your math is mathing. Recapturing something, even with some marginal loss, is still a greater return than nothing.

[mapt]

Your buffer here is meat. Cattle are tremendously inefficient consumers of grain. Eat your burgers in the bountiful years, then slaughter 75% of the herd in a hardship year, eat well for six months, then spend the next three, four, five years eating more grains while the herds recover.

Ethanol is another one.

That's the sensible way to do it.

Somehow I doubt that it's the way we do it... But maybe the variability is coming from world trade and developing nations.

[cperciva]

Cattle are inefficient consumers of grain, but highly efficient consumers of grass. Most land used for pasture can't effectively be used for anything else.

[hombre_fatal]

This argument might sound good, but those cattle are fed crops, not just sunshine and the grass they walk on.

Most crops grown in the US are used as animal feed. They are dependent on arable land that could be used to grow food for humans directly and much more efficiently. We just like the taste, so we accept the inefficiency.

[hunter-gatherer]

Eh. The "inefficent calorie conversion" take is sort of lazy and misses the nuances. I just looked it uo, and it seems that only about 55% of yields are for feed, and there is definitely some more nuance there, since a lot of feed meal comes from stalks and parts if the plants humans would not consume. This notion of calorie inefficiency also misses the mark on what would be planted and harvested instead to contain the same bioavailable nutrient profile thay comes from meat. In otber words, using land for feed to convert grains to another type of food is probably more necessary than just "taste".

I don't care to research it further, but I own a small 5 acre farm and can attest that some crops grow in some areas and some don't. So even if you did map it all out on a piece of paper where you'd get all your beans and lentils and whatnots I doubt it would work in real life. Cattle can handle a couple hard freezes. My tomatoes can't.

[LinXitoW]

You’re right that a lot of livestock feed is crop residues/byproducts humans don’t eat—but that doesn’t make beef “necessary” or erase the land/opportunity-cost problem. Globally, ~36% of crop calories go to animal feed and only ~12% of those feed calories come back as animal-product calories (Cassidy et al.). Livestock still consume ~1/3 of global cereal production (Mottet et al.). And in full-system LCAs that include grazing + feed land, meat/dairy provide ~18% of calories and ~37% of protein but use ~83% of farmland; cutting them can reduce farmland >75% while still feeding the world (Poore & Nemecek / Oxford). Plus, even if pasture isn’t croppable, it can be restored—land used for animal foods has a big carbon opportunity cost (Hayek et al.). Nutritionally, major dietetic bodies say well-planned vegetarian/vegan diets can be nutritionally adequate, with attention to nutrients like B12.

[bruce511]

There is, as you say a lot of nuance here. Making cattle go away doesn't suddenly make say 55% more wheat suddenly appear on market shelves.

Indeed the argument to remove beef production has always struck me as an interesting starting point to a longer conversation.

So ok, cattle are gone, and there's now say 30% more grain on the market. Presumably this lowers prices to humans? Do people suddenly eat 30% more bread?

Health, and weight, issues aside (not sure an increase in carbs at the expense of protein is a win), do people just shift to other protein (like chicken). Does this mean a huge oversupply of grain, and a consequent drop in prices?

Let me put it another way. Does removing a market currently consuming 30-50% of the crop make things better or worse for farmers?

IMO Having livestock feed as a market keeps prices up, and as this article points out they're still too low. Killing off the cattle market kills off grain farmers too. I'm not sure that's the win people think it is.

[mapt]

We feed the average cow >10lbs of grain and also some alfalfa for every pound of meat we get out right now.

Part of the cull would likely be shifting towards more grass fed production. Another part would simply be prioritizing chicken or pork for a while.

[direwolf20]

Americans would riot without burgers.

[OgsyedIE]

Some of them date back to 'westward expansion', where they were incentives to encourage settler immigration (e.g. Texas tax exemption from 1839). They've stayed on the books because nobody wants the trouble of suggesting their removal.

More generally, however, it's a cost that is paid to support massive efficiency gains in other sectors. Like roads, aviation or the military. The freight system particularly would be unreliable if food prices floated according to only supply and demand, due to freights vulnerability to political upheavals, militias, etc.

[jillesvangurp]

It's out of political fear. The irony is that it doesn't actually work all that well.

Apparently, New Zealand abandoned all farm subsidies at some point and while the transition was abrupt and rough for farmers the farming sector recovered and is now performing much better. They abandoned it because they could no longer support it economically. They were producing lots of sheep that couldn't be sold. Now they produce much more meat with much less sheep.

Farming subsidies aren't unique to the US. Here in the EU, farmers are giving away subsidized potatoes in Berlin currently. You can literally go to a collection point and pick up some free potatoes. They have so much over production that farmers literally don't know what to do with it. Nobody wants them. In the same way there's a history of subsidized beetroot farming for sugar production, too much wine in France, butter and milk surpluses, etc. This happens over and over again.

