Subsidies Bad

8/14/2019 Subsidies Bad

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Subsidies Bad 2ADI Peterson/Perry Lab#1

Laundry ListSubsidies cause poverty and kill the economy, free trade, and soft power

Griswold 6 [Daniel T., director of the Center for Trade Policy Studies at the Cato Institute, 9/28, Congress milks taxpayersdry, http://www.freetrade.org/node/488 , AVLB]Abroad, U.S. farm programs drive down global commodity prices by blocking imports and promoting overproduction,hurting some of the world's poorest farmers, perpetuating poverty, and needlessly creating ill will toward the U nitedStates. They have also proven to be a stumbling block in W orld Trade Organization negotiations, complicating the task of opening global markets not only to U.S. farm exports but also to manufacturing and service-industry exports.

Farm producers claim we must hold on to our subsidies and trade barriers as bargaining chips. To open our farm market before other countries open theirs, they say, would be "unilateral disarmament." But U.S. farm programs are not an asset, they're a liability: a ball and chain costing the U.S. economy billions of dollars a year. Congress should reduce farmsubsidies and trade barriers regardless of what other countries do. We do not need a permission slip from abroad before weenact reforms that promote our own national interests.

Earlier House Agriculture Committee hearings featured a handful of non-farm-sector witnesses, but the lopsided lineups helpexplain why farm bills remain essentially of the farm lobby, by the farm lobby, and for the farm lobby.

With midterm elections approaching, and phrases like "special interests" back in circulation, congressmen should remember who they were really elected to serve.
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Laundry ListSubsidies increase food prices,spending, and global poverty, destroy the environment, rural communities, and soft

power

Griswold et al. 5 [Daniel, Stephen Slivinski, and Christopher Preble, scholars at the Cato Institute's Center for Trade PolicyStudies, Ripe for Reform: Six Good Reasons to Reduce U.S. Farm Subsidies and Trade Barriers, 9/14,http://64.233.167.104/search?q=cache:z1gUW2FsluoJ:www.freetrade.org/pubs/pas/tpa-030.pdf+Ripe+for+Reform:+Six+Good+Reasons+to+Reduce+U.S.+Farm+Subsidies+and+Trade+Barriers&hl=en&ct=clnk&cd=2&gl=us&client=firefox-a , AVLB]

U.S. agricultural policies have remained fundamentally unchanged since the 1930s. Today the U.S. government continues tosubsidize certain farm commodities through direct price supports and tariff rate quotas that limit imports. Americans pay ahigh price for this ongoing government intervention in agricultural markets. Reducing farm subsidies and trade barriers wouldbenefit Americans in six important ways.

One,reform would deliver lower food prices to tens of millions of American households, especially low-income families thatspend a large share of their income on food. Last year U.S. farm programs transferred $16.2 billion from U.S. food consumersto producers.Two, reform would lower costs for U.S. industries, such as confectioners and other food processors, that use agriculturalcommodities in their final products and would promote trade negotiations to open markets abroad for U.S. exporters.

Three, reducing farm subsidies would save U.S .taxpayers tens of billions of dollars during the next decade.Many of thosesubsidy payments currently go to large farms and agribusinesses, not to smaller family farms.

Four,agricultural reform would enhance the environment by reducing the amount of top soil lost and damaging fertilizers and

pesticides used by American farmers. It would liberate farmland to be used for reforestation, recreation, and other moreenvironmentally friendly purposes.

Five, agricultural reform would benefit farmers themselves by promoting production of crops that are in demand byconsumers. Farm reform would stimulate innovation and productivity gains on the farm and promote more economic diversityand dynamism in rural communities.

Six, lower farm trade barriers would raise incomes of farmers in poor countries, reduce global poverty, create a morehospitable climate abroad for U.S. foreign policy, and enhance U.S. security.
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Terrorism/Heg/Bomb CardSubsidies kill heg and lead to terrorism

Griswold et al. 6 [Daniel, Stephen Slivinski, and Christopher Preble, scholars at the Cato Institute's Center for Trade PolicyStudies, Six Reasons to Kill Farm Subsidies and Trade Barriers, February 2,http://www.reason.com/news/show/36207.html ] AVLB

6. A More Hospitable World

The collective effect of American farm policies is to depress the income of agricultural producers worldwide, exacerbating poverty in areas, such as sub-Saharan Africa and Central Asia, where people are heavily dependent on agriculture.

