NCPA - National Center for Policy Analysis

Farm Subsidies are Harm Subsidies

October 30, 2003

Farm subsidies are perverse and they're not good for the environment, farmers or consumers, says Bishop Grewell (American Enterprise Institute).

Even when subsidies are tailored for environmental benefits, they often end up doing more ecological harm than good. Examining two government subsidies for ethanol production and the Conservation Reserve Program (CRP), he found:

  • Ethanol produced from corn causes environmental degradation from increased soil erosion and aquifer mining, from soil, water, and air pollution, and from increased emissions of global-warming gases.
  • Ethanol increases the evaporation rate of gasoline, which leads to increased smog-causing pollutants.
  • Under the CRP, farmers received payments to remove 17 million acres from production, but total cultivated land fell by only 2 million acres.

Grewell argues that subsidies should be removed because they prevent competition by creating an entry barrier for new farmers, who may be more efficient. Under the current system subsidies only go to those who are already in the farming game, because they're based on the previous years' production. In addition, Grewell argues, agricultural subsidies are an obstacle to reducing trade barriers because they lead other countries to close their doors to U.S. exports.

Source: J. Bishop Grewell, "Farm Subsidies are Harm Subsidies," American Enterprise, October/November 2003, American Enterprise Institute.


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