In the US, the two main crops that are being subsidized are corn and soy beans. Corn syrup isn't exactly a thing that the rest of the world needs in their diets. It's a very uncommon ingredient outside the US. And commonly associated with obesity issues inside it. Soy beans are useful for export and for feeding animals. Exports are problematic (tariffs) currently and animals can also be fed with corn.

And of course much corn is also used for ethanol production, which in turn is used to greenwash fuel usage in the ICE vehicles that burn it. Bear in mind that intensive corn farming is very CO2 intensive. The extensive mono cultures in the US are destroying the landscape and contributing to desertification. It's not great the environment or global warming. It doesn't make any economic sense to be subsidizing corn production at this scale.

The problem here is that these are relatively low value crops that would not be produced in anywhere near the current volumes without subsidies. They aren't actually needed in these volumes either. Farmers mainly grow it because they get money to grow it. They would be growing more valuable things without subsidies. Or at least be diversifying what they do. The irony of this is that many farmers don't even like being that dependent on subsidies.

The whole system perpetuates but there's no solid argument for it. Everyone could arguably do better without that. But it's easier/more convenient to not change the system. So politicians keep on "protecting" the farmers (i.e. their own seats).

[rgblambda]

>Here in the EU, farmers are giving away subsidized potatoes in Berlin currently.

I looked into this story because it doesn't sound correct. It seems the potatoes were indeed sold but due to an unusually high yield this year, the trader decided not to pick them up so the farmer gave them away rather than try to find another buyer. And it was just one farm in Saxony. So this is not an EU or even a Germany wide issue.

[jillesvangurp]

I have some friends that picked up free potatoes. That's why I mentioned it.

https://www.dw.com/en/berlin-germany-potatoes-eu-agriculture...

[rgblambda]

Hope you understand this is the equivalent of an ice cream parlour handing out free ice cream because the freezer broke. It has nothing to do with government agricultural policies or subsidies. Otherwise your friends would be getting their free spuds every week.

[koshergweilo]

Thanks for the fact check!

[marcus_holmes]

Also the whole system is very exploited and rigged. Powerful people are pulling huge amounts of money out of the agricultural sector, and every government subsidy is feeding that engine so those people can continue doing that.

[adregan]

> This question may be naive, but why is the agricultural industry so subsidized?

I believe this is the same tune we hear in other industries: it’s the effect of the consolidation of companies which provide the inputs (seed and chemicals) leading to a lack of competition and the increase in prices on a captive consumer base.

When farmers feel the crunch due to macro forces in the market (and tariffs), the government effectively acts as a backstop for the conglomerates providing the inputs. Think of the farmer’s hand as an open palm, the subsidy flows through it directly to the company to which they are indebted (“the money is in the ground” as I used to hear during a brief time in crop insurance).

While these subsidies may have initially began with the quaint notion of protecting against scarcity (as many sibling replies seem to believe), the reality is that farmers are being squeezed just as the rest of us. Profits are way up while competition is way down.

[conductr]

It’s similar to oil. Our people are very price sensitive to food and gas. It’s required in America at all economic classes fairly heavily in our society. So, politicians have decided to try to force prices low and keep hidden costs at the federal level. It allows for reallocation of wealth (a richer person’s taxes helps pay for a poorer person’s lunch and gas to the grocery store). Also, if taxes aren’t enough to cover it well we run our country at a huge deficit so it’s all a big illusion of sustainability that pretty much is destined to fail eventually anyway. I don’t think people or politicians really care about the future or what world their children will inherit as much as they act like they do here; or I’ve not been witness to that thought process in most of our systems.

[lovich]

… but why, economically, does subsidizing farms result in a more efficient allocation of resources?

It’s doesn’t.

Agricultural subsidies in the US, and I presume most states but I’m not as well read on their policies, are a mixture of realpolitik, war preparedness, and graft.

If you are trying to square the circle, you can’t, because economic efficiency was not an input for the decisions on these subsidies.

[nemomarx]

Pricing anything into the cost of food would be political poison. Paying farmers to grow nothing is considered preferable to that

[Loughla]

It's not always about price. Paying farmers to grow nothing ensures they stay open if we need them to grow something.

When I farmed we had set aside land paid for by the government. When there were predicted shortages on food in the future, we were allowed to farm that ground.

You don't want farmers going under. It just takes one bad year that way and we're all fucked. I've never lived through a proper famine, but Grandpa talked about the dust bowl and depression. It sounded fucking awful.

[bruce511]

This exactly.

The fuss made about agricultural subsidies by non-farmers is misguided. Dropping subsidies doesn't make food cheaper, it makes it go away.

Consumers are addicted to cheap food, so they pay taxes instead to make up the difference. Given a progressive tax system this actually is a very efficient approach to take. And overall, as a % of the total budget, these subsidies are insignificant.

