Subsidies, penalties, and the true cost of food

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This makes me worry about how the poor will afford to eat....

but that's probably a political comment........

Keep in mind that the organic price will not go DOWN.

In the "first world" today we spend the lowest percentage of our income on food as any time in history. To go back to historic percentages will be a really hard adjustment.

Also keep in mind that the Chem-Ag subsidies are not likely to ever be taken away.
That's how too many lawmakers guarantee re-election.

Are there sources to prove this statement? I don't dispute that it's true, I would just like to be able to share it with others. Any help would be appreciated!

Source: Jenny pulled this from one of my podcasts. I think it is from the farmageddon podcast.

To accurately answer this question, it would take a bout six years of research and would then fill about four books.

But let's try to explore a small part: corn.

First, there is the obvious subsidy there. My impression is that it is usually around 60% to 70%. A little research... ah, "75 to 85 percent".

Just at 75%, that means that when $25 is paid to the farmer for corn, that the farmer also receives $75. So if there was no subsidy, we would pay $100 for that same corn. Four times more.

And this doesn't even start to explore the subsidies for petroleum (commodity corn uses almost exclusively petroleum fertilizers) or the myriad of other subsidies. And let's not forget that corn finds its way into ... what, 70% of all foods? And many of those other foods are subsidized too. Then we get to the ag program formerly known as food stamps.

So in my podcast I said "almost 4 times more". But I think if somebody really researched this, they might find a much higher number.

I'm surprised anybody feels the need to ask me to source this information.

paul wheaton wrote:I'm surprised anybody feels the need to ask me to source this information.

I saw it... last week? Week before? ... and have thought about it at least every day since. I'd love to share it with my other boards, but can't because there's no evidence/citations. It'd get shot down in an instant. I don't even know where to begin looking for citations.

Tyler Ludens wrote:This analysis might have some helpful numbers: http://nyu.academia.edu/KellyMoltzen/Papers/379987/Subsidies_and_Specialty_Crops_An_Analysis_of_the_Current_State_of_U.S._Agricultural_Policy

Another report looking at subsidies and prices: http://www.foodandwaterwatch.org/pressreleases/do-farm-subsidies-cause-obesity/

More dismaying numbers: http://www.pcrm.org/health/reports/agriculture-and-health-policies-unhealthful-foods

http://www.organicconsumers.org/gefood/govtsoyloans.cfm

etc etc....

it seems like every thread I read you are swooping in to save the day. thanks for the hard work Ludi.

You're very welcome!

“Highly efficient U.S. producers like SolarWorld can vie with any company in the world in legal competition. But the government of China’s illegal trade practices are neither economically nor environmentally sustainable for anyone. Free trade is trade free of illegal foreign government intervention.”
extract from http://cleantechnica.com/2012/02/12/dumping-solar-study-sheds-light-on-solar-pv-trade-flows-us-china-manufacturing/

The US complaining about china subsidies of PV manufacture that allowed them to take 55% of the market share .....
In Australia our farmers don't have government subsidy on our produce , and we get 1970's prices on our grains having to compete with US farmers with subsidies.... yet still pay 2013 prices for fuel/fertilizers... this has been driving many farmers off the lands...

http://en.wikipedia.org/wiki/International_wheat_production_statistics

When the other big producers in the world have the same issues , there will be less food making, and for higher prices , and the US government can only financially do it for so long , one day the bubble will pop, when it does , it will be society looking at people like us (permies people) for answers.... it's only a matter of time (may or may not be in our life time ) .. until then , lets be loud and proud, and try and change peoples thinking so we are more adjusted when that change does come....

Where are these numbers coming from? some quick searching tells me that 5he US (grain) corn crop is worth 15.1 billion in sales and is supported by 2.8 billion in subsidies. And my understanding of the structure of us aggriculture subsidies is that removing them would cause a temporary drop in price as the loss of the price floor causes producion to expand rapidly (the old saw about paying farmers not to grow corn) in search of ever diminishing margins as more corn comes on the market, followed by huge price voltility in the long run, and chem-agg killing all the soild instead of just most of it.

