If I told you that
the federal government wanted a check for 50 dollars every year from every
family of four which would be spent on a program which cost them money, most of
us would be a bit confused if not angry. And yes, I’m going to make you read
all of this to get to today’s totally relevant point.
And yet, in the
U. S., fewer than 4,500 farm businesses produce sugar. Those businesses cost
taxpayers around $4 billion a year in subsidies. To what end? Nominally, to
keep sugar production a viable US industry. The underappreciated “rest of the
story” is that the cost of these price supports is the cost paid to prop up the
prices of US domestic sugar and eliminate “unfair” competition from such
economic giants as Costa Rica, The Dominican Republic, Guyana, Jamaica and, of
course, that great Caribbean bugaboo - Cuba.
This U.S. sugar
program is, in essence, a Stalinist-style supply control initiative that limits
imports through quotas and domestic production through what are called
marketing allotments. While doing so, it also, and here’s the dirty little
secret, substantially increases U.S. prices. On average U.S. sugar prices are
about twice as high as world prices, ensuring domestic sugar production is
artificially higher, crowding out other productive uses of irrigable farmland.
If this had a
net positive effect, it might be tolerable, despite its effect of enriching a
small sector of American society at the expense of all the rest of us. However,
it doesn’t work that way. The program is also a net job killer. Employment
losses in the U.S. food-processing sector more than offset any positive
employment impacts in the U.S. sugar-processing sector. The net result is
reductions in U.S. manufacturing employment opportunities in the order of
10,000 to 20,000 jobs every year, per one industry report. An increasing number
of (formerly US) confectioners are now producing elsewhere with sugar of the
same quality at half the price per pound. And (I told you I’d bring it back
together) the annual cost to the average family of four of artificially expensive sugar is between 44 and
50 dollars, just considering subsidies, not to mention the higher costs of all
products using subsidized sugar.
On a broader
scale, the concept has also been applied to farm products in general. I’ve
written on farm subsidies previously and don’t care to repeat all the grim
details, but the total cost in an ordinary year is a big number. The federal
government spends more than $20 billion a year on subsidies for farm businesses.
About 39 percent of the nation's 2.1 million farms receive subsidies, with the
lion's share of the handouts going to the largest producers of corn, soybeans,
wheat, cotton, and rice.
Yes, I know, you’ve
said this before, Mike, so what is new? I’m glad you asked, Grasshopper. In today’s
local paper there is a small article, only one paragraph, citing the diversion
of $3.6 billion from the Pentagon budget, primarily from such “non-essentials”
as schools, and maintenance facilities, domestic and overseas, which would be
used for Trump’s wall which, you may recall,
Mexico was supposed to pay for.
You’ve probably
realized by now that the point of this is that, once again acting like the
spoiled child he is, Trump has bullied his way through legal opposition to do
his own will. In this case, giving to the rich and robbing those who defend us.
The amount spent on sugar subsidies
alone, would more than suffice for his wall fantasy. It would only be 18.5% of
the “usual” US farm subsidy package. Considering the conservative tendencies of
many farmers, it could have been amusing (and appropriate) to have seen Trump
tell his “rustic” supporters (and huge agribusiness donors, such as Cargill, Archer
Daniels Midland, and Monsanto) that it was their turn to suck it up for the
good of “the wall.”
That would be
in a normal year. Here comes the rest of the story. Since the inception of
Trump’s incredibly naïve tariff war with China, American farmers are in
trouble. An additional $16 billion so far, has been diverted to
farm aid as soybean and wheat markets in China have dried up (to be eagerly replaced,
by increased sales from Russia and Brazil). This now greatly affects this year’s
subsidies. Driven by a tragically flawed economic policy, discredited by real
economists everywhere, the 2019 farm subsidy is now $39 billion! That makes the funds
diverted from valid DOD uses such as schools & maintenance to “the wall” a
mere nine percent of our annual gift to farmers and big agriculture. “Family farm,” a favorite Republican shibboleth,
is not a synonym for “small farm.” In 2015, 90 percent of million-dollar farms
were family farms. Almost of all the commodity payments and crop insurance
indemnities are going to millionaires and multimillionaires as measured by farm
household net worth.
It’s nice to know that Trump is nothing, if not consistent.
He compounds poor decisions based on poor judgement and lack of information on
a daily basis. This is simply one more.
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