The frustration and despair caused by these policies undermine American security. Many people who depend onagriculture for their survival , both as a source of nourishment and a means of acquiring wealth, perceive U.S. farm policy as part of an anti-American narrative in which Washington wants to keep the rest of the world locked in poverty .Indeed, in a survey of anti-American sentiment around the world, the Pew Research Center found a majority of respondentsin more than a dozen countries were convinced that U.S. farm and trade policies increased the "poverty gap" worldwide.These sentiments transcended geographic, ethnic, or religious boundaries. In such an environment, terrorist ringleaders find fertile ground for their message of hate and violence.

Nicholas Stern, chief economist at the World Bank, is blunt about America's leadership role. " It is hypocritical to preach the advantages of free trade and free markets, " Stern told the U.N. publication Africa Recovery , "and then erect obstacles inprecisely those markets in which developing countries have a comparative advantage. " Johan Norberg, of the Swedishthink tank Timbro, argues that farm protection in developed countries amounts to a "deliberate and systematic means of undermining the very type of industry in which the developing countries do have comparative advantages." (See "Poor Man'sHero," December 2003.)

American subsidies and tariffs amount to much more money than its foreign aid to the developing world. According to

Oxfam, "in crop year 2002, the U.S. government provided $3.4 billion in total subsidies to the cotton sector," including about25,000 growers. "To put this figure into perspective," Oxfam says, "it is nearly twice the total amount of U.S. foreign aidgiven to sub-Saharan Africa. It is also more than the GDP of Benin, Burkina Faso, or Chad, the main cotton-producingcountries in the region." The subsidies drive down world cotton prices, costing developing countries billions of dollars in lostexport earnings.

Poor countries don't want our pity; they want our respect. To the extent that American security depends on the expansionof liberal democratic institutions and free market economics, Washington must be particularly sensitive to policies

that exacerbate poverty in the developing world.
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Subsidies=Terrorism

Preserving subsidies leads to terrorismSegal 7 [Hugh, Canadian Senator and member of the Standing Senate Committee on Foreign Affairs and International Trade, A Better Way to HelpAfrica, National Post, EDITORIALS; Pg. A20, lexis, AVLB]

Africa cannot be left to wallow in a morass of bad governance, corruption, disease and global neglect. In strategic terms, thedire situation in Africa creates the risk of more failed states and the spread of terrorism. It also threatens democracy andcreates huge, potentially destabilizing, migratory pressures.Africa has the mineral wealth, agricultural potential and popular will necessary to move toward a promising future. Butrealizing this goal requires improved governance, a more effective fight against corruption, targeted job creation and thereduction of Western agricultural barriers to African exports. It also requires Canada to look at our African policy, separatethe strengths from the weaknesses, and move ahead as an influential aid partner. Above all, we should understand that theremoteness of Africa geographically has no bearing on its importance to us strategically. Many of our commonwealth andfrancophone brothers and sisters are among those countries with the greatest need and potential.


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Trade RelationsSubsidies kill trade relation and close markets to American products

Edwards 7 [Chris, director of Tax Studies at CATO, Agricultural Subsidies, 6/13,http://www.cato.org/downsizing/agriculture/agriculture_subsidies.html , AVLB]

4. Farm Subsidies Damage U.S. Trade Relations . Global stability and U.S. security are enhanced when less developedcountries achieve stronger economic growth. America can further that end while helping itself by encouraging the loweringof trade barriers and the expansion of trade by poor nations. However, U.S. and European farm subsidies and agricultureimport barriers are a serious hurdle to making progress in global trade agreements. U.S. sugar protections, for example,

benefit only a very small group of U.S. growers but are blocking broader free trade within the Americas.

The World Trade Organization estimates that even a one-third drop in all tariffs around the world would boost global output

by $686 billion, including $164 billion for the United States. 30 Trade liberalization would boost the exports of U.S. goodsthat are competitive on world markets, including many agricultural products, but U.S. farm subsidies and protections stand inthe way of that goal.
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Free TradePlan will liberalize trade and will be modeled

Markheim and Riedl 7 [Daniella, Jay Van Andel Senior Analyst in Trade, and Brian M. Riedl, Gover M. Hermann Fellowin Economic Policy Studies at The Heritage Foundation, February 5 th, Farm Subsidies, Free Trade, and the Doha Round,http://www.heritage.org/RESEARCH/BUDGET/wm1337.cfm , AVLB]

