farm subsidies

A Guide To Farm Subsidies

In the 1930s, a quarter of the United States' population was relying on farm products for their main source of income.  This has changed drastically throughout the years, given the continuous effects of urbanization and the influx of imported crops from other offshore markets.  Currently, only 2% of the nation's population is engaged in the agricultural business.

But agriculture is an important component of any country's backbone.  The United States government realizes this fact, and through the efforts of the United States Department of Agriculture (USDA), farm subsidies are issued every year. 

But what are farm subsidies, and what do they mean for farmers?  More importantly, what do they mean for the country as a whole?

Farm subsidies are basically grants that the government bestows on farmers to complement the income from their agricultural endeavors.  These subsidies have a twofold purpose:

1. It promotes agriculture as a viable industry essential for the nation's continual growth and sustenance; and
2. It keeps the prices of agricultural commodities low without compromising profit for farmers, so that US produced agricultural supplies can compete with low priced commodities being imported from abroad.

Basically, farm subsidies are additional compensation for farmers, aside from the earnings they will receive from their crops.  The reason for this?  It's because the United States wishes to encourage farming, given its importance to the nation's economy.  If importation of commodities is allowed, and given the cheaper cost of living in other countries, homegrown crops will suffer a lot, and people will give up on farming.  By giving out some subsidies, which in effect can be considered as additional salary for farmers, the government is protecting an industry vital for the nation's sustenance.

Currently, there are over 20 commodities that merit subsidies from the US government through the USDA.  Among these are grains, sugar, oil seeds, tobacco, barley, sorghum, maize, cotton, milk, rice and peanuts, among others.  Farmers who are producing these commodities are entitled to subsidies from the government.  Corn is one of major commodities for which subsidies are reserved.  The New York Times, in fact, reported that almost 20 billion dollars is afforded to the corn industry in 2005 alone.

The operating law by which subsidies for farmers of these commodities are founded upon is the Farm Security and Rural Investment Act of 2002.  But the law on subsidies is an ever changing one, as it depends on the budget allocation made by Congress every year.