The U.S. farm subsidies should be reduced or eliminated. The position would be influenced by a number of factors that would give evidence on the impacts that the farm subsidies have had to the US economy. Further, if the subsidies continued being extended to the members of the public, they would cause further economic pressure to the U.S. government as well as the citizens. However, there are equally valid reasons why the subsidies should remain as benefits to the small scale farmers.
There are different ways through which the subsidies have and would continue to be significant to the United States citizens. Farming being the basic source of food to the society, it would only be affordable to the people if its production is cheap. Reducing or eliminating the farm subsidies would cause a reduction in food production making it unaffordable to some people (Edward).
The production costs will escalate since most people cannot afford the necessary farm inputs. Seeds, farm equipment, and labor among other farming requirements would become highly expensive and unaffordable to many. For instance, approximately 2% of the U.S. population is from farm and ranch families, and they employ nearly 15% of the U.S workforce (American Federation). Therefore reducing the productivity of the sector would affect the economy in terms of revenue and most of the citizens will remain unemployed. Also, the 30% of gross farm income from exports will be reduced since the exports will fall following the increase in export prices for the products (American Federation).
However, there are facts why the subsidies should be reduced or eliminated in the U.S economy. Since the farming is mainly done by the families in the form of ranches and farms, the subsidies seem to be beneficial only to the small portion of the population. In 2014, the average income for farm households was $131,754 which was 74% more than the average U.S household income of approximately $75,738. Therefore, a few people adding up to around 2% of the U.S population are benefiting at the expense of the majority (Schnepf 18). As such, the subsidies should be reduced or eliminated to ensure fairness in the American society.
Further, there are schemes developed in the name of farm subsidies that are meant to defraud the citizens. A report by the Government Accountability Office realized that inappropriate farm payments rise to $500 million per year (Edward). There is information that since 2000 approximately $1.3 billion has been paid to the individuals who own farmlands that have never been used for farming (Edward). Therefore, the citizens through taxes have continued to fund projects that do not have any monetary value or significance to them. People are losing on the ground of assisting the small-scale farmers while the benefits are fetched by the rich, large-scale farmers, and some government officials.
Also, farm subsidies are harmful to the economy. In common economic perspective, market prices are in line with the supply and demand thus encouraging efficient production. However, it is not the case in agriculture in the U.S following the subsidies. There is overproduction, overuse of marginal farmland, inflation in the price of the land as well as excess borrowing by farm businesses, which influences the economy in terms of interest rate (Edward).
The farm subsidies were a unique strategy to encourage farming in the United States. As a result, extensive improvements have been noted in the economy with high revenue being generated from farming activities. However, the economic undertaking has been essentially expensive for the citizens who have to fund the subsidies through taxation. However, challenges are rising on the relevance of the subsidies and the necessary precautions like reduction or elimination of the policy should be employed.
Works Cited
American Federation. "Fast Facts About Agriculture - The Voice Of Agriculture - American Farm Bureau". Fb.org. N.p., 2016. Web. 11 Apr. 2016. <http://www.fb.org/newsroom/fastfacts/>
Edwards, Chris. "Ten Reasons To Cut Farm Subsidies". Cato Institute. N.p., 2007. Web. 11 Apr. 2016. < http://www.cato.org/publications/commentary/ten-reasons-cut-farm-subsidies>
Schnepf, Randy. "U.S. Farm Income Outlook For 2016". Congressional Research Service 40.2 (2016): 1-18. Web.