Though farm policy reform will be difficult at best to achieve, it would have two positive benefits. It would end nonsensical,distorted subsidies for a handful of select crops, resulting in a more equitable domestic market. Unilateral reductions in farmsubsidies and bailouts would give U.S. trade negotiators the second benefit: ammunition to break the impasse over agricultureprotection with the EU and other countries in world trade talks, allowing them to continue to credibly lead the world inopening global markets. Successful conclusion of the current WTO round of negotiations would also expand economicopportunity and economic freedom and promote prosperity for all nations
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Free TradeDecreasing farm payments key to free trade-that's key to the economy and efforts

Markheim and Riedl 7 [Daniella, Jay Van Andel Senior Analyst in Trade, and Brian M. Riedl, Gover M. Hermann Fellowin Economic Policy Studies at The Heritage Foundation, February 5 th, Farm Subsidies, Free Trade, and the Doha Round,http://www.heritage.org/RESEARCH/BUDGET/wm1337.cf AVLB]

Two vital policy issues are at stake in the U.S. Farm Bill: limiting the size of government and advancing world trade.Defending free trade and fighting for further trade liberalization should be a top priority for Congress this year. Expandingglobal trade is one of the keys to building a stronger economy at home and promoting better relationships abroad.Specifically, reducing the burdens of the Farm Bill would be a breakthrough in the Doha Round. The President has proposedsome good, albeit small, steps for Congress to consider, but much more should be done to achieve a sensible market-basedfarm policy.
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TradeFarm subsidies hurt US position in global trade talks

Andrew Cassel , August 1, 200 8, Why U.S. Farm Subsidies Are Bad for the World, Newscenter Boosting farm subsidies here will be enormously damaging to the U.S. position in global trade talks,where our negotiators have been trying to get other countries to reduce their own agricultural subsidies.

Europe and Japan, for instance, would buy more American farm products if their own farmers weren't soheavily protected by tariffs and subsidies. And lowering such trade barriers in the world's richercountries would enable poorer nations in Africa, the Caribbean and elsewhere to grow by exportingmore of their own products.


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Developing World

Subsidies make it impossible for other nations to compete with driven down prices

Andrew Cassel , August 1, 200 8, Why U.S. Farm Subsidies Are Bad for the World, Newscenter

The farm bill, which the House of Representatives has approved and which the Senate could voteon this week, calls for taxpayers to fork over some $180 billion to farmers during the nextdecade. That's a 70 percent hike above the cost of current farm-subsidy programs, most of whichrepresent direct payments to wealthy farmers and agribusinesses.

Those subsidies make it possible to export millions of tons of food so cheaply that native farmersin places such as Jamaica can't possibly compete.

By guaranteeing U.S. farmers a minimum payment for commodities such as corn, rice andsoybeans, the government encourages overproduction. That drives down the market price,forcing even higher subsidies and creating surpluses that can be shipped to Jamaica andelsewhere.


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Developing WorldSubsidies cost the developing world $350 billion annually

Susan E. Rice and Gayle E. Smith, May 30, 20 03 , Agricultural subsidies : Stop the trans-Atlantic food fight,International Herald Tribune

President George W. Bush echoed his nemesis, President Jacques Chirac of France, last week when he called on"all developed nations, including our partners in Europe," to "immediately eliminate subsidies on agriculturalexports to developing countries so that they can produce more food to export" and "feed their own people." Chirachad offered an equally hollow proposal on Feb. 22 when he urged rich countries to temporarily stop subsidizingagricultural exports to poor African countries.If both leaders were serious, their convergence on this important issue at the Group of Eight summit meetingstarting Sunday in Evian, France, could not only spur improved cooperation between the United States andEurope but also lead to a new lease on life for the world's poorest. According to the World Bank, rich countries'agricultural subsidies cost the developing world $350 billion each year, dwarfing the $50 billion in assistance thedeveloped world provides annually to all poor countries.


