Monday, October 15, 2007

End Subsidies?

Dean Kleckner, Illinois farmer and former head of the American Farm Bureau from 1986 to 2000 had a wonderful op-ed piece in the NY Times this morning entitled “Today’s Harvest of Shame.” In it he attacks our current system of subsidies and calls for a more open agricultural trade policy. Here are two of the more powerful paragraphs from his op-ed.

In the 1990s, however, a trip to New Zealand made me realize that eliminating subsidies was not just a free-market fantasy, but rather a policy that could work in an advanced industrial nation. New Zealanders had stopped subsidizing their farmers, cold turkey, in 1984. The transition was controversial and not without its rough spots, yet it succeeded. On that visit and several later ones, I never met a farmer who wanted to go back to subsidies.

Today, it’s obvious that we need to transform our public support for farmers. Many of our current subsidies inhibit trade because of their link to commodity prices. By promising to cover losses, the government insulates farmers from market signals that normally would encourage sensible, long-term decisions about what to grow and where to grow it. There’s something fundamentally perverse about a system that has farmers hoping for low prices at harvest time — it’s like praying for bad weather. But that’s precisely what happens, because those low prices mean bigger checks from Washington.

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