Thanks eco-terrorists
- Thread starter Gonz
- Start date
2minkey
bootlicker
subsidies hide the real cost of production. if i remember correctly most economists agree that US food prices have been artificially low for some time, but don't understand the underlying mechanism fully. i'll ask a dude i work with about this tomorrow, and perhaps be better able to explain...
jimpeel
Well-Known Member
Suppose you are a farmer and you grow wheat. The government studies forecasts of the wheat crop and the futures market and they determine that we already will have enough farmers growing wheat next year.
Their studies also find that there will be a shortage of chickpeas because there are not enought farmers planting chickpeas.
The problem with getting farmers to move from growing wheat to growing chickpeas is that chickpeas command a price that is 50% lower than wheat.
So the government pays you the difference -- subsidizes -- between what you would get growing wheat and what you would get growing chickpeas. Some people call this paying you not to grow wheat while in reality it is paying you to grow chickpeas.
Now there are subsidies for farmers to allow their fields to go fallow but those subsidies are not nearly what they are for growing something other than what you normally grow. Many times this is to allow the ground to recover from overplanting.
There are also subsidies for farmers who allow sections of land to return to native habitat to encourage hunting and other recreational activities. This is, however, usually a state, not federal, subsidy.