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Environment/Bio-DAgricultural subsidies threaten wildlife populations in developing countries

Borders and Burnett, 2006. [Max and H. Sterling, adjunct scholar and senior fellow with the National Center for Policy

Analysis, "Farm Subsidies: Devastating the World's Poor and the Environment," National Center for Policy Analysis, March24, http://www.ncpa.org/pub/ba/ba547/ ] In addition, wildlife populations in developing countries are devastated as an indirect result of agricultural subsidies. Atcurrent prices, poaching often provides more revenue than farming and wildlife is frequently seen as competition for land anda threat to crops. Furthermore, farmers are often unable to afford fertilizers and pesticides that increase the available yieldfrom a given amount of land thus they must use more and more land just for subsistence agriculture.
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Environment/Bio-DAgricultural subsidies threaten wildlife populations in developing countries

Borders and Burnett, 2006. [Max and H. Sterling, adjunct scholar and senior fellow with the National Center for Policy

Analysis, "Farm Subsidies: Devastating the World's Poor and the Environment," National Center for Policy Analysis, March24, http://www.ncpa.org/pub/ba/ba547/ ] In addition, wildlife populations in developing countries are devastated as an indirect result of agricultural subsidies. Atcurrent prices, poaching often provides more revenue than farming and wildlife is frequently seen as competition for land anda threat to crops. Furthermore, farmers are often unable to afford fertilizers and pesticides that increase the available yieldfrom a given amount of land thus they must use more and more land just for subsistence agriculture.

U.S. farm subsidies are detrimental to the environment.According to the World Trade Organization, "higher subsidies, such as

provided for in the 2002 U.S. Farm Bill, lead to an intensification of agricultural production in OECD countries which can generally beconsidered detrimental to the environment in terms of exposure to

pesticides and fertilizers, habitat destruction and landdegradation."

Indeed, in order to produce more, farmers convert wetlands toagriculture, intensively use fertilizers and pesticides, and divertwater from rivers and streams. For example:

Roughly half of U.S. wetlands lost from 1986 to 1997 more than300,000 acres were converted to agricultural use.Fertilizer and pesticide runoff from farmlands contribute todestructive algal blooms and the 7,000-square-mile dead zone thatappears every summer in the Gulf of Mexico off the coasts of Louisianaand Texas.Subsidized water diversion for irrigation in California hascontributed to a 60 percent to 80 percent decline in fish populationsin the Trinity River and record low numbers for many species in theSan Francisco Bay-Delta ecosystem.


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EnvironmentSubsidies destroy the environment-more land is cultivated and more pesticides are used


5. Farm Programs Damage the Environment . Federal farm policies are thought to damage the natural environmental in

numerous ways. 31 Subsidy programs, particularly price guarantee programs, cause overproduction, which draws marginalfarmland into active production. Similarly, trade barriers induce agriculture production on land that is less naturally

productive. As a result, marginal lands that might otherwise be used for parks or forests are locked into farm use becausefarm subsidy payments get capitalized into higher prices for land.

Subsidies are also thought to induce excessive use of fertilizers and pesticides. Producers in regions that have more optimalsoils and climates tend to use less fertilizers and pesticides than do producers who are induced by subsidies to farm in lessfavorable locations. An excessive use of chemicals can contaminate lakes, rivers, and other water systems.

Florida sugar provides a good example. Large areas of wetlands have been converted to cane sugar production because of artificially high domestic sugar prices. Unfortunately, the phosphorous in fertilizers used by sugar farmers has causedsubstantial damage to the Everglades. Farming, like any industry, can cause negative environmental impacts, but it ismisguided for federal policy to exacerbate those problems.


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EnvironmentSubsidies destroy the environment-pesticide use and water usage prove


4. More Environmentally Friendly Land UseThe distortions and perverse incentives of U.S. agricultural policies have encouraged practices that damage theenvironment. Trade barriers and subsidies stimulate production on marginal land, leading to overuse of pesticides,fertilizers, and other effluents. A central if unstated purpose of American farm policy is to promote production of commodities that would not be economical under competitive, free market conditions.This often means

emphasizing crops better grown elsewhere, requiring more chemical assistance.Overuse of fertilizers and pesticides adds to runoff that pollutes rivers, lakes, and oceans. According to the WorldResources Institute, agriculture is the biggest source of river and lake pollutants in the United States. A study bythe Environmental Protection Agency found that 72 percent of U.S. rivers and 56 percent of lakes it surveyedsuffer from agriculture-related pollution. Areas of the Gulf of Mexico have become "dead zones" because of therunoff from farms in the Midwest. Even where fertilizers and pesticides are not used intensively, the mere act of plowing soil eliminates forest and grass cover, leaving soil exposed for weeks at a time and vulnerable to erosion.Erosion can build up silt in nearby rivers and downstream lakes.Domestic sugar protection has maintained a concentration of producers in central Florida who have used up waterfrom the endangered Florida Everglades while spitting back phosphorous content far above the level consistentwith maintaining the surrounding ecosystem. The high runoff has seriously reduced periphyton, such as algae, that

