I used to not like farm subsidies, but the free market tends to plan for supply shocks poorly, and the cost of shortages is incredibly high, so I don't mind paying farmers to overproduce food.
The problem is that the government tells you to produce a limited selection of crops. Then subsidy farmers will try to optimize the crap out of the subsidies. It's ok for food security but now all the food processing companies will try to use the subsidized crops everywhere because they are much cheaper.
Do you have a source for this? I believe you, but there are multiple ways of parsing that sentence, and a source would clarify things.
One reading (87% of gross income) is obviously problematic, and another (87% of profit) is exactly what you'd expect to get if you add almost any subsidy to a previously low-margin activity.
Absolutely, but depending on how you do it, you can cause less market distortions - what I've seen subsidies do locally is make farmers do things that would be unprofitable instead of searching for what's profitable for them (eg. planting sub-optimal crops because they know they get subsidies, prevent small inefficient farmers from going bust effectively becoming a welfare program that prevents more efficient farming, etc.)
Having a functioning farm sector a food reserve is sooooo much better than having any amount of food in storage. You can only store so much, it won't last long given the huge amount needed every day. Disruptions that last years rather than weeks or months look more likely now than in the past century.
That can be generalized and of course is not limited to farming.
Maybe on the US level it makes sense, but I live in a small country and I hear this argument a lot and it makes 0 sense :
a) our agricultural sector isn't diverse or strong enough anyway, if we get cut off from imports we are fucked even with subsidies
b) ramping up basic agriculture doesn't seem that hard, as in that's an easier crisis scenario to handle
c) on the market if global food prices jumped (has happened in the past) the subsidized farmers were quick to export to richer markets at a higher price, I believe US also saw similar price jump effects when China was affected by pork shortages IIRC
Best case scenario is government just increases the emergency supplies they already have to cover the period it would take the production to ramp up
> Maybe on the US level it makes sense, but I live in a small country
In case you missed it, this entire discussion here is about the US situation. The "U.S:" even is in the article's subtitle (once you click on the article) and the US and NAFTA are all over the article and this discussion.
The country talked about as the one subsidizing their products, leading to the problem elsewhere, is not Mexico. Not sure what you were reading here. It's the USA.
And apparently, see the current topic, Mexico too thinks having a functioning farming sector is more important than having access to the cheapest goods. Other wise they would welcome that the US pays for them being able to import the products more cheaply because of the subsidies.
So, given that, I'm not sure why you think pointing to Mexico refutes my point?
> [...] but the free market tends to plan for supply shocks poorly, [...]
Well, when you ban people from raising prices when they prepared for an emergency better than others, that tends to disincentives preparing for emergencies.
(And, yes, the US and many state ban raising prices whenever they declare emergencies.)