What is hurting farmers are reduced markets. USAid used to buy up a lot of surplus production (effectively a back-door subsidy), lots got exported to China et al. Given the economic antagonism towards the US (thanks to things like tarifs and insults) demand for US food exports either dropped naturally (eg Canada) or with reciprocal tarifs (eg China).

Politicians like to say "we don't make things here anymore" ignoring the most fundamental production of all (farming). They destabilize foreign trade, and (if we look at more labor intensive crops) target farm workers for deportation.

To be fair, agriculture states are also red states, so it's fair to say they voted for this.

[mlrtime]

>What is hurting farmers are reduced markets

I know there is a rule about reading the article, but did you? This [trend] is nothing new, USAid has nothing to do with it other than short term changes.

[IG_Semmelweiss]

The vast majority of countries have barriers preventing our highly efficient production from selling in their countries. Think Argentina and meats, Switzerland and all things cattle, EU and pretty much everything.

Tariffs were one way to pry open those markets, but of course, the few agricultural products that were already selling , were affected in the retailiation . It will take some time for things to sort out.

[bruce511]

Not surprisingly most countries want to be self sufficient with food production, so tarifs on food imports makes sense.

Unfortunately though I don't think US tarifs are the solution here. Leaving aside that antagonizing the end-consumer seems unproductive (eg canada) there's also a perception in Europe that US food products (especially meat) are of low quality.

Whether that perception US true or not US immaterial. (My own visits to the US and experience of US food would suggest the US optimizes for quantity not quality, but anecdotes are not data.)

Much of the barrier with exporting beef are the higher food standards, and documentation, required in Europe. Lowering the standards doesn't seem to be politically acceptable either.

[enaaem]

That’s what foreign aid is for:

1. Keep strategic production capacity alive.

2. Spread American soft power.

3. Get warm fuzzy feelings because you prevented millions of people from dying of starvation.

[mlrtime]

No, the US will not depend on foreign aid to [primarily] feed it's citizens. Never going to happen.

[nemomarx]

You've got it backwards - foreign aid using US grown crops provides increased very stable demand. Take any excess grains made in a given year and ship them to another country, the farmers get paid well for it so they keep their productive capacity high, and the marginal cost of getting it to a charity overseas is low anyway. This means there's always enough grain to feed our citizens.

[direwolf20]

And it keeps foreign countries dependent on us and gives us another avenue to coerce them. Wins for us all around.

[mlrtime]

The ability for a nation to feed itself is national security, period. Anyone who says otherwise is wishfully thinking or naive.

The quickest way for a government to collapse is famine.

IMO it is the role of the federal government to ensure that the US is not dependent on another country to feed its people. This is probably not popular here, but its a fact.

[maxglute]

> so subsidized

Emphasis on "so", i.e. past obvious strategic rationale like food "security", there's reason to believe US ag has excessive subsidies. IMO answer is like every other "strategic" sector, farmland political economy has been captured by wealth (i.e. Bill Gates largest farmland owner). There's a fuckload of tax haven / loop holes tied to farmland that defers capital gains tax, estate/inheritance tax, property tax. Farmland is stable investment (because land) used to park wealth - it's an asset class, hence if held as asset, wealthy will double down / double dip to make sure it doesn't go idle, so they lobby all the "easy" crops to get massive subsidies and now something like 80% of subsidies goes to top 10% of recipients. US doesn't need to produce that much surplus corn/soy, but it's relatively easy to grow so big agri with capital sunk on those crops will lobby for continued subsidy of said crops, build up even more wasteful sectors like agri to energy (30-50% of corn goes to ethanol), and next thing you know a very inefficient ground water to subsidized agri commodity to gdp generator takes on it's own logic. TLDR, people good at at spread sheets rigged US agri like they rigged everything else.

[hsuduebc2]

At least in Europe they have inproportionally big lobby and food is considered a security issue. If it would not be subsidized it would probably be beaten by much more cheaper imports. You can see they ignored security issue with energy and it backfired pretty bad.

[mistrial9]

because the energy states of inputs are so massively beyond ordinary bounds that distortions of unexpected kinds develop and persist in markets that otherwise appear to be straightforward? And, this is not new, but more energetic and more far-reaching than ever before. (more comments would have to chose a lens through which to postulate e.g. economic, legal, energy exchange, human nature ... etc.. ?)

[bluGill]

most of the subsidies are insurance not direct payments.

[Ekaros]

Because agriculture is hard industry. The producer prices that is what the farmer gets are often laughable cut from final product. And this is due to farmers having little or no power in the system. Their products are made at certain time. And then they start declining in quality and finally rotting away. Most of the value ends up in other parts of the chain.

You could increase prices relatively little and farmers would earn lot more. But no one else is willing to allow that to happen. As such directly subsidizing them is more efficient.