supports birds and other animal life. Congress has spent billions to repair the damage caused to the Everglades bythe protected sugar industry.Farm programs also waste scarce water resources, especially in the arid West. Agricultural water subsidies aloneamount to around $2 billion annually, propping up such uneconomical enterprises as growing cotton in the Arizonadesert.Finally, farm programs crowd out more environmentally friendly land uses by artificially driving up land prices. Asizeable share of the increased income that protection and subsidies deliver to farms becomes "capitalized"through higher land values, because the subsidies increase the stream of income that land can produce. Higherprices for farmland, in turn, render it more expensive to acquire and maintain environmental preserves, parkland,forests, or other land use alternatives that would be more likely to preserve habitat and biodiversity. By keepingmarginal farmland under cultivation, the government has slowed the trend of reforestation.


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Econ

Subsidies kill economies of developing nations

Borders, Burnett 3-24- 06 Farm Subsidies:Devastating the World's Poorand the Environment:National Center For Policy AnalysisMax Borders is an adjunct scholar and H. Sterling Burnett is a seniorfellow with the National Center for Policy Analysis.

Every dollar, yen or euro poured into the agriculture sectors of richnations makes developing countries' farm sectors that much lesscompetitive. The "dumping" of agricultural commodities at prices lower than the cost of production is devastating to developing countries,since most depend almost entirely on only one or a few products. Everyyear, farm subsidies cost developing countries about $24 billion in

lost agricultural income. Cotton is an excellent example:

World cotton prices have fallen by half since the mid-1990s and,adjusted for inflation, are now lower than at any time since the GreatDepression of the 1930s.Despite the plunge in prices, cotton production in the United Statesgrew 42 percent between 1998 and 2001.Due to subsidies, American cotton farmers receive up to 73 percentmore than the world market price for their crop. To compensate for falling prices, U.S. cotton subsidies have doubled since 1992, and in2001-2002 America's 25,000 cotton farmers received a $230 subsidy for every acre of cotton planted a total of $3.9 billion. By comparison,wheat and maize subsidies amount to $40 to $50 per acre.


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EconAg subsidies kill econ growth in the developing world

Borders, Burnett 3-24- 06 Farm Subsidies:Devastating the World's Poorand the Environment:National Center For Policy AnalysisMax Borders is an adjunct scholar and H. Sterling Burnett is a senior fellow with the National Center for Policy Analysis.

Subsidized agriculture in the developed world is one of the greatestobstacles to economic growth in the developing world," said NCPASenior Fellow H. Sterling Burnett, who co-authored the report."American cotton subsidies cost sub-Saharan Africa $302 million in2001 and 2002 alone.

According to the NCPA report, subsidies encourage overproduction.Surplus crops are then sold below the cost of production, depressingworld prices. As a result, countries with unsubsidized goods areessentially shut out of world markets, devastating their localeconomies.

"Right now, developed countries like the United States contribute over$50 billion annually in foreign aid to underdeveloped countries," saidMax Borders, NCPA adjunct scholar and the report's other co-author."If developed nations reduced their subsidies and eliminated tradebarriers, this aid would be unnecessary, and rural poverty would bereduced."


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Econ

Ending farm subsidies would boost the global economy by 100 billion dollars

Borders and Burnett, 2006. [Max and H. Sterling, adjunct scholar and senior fellow with the National Center for PolicyAnalysis, "Farm Subsidies: Devastating the World's Poor and the Environment," National Center for Policy Analysis, March24, http://www.ncpa.org/pub/ba/ba547/ ] Conclusion. Farm subsidies eat up federal revenue and make little, if any, economic sense. They also hold back progress indeveloping countries and result in severe environmental damage. Ending subsidies would benefit the federal budget, third-world farmers and the environment. The International Monetary Fund (IMF) estimates that eliminating various agriculturesubsidies in rich countries would raise global welfare $100 billion.