Logan Simmering wrote:Where are these numbers coming from? some quick searching tells me that 5he US (grain) corn crop is worth 15.1 billion in sales and is supported by 2.8 billion in subsidies. And my understanding of the structure of us aggriculture subsidies is that removing them would cause a temporary drop in price as the loss of the price floor causes producion to expand rapidly (the old saw about paying farmers not to grow corn) in search of ever diminishing margins as more corn comes on the market, followed by huge price voltility in the long run, and chem-agg killing all the soild instead of just most of it.

Nice to see you've backed it up with verifiable statistics !! but lets use your figures ... although i cant see how your logic works ?!?!! removal of 2.8 billion (18.54%) from the annual ...
Maize (corn), U.S. No. 2 Yellow, FOB Gulf of Mexico, Price in US$ per bushel: 6.12.....As of: Friday, July 26, 2013 .....Source: USDA Market News http://www.indexmundi.com/commodities/?commodity=corn
a drop of 18.54% = $4.98 per bushel that's the price drop you mention which i do agree with ... now you say production expands quickly ? this doesn't make financial sense, farmers do not grow a product that there is no return on , they plant crops that yield higher profits to remain viable (sorghum, millet, clover/lucerne ect) ......at this point the market gets "world parity price" and imports even out the price....this is an even playing field , world parity... resulting in stability , not volatility....

Thank you for posting this. This situation has been a long time coming. Food and Water are becoming big issues nowadays. We have to take simple steps like having our own small gardens and having a water source other than city water, this is one of the reasons I am here, to add to my skills....

David Williams wrote:

Logan Simmering wrote:Where are these numbers coming from? some quick searching tells me that 5he US (grain) corn crop is worth 15.1 billion in sales and is supported by 2.8 billion in subsidies. And my understanding of the structure of us aggriculture subsidies is that removing them would cause a temporary drop in price as the loss of the price floor causes producion to expand rapidly (the old saw about paying farmers not to grow corn) in search of ever diminishing margins as more corn comes on the market, followed by huge price voltility in the long run, and chem-agg killing all the soild instead of just most of it.

Nice to see you've backed it up with verifiable statistics !! but lets use your figures ... although i cant see how your logic works ?!?!! removal of 2.8 billion (18.54%) from the annual ...
Maize (corn), U.S. No. 2 Yellow, FOB Gulf of Mexico, Price in US$ per bushel: 6.12.....As of: Friday, July 26, 2013 .....Source: USDA Market News http://www.indexmundi.com/commodities/?commodity=corn
a drop of 18.54% = $4.98 per bushel that's the price drop you mention which i do agree with ... now you say production expands quickly ? this doesn't make financial sense, farmers do not grow a product that there is no return on , they plant crops that yield higher profits to remain viable (sorghum, millet, clover/lucerne ect) ......at this point the market gets "world parity price" and imports even out the price....this is an even playing field , world parity... resulting in stability , not volatility....

Sorry, I posted from my (non-smart) phone so links weren't an option.

Price of subsidy: https://en.wikipedia.org/wiki/Agricultural_subsidy#United_States

And, this is where I got the value of the corn crop, but it's now showing it as 63 billion rather the the 15 I thought I saw before: http://www.epa.gov/agriculture/ag101/cropmajor.html

As for my logic, It's kind of a standard (at least I've encountered it several places, including econ classes) explanation of for agricultural boom-bust cycles (and the dust bowl), where the only way to make ends meet with falling prices is assumed to be increasing production leading to a bigger glut and lower prices until the debt load of exuberance during a previous bust leads to large scale farm closure, lower production and a return to a more sustainable price. In theory agricultural subsidies are supposed to act against this pattern by providing a price floor. However, looking a bit at the data (http://www.nass.usda.gov/Statistics_by_Subject/index.php?sector=CROPS, http://plantsci.missouri.edu/grains/corn/facts.htm) and history of the sector (http://www.kansascityfed.org/publicat/econrev/pdf/11q4HendersonGloyBoehlje.pdf) neither aspect of that narrative seems to hold, with production dropping as prices drop (presumably parallel to some sort of substitution for other crops) and subsidies doing little to smooth out boom-bust cycles which are primarily fueled by export prices.

