Raising Less Corn and More Hell

Raising Less Corn and More HellByAman JainAshwin KateelkarDnyaneshwar ghuleLohit SoniRamachandran T

Brief History of American Farming

BEFOREGOLDEN AGE OF AMERICAN FARMINGAFTERRecession + Food PricesPAINFUL AGE OF AMERICAN FARMINGEuropean Countries into Agricultural Production Decline in World Trade American ExportsPricesDemandProblem??Overproduction!!But Controlling efforts failed!!Competitive MarketGovernment InterventionPrice SupportSubsidies

Market for Agricultural CommoditiesMarketing clearing PriceProduction cost < Price received => Normal profitAll farmers face same problem -> They dont refrain from production, but produce more till the profitability is goodHence, Price = Equilibrium price + Normal profit Price Support

GovernmentFair PriceFarmers encouraged to produce morePricesBuy Crops at Support priceSold in global market at a price below the US support price or FREE!!

FarmersTaxpayersResponses to Price Support

OverproductionGovernment => Acreage-restriction programsFarmers Response:CornsSoybeans and SorghamsMore fertilizers and pesticides, increased productivity.Intense cultivation in SMALL landOutput : 12 times than it was 60 years agoCrop prices Consumer Food billsSurplus Production piled up in WarehousesDrawbacks:Target price

1980s switched to target price policyTarget price Market price = Subsidies from government Price guaranteed to farmersConsumer Food bills Storage of surplus crops Cost of tax payers

ResultSmall farmers received small subsidiesGiant farmers received huge subsidiesMore Policy Tinkering1996: Freedom to farm Act(failed)1998: Supplemental bills2002: Most expensive farm bill of history costing $191 billion for 10 years2008: Food, Security, and Bio-energy ActCosting $300 billion for 10 years Allows to choose different programs for different crops

Reality of Farm SubsidyFarmers Income > Nonfarm families income over the past decadeLarge Agribusinesses Chief beneficiaries of the policy 74% of the total farm subsidies goes to top 10% of farmsA video that best explains the ill-effects of subsidies:https://www.youtube.com/watch?v=o2zEAxjmjYMGet paid for doing nothing Get compensated for losses that they dont actually incur

Farm Subsidies in Other NationsJapanese farm programs:Subsidies from government + tariffs on imported food=Roughly doubles the income of farmer than the average income in the countryEuropean union spend twice on subsidies than what US spendNew Zealands policy

It was myth in US that the farming sector cannot prosper without government subsidies which was proved wrong by New ZealandNew Zealand government eliminated all farm subsidies of every kindResultImprovement in techniques, cutting costs, and aggressive marketing in export markets.More than 40% increase in farm output.Total contribution in farming sector increased from 14% to 17%.Increased land productivity by 6% per year.Discussion QuestionsAmerican corn farmers receive billons of dollars in taxpayer subsidies each year. These subsidies allow them to sell their grain at prices below what it costs to produce it, particularly for export markets. How do US corn subsidies hurt mexican farmers? The mexican farmers would have to suffer huge losses and they would be out of corn or subsidized crop farming, as there are no subsidies given to mexican farmers by their government

2. If it is so obvious that farm subsidies hurt consumers, why do such subsidies continue to voted in by congress?Discussion Questions

Support given by large pharmaceuticals, political moves3. What groups would be major beneficiaries if farm subsidies in United States were eliminated? Discussion Questions Taxpayers, consumers, and farmers outside US.

4. What are likely environment impacts of farms programs ?Discussion Questions Farm programs lead to increase in food production which indirectly lead to increase use of more pesticide and fertilizers, as a result leading to air and soil pollution which also resulted in deforestation

5. Under federal duck stamp program wildfowl hunters pay a fee to federal government each year, the proceeds from which are used to purchase land for wildfowl habitat. Do you think farmers support or oppose the duck stamp program? Discussion Questions yes, farmers would support the program as the habitat would help in increasing ground water reserves . It would also be helpful in avoiding floods .

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