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Food PricesSubsidies create higher food prices in the U.S.-especially affects poor consumers


1. Lower Food Prices for American FamiliesThe foremost reason to curtail farm protectionism is to benefit American consumers. By shielding the domesticmarket from global competition, government farm programs raise the cost of food and with it the overall cost of living. According to the Organization for Economic Cooperation and Development, the higher domestic food pricescaused by U.S. farm programs transferred $16.2 billion from American consumers to domestic agriculturalproducers in 2004.That amounts to an annual "food tax" per household of $146. This consumer tax is paid overand above what we dole out to farmers through the federal budget.American consumers pay more than double the world price for sugar. The federal sugar program guaranteesdomestic producers a take of 22.9 cents per pound for beet sugar and 18 cents for cane sugar, while the worldspot price for raw cane sugar is currently about 10 cents per pound. A 2000 study by the General AccountingOffice estimated that Americans paid an extra $1.9 billion a year for sugar due to import quotas alone.American families also pay more for their milk, butter, and cheese, thanks to federal dairy price supports andtrade barriers. The federal government administers a byzantine system of domestic price supports, marketingorders, import controls, export subsidies, and domestic and international giveaway programs. According to theU.S. International Trade Commission, between 2000 and 2002 the average domestic price of nonfat dry milk was23 percent higher than the world price, cheese 37 percent higher, and butter more than double. Trade policies also

drive up prices for peanuts, cotton, beef, orange juice, canned tuna, and other products.These costs are compounded by escalating tariffs based on the amount of processing embodied in a product. If thegovernment allowed lower, market prices for commodity inputs, processed foods would be substantially cheaper.Lifting sugar protection, for example, would apply downward pressure on the prices we pay for candy, soft drinks,bakery goods, and other sugarcontaining products.The burden of higher domestic food costs falls disproportionately on poor households. Farm protections act as aregressive tax, with higher prices at the grocery store negating some or all of the income support the governmentseeks to deliver via programs such as food stamps.If American farm subsidies and trade barriers were significantly reduced, millions of American households wouldenjoy higher real incomes.


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SpendingDecreasing subsidies would curb government spending-this reform affects huge agribusinesses, not small farmers


3. Budget Savings and Equity for U.S. TaxpayersAgricultural reform also would reduce the cost of government.The Office of Management and Budget estimatesthat taxpayers shelled out an expected $26 billion in direct agricultural subsidies in fiscal year 2005-the biggestsingle-year subsidy bill since 1986. Just nine years ago, Congress promised to phase out farm subsidies by 2003.Instead they've reached near-record highs.

Subsidy levels before 1996 were set by a formula that triggered an increase when crop prices fell. Starting in1995, crop prices began to rise, resulting in lower payments from the federal government. The Freedom to FarmAct, passed in 1996 when commodity prices were high and demand for subsidies low, ended the price supportprogram and replaced it with a declining fixed payment unrelated to market prices. Payouts were scheduled todrop from $5.6 billion in 1996 to $4 billion by 2002 and then disappear.But Congress reversed course in 1998, when crop prices began to decline, passing an "emergency" supplementalbill that raised total farm subsidies to $12.4 billion. Subsequent supplemental hiked handouts to new heights,totaling more than $76 billion between 1999 and 2002, a whopping $57 billion more than the Freedom to Farm Actoriginally mandated.In May 2002, President George W. Bush hammered the final nail into Freedom to Farm, signing a six-yearappropriation that revived the old price support program. Taxpayers have coughed up $55.5 billion hi the three

fiscal years since. For the same money Congress paid to farmers during the "phase-out" period between 1995 and2003, the federal government could have purchased outright more than a quarter of the country's farms.Yet two-thirds of American farmers don't even receive subsidies. So where does all that tax money go? Mainly tolarge agribusinesses and the richest family farmers. In 2003, the most recent year for which comprehensivestatistics are available, the top 10 percent of all subsidy recipients gobbled up 68 percent of the money, and thetop 5 percent got 55 percent.Take, for instance, Riceland Foods in Stuttgart, Arkansas, the largest single recipient of farm welfare. In 2003 itreceived $68.9 million in subsidies for producing rice, soybeans, wheat, and corn-more than all the farmers inRhode Island, Hawaii, Alaska, New Hampshire, Connecticut, Massachusetts, Maine, Nevada, and New Jerseycombined.The second-largest recipient of farm welfare in 2003 was Producers Rice Mill, also in Stuttgart, Arkansas, which

received $51.4 million. The agricultural welfare rolls also include many Fortune 500 companies, such as ArcherDaniels Midland and International Paper, plus corporations most people don't associate with farming, such asChevron, Caterpillar, and Electronic Data Systems.From the taxpayer's perspective, there is no good reason why the federal government should continue to subsidizefarmers or companies, especially those that can remain profitable on their own.