the economists you originally spoke of from your "quick search" speak of a market that is subsidized , which is the same logic they use in a tariff system and is considered "tobacco science" since all the figures they use are in a distorted market

https://en.wikipedia.org/wiki/Agricultural_subsidy#United_States
states exactly what i did in my first post

Global food prices and international trade :-
Mark Malloch Brown, former head of the United Nations Development Program, estimated that farm subsidies cost poor countries about US$50 billion a year in lost agricultural exports:

"It is the extraordinary distortion of global trade, where the West spends $360 billion a year on protecting its agriculture with a network of subsidies and tariffs that costs developing countries about US$50 billion in potential lost agricultural exports. Fifty billion dollars is the equivalent of today's level of development assistance."

Secondly , there is another issue that is it's subsidized for ethanol for fuel and is why i used wheat as the prime example

In summary , while your right in the old agriculture systems prior to a "global market" the boom and bust cycle held true , but in a free global market those cycles are no longer present in storable products, yet does still affect "fresh produce" like milk , fruit and vegetables ect, though not as much as they used to since it draws from a further field....
I still stand by my original point of view that A) subsidies from any country on any product distort markets in a free trade environment and B) saying "illegal trade practices" by China, while doing the exact same thing on another product yourself is extremely hypocritical as a nation
i'm happy if other people don't see it in that light ,and is why they call this a forum just my point of view, and lastly , i'd personally like to thank you Logan for looking a little more in-depth into something i can see you feel strongly about , through knowledge and re-evaluation of things in life is what creates change , even if we disagree as a result or reaffirm what we believed beforehand

Got this in email today:

hate to bother you because you are busy. There is a quote of yours on Food Inc (on Facebook) about farm subsidies, and penalties for organic ag. There is a lot of noise being made by people with questionable agendas about this idea of penalties for organic ag. They say there is no such thing. I can't find anything offhand to refute them. Could you take a loot at the post and maybe say something when you get a chance. Thanks

And sent this response:

https://permies.com/t/16161/md/Subsidies-penalties-true-cost-food

I went to google and typed in "organic certification fees" and it came
back with this as the first link:

http://www.ccof.org/certification/fees

And then to find out why those people seem to not know how to use
google, but they are very good at FUD:

https://permies.com/t/12873/tnk/professional-trolls

Then there's stuff like being able to slaughter yourself, raw milk vs. pasturized...

When I learned about rotational grazing I went on youtube and watched a bunch of videos. I won't be able to find it again, but it was some older gentleman who had converted over and had started noticing that gap getting larger- the space between the price of his inputs and the price he got. He had a wonderful expression on his face, and he was happy because he was working less too.

Prices are already going higher; things would only have tilt a little bit for the cattle industry to be beat. Sixty percent of beef sales is ground beef in America- and the industry has to keep raising it's prices, on a product that literally makes me sick. I hypothesize they are spraying broad leaf herbicides on the pastures and that's what hurts me, but that's a guess.
But anyway, with a concerted effort, a consortium could push them out with competitive pricing and focusing most if not all supply to ground beef.

August Hurtel wrote:
But anyway, with a concerted effort, a consortium could push them out with competitive pricing and focusing most if not all supply to ground beef.  

what kind of consortium?

It's going to depend on the country. I can claim around 300 USD per hectare in subsidies just for having conventional agricultural land, but if I have Organic land then I can claim $600 per hectare (this may change since the latest budget gutted the EU's common agricultural policy)
Organic does cost more, it needs more fuel or plastic inputs, more labour, the seeds are more expensive and the paperwork is an order of magnitude higher and I expect the consultant you MUST employ costs but I can't find info on that.

Skandi Rogers wrote:It's going to depend on the country. I can claim around 300 USD per hectare in subsidies just for having conventional agricultural land, but if I have Organic land then I can claim $600 per hectare (this may change since the latest budget gutted the EU's common agricultural policy)
Organic does cost more, it needs more fuel or plastic inputs, more labour, the seeds are more expensive and the paperwork is an order of magnitude higher and I expect the consultant you MUST employ costs but I can't find info on that.

doesn't that mean you get more subsidies for organic then? am i misunderstanding something?