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OverproductionSubsidies cause overproduction and destroy economic competitiveness


The extensive federal welfare system for farm businesses is costly to taxpayers and creates distortions in markets. Subsidiesinduce farmers to overproduce, which pushes down prices and creates demands for further subsidies. Subsidies inflate land

prices in rural America. And the flow of subsidies and regulations from Washington hinders farmers from innovating, cuttingcosts, diversifying their land use, and taking the actions needed to prosper in a competitive global economy.

The distortions caused by federal farm policies have long been recognized. In 1932 a member of Congress noted that theAgriculture Department spent "hundreds of millions a year to stimulate the production of farm products by every method,from irrigating waste lands to loaning and even giving money to the farmers, and simultaneously advising them that there is

no adequate market for their crops, and that they should restrict production." 6 The folly is the same seven decades later,

except that the subsidies have increased from "hundreds of millions" to tens of billions of dollars.


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Small FarmsFarm subsidies lead to corporate consolidation of farms-killing small farms

Reidl 7 [Brian M., Grover M. Hermann Fellow in Federal Budgetary Affairs in the Thomas A. Roe Institute Foundation,How Farm Subsidies Harm Taxpayers, Consumers, and Farmers, Toohttp://www.heritage.org/Research/Agriculture/bg2134.cfm ]

Farm subsidies are intended to raise farmer incomes by making up for low crop prices. Instead, subsidies promoteoverproduction, lowering prices even further. Expensive programs to restrict plantings are then implemented to raise pricesagain. Ethanol mandates raise prices further.

Farm subsidies are intended to help struggling family farmers. Instead, they harm those farmers by excluding them from mostsubsidies; financ ing the consolidation of small, individually owned farms into business conglomerates; and raising landvalues to levels that prevent young people from entering farming.

Farm subsidies allegedly are intended to be con sumer- and taxpayer-friendly, but they cost Americans billions of dollars eachyear in higher taxes and higher food costs.

The farm bill does not address any of these short comings. Washington would continue to spend approximately $25 billionannually to subsidize a small, elite group of farmers through policies that do nothing to help the farm economy.
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A2: Small Farmers Turn

Most subsidies go to large agribusinesses-not family farms

Griswold 6 [Daniel T., director of the Center for Trade Policy Studies at the Cato Institute, 9/28, Congress milks taxpayersdry, http://www.freetrade.org/node/488 , AVLB]

A hearing in the House Agricultural Committee last week highlighted everything wrong with U.S. farm policy. In preparationfor writing the 2007 farm bill, House members heard from 17 witnesses representing every possible farm lobby --from cottonto corn, sugar to potatoes, rice to eggs, and sorghum -- but not a single spokesperson for the interests of the American peopleas a whole.

Fewer than two percent of Americans farm for a living, and only a third of those farmers receive subsidies. Yet the interestsof subsidized and protected farmers dominate every farm bill discussion in Washington. The broader interests of the UnitedStates and the other 98 percent of Americans are systematically ignored.

The biggest losers from U.S. farm policy are taxpayers. From 2000 to 2005, Congress spent an average of $17 billion a year in direct payments to farmers. That's real money, even in Washington. Most of those payments did not go to small "familyfarms," but to large operations and agribusinesses, including some Fortune 500 companies. Indeed, according to theEnvironmental Working Group, the top 10 percent of recipients collected two-thirds of the payments on offer, and the top 5

percent collected 55 percent.
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A2: Small Farmers TurnAgriculture subsidies are America's largest corporate welfare program-money goes to wealthy owners andagribusinesses

Markheim and Riedl 7 [Daniella, Jay Van Andel Senior Analyst in Trade, and Brian M. Riedl, Gover M. Hermann Fellowin Economic Policy Studies at The Heritage Foundation, February 5 th, Farm Subsidies, Free Trade, and the Doha Round,http://www.heritage.org/RESEARCH/BUDGET/wm1337.cfm ] AVLB

America's Incoherent Farm Policy

The way subsidies are targeted is arbitrary and irrational. Nearly 90 percent of all subsidies go to growers of just five crops(wheat, cotton, corn, soybeans, and rice), while the vast majority of farmers specializing in livestock, fruits, vegetables, andall other crops flourish in a free market without subsidies.

And it is not small family farms or cash-strapped farmers who get the bulk of subsidies, but big agribusinesses. Agriculture is

increasingly moving away from family farmers and is being consolidated into large, profitable agribusinesses. Consequently,farm subsidies are no longer necessary to keep most farmers solvent. A Department of Agriculture report states that "onaverage, farm households have higher incomes, greater wealth, and lower consumption expenditures than all U.S.households." [5] The average farm household now earns $79,961, which is 26 percent above the national average. Farmers'average net worth is double the national average. Farming is not a teetering industry; the farm failure rate is just one-sixth therate for non-farm businesses. Yet taxpayers subsidize (mostly large) farms with approximately $25 billion annually.

Furthermore, two-thirds of subsidies are distributed to the wealthiest 10 percent of farmers. In 1999, the 136,000 householdswith annual farm sales of more than over $250,000the group that also receives the largest farm subsidiesreported anaverage income of $135,397, which was two-and-a-half times the national average. [6] Lawmakers, Fortune 500 companies,and even celebrity hobby farmers such as Ted Turner, David Rockefeller, and Scottie Pippen collect subsides that dwarf whatthe average family farmer receives . [7] Subsidizing large agribusinesses that grow certain crops while excluding many familyfarmers who grow other crops has earned farm subsidies the title "America's largest corporate welfare program." [8]

In addition, U. S. farm subsidies embody an economic incoherence that is stunning even by government standards. Farmpolicy is based on the premise that surpluses have driven down crop prices and so farmers need subsidies to recover lostincome. The federal government's remedy is to offer subsidies that increase as a farmer plants more crops. But planting morecrops creates greater crop surpluses, further driving prices down and spurring demand for even greater subsidies. Then, whilepaying some farmers to plant more crops, Washington turns around and pays other farmers not to farm 40 million acres of cropland each year. [9] Different farm policies simply cancel each other, with the only net effect being higher taxes onAmericans.
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A2: Small FarmersPlan doesn't hurt small farmers-subsidies go to wealthy owners and farm incomes exceed national average


1. Farm Subsidies Redistribute Wealth. Farm subsidies transfer the earnings of taxpayers to a small group of fairly well-off farm businesses and landowners. USDA figures show that the average income of farm households has been consistentlyhigher than the average of all U.S. households. In 2005 the average income of farm households was $79,965, or 26 percenthigher than the $63,344 average for all households.19 When large-scale federal farm subsidies began in the 1930s, farmincomes were only half the national average.

Although policymakers love to discuss the plight of the small farmer, the bulk of federal farm subsidies goes to the largestfarms.20 For example, the largest 10 percent of recipients have received 72 percent of all subsidy payments in recent years.21Numerous large corporations and even some wealthy celebrities receive farm subsidies because they are the owners of

farmland. It is landowners, not tenant farmers or farm workers, who benefit from subsidies. And one does not even have to bethe owner of farmland to receive subsidies: Since 2000 the USDA has paid $1.3 billion in farm subsidies to people who ownland that is no longer used for farming.22


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A2: Reforms SolveCurrent reforms don't solve-they retain the bloated subsidies of the 2002 bill

Markheim and Riedl 7 [Daniella, Jay Van Andel Senior Analyst in Trade, and Brian M. Riedl, Gover M. Hermann Fellowin Economic Policy Studies at The Heritage Foundation, February 5 th, Farm Subsidies, Free Trade, and the Doha Round,http://www.heritage.org/RESEARCH/BUDGET/wm1337.cf AVLB]

In late January, the Department of Agriculture unveiled President Bush's proposal for reauthorizing the farm programs thatexpire in September. These reforms would marginally improve the current system. The President would close a loophole thatcurrently allows excessive marketing loan payments. Counter-cyclical payments would be slightly altered to better targetlow-revenue farmers. Best of all, the President would eliminate subsidies for farmers earning over $200,000 annually.

However, these tweaks generally retain the bloated and economically incoherent farm subsidy programs that in 2002 replacedthe innovative 1996 "freedom to farm" reforms. The watershed 1996 reforms largely ended market distortions, allowingfarmers to make production decisions without government interference. While farm subsidy costs have more than doubled inthe past decade, the President would spend only slightly less than the previous farm bill (and likely more than theCongressional Budget Office baseline for these programs). Anti-free market milk and sugar policies would be only slightlychanged.

The President's proposal represents a small step in the right direction. Better still would be a return to "freedom to farm"policies. If these fail, the next test would be whether the President draws a line in the sand and threatens to veto the expensiveand inefficient farm legislation Congress appears ready to write.
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Subsidies Bad

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