2020 is going to be a record year for payments to farmers.
Between price-contingency payments, conservation payments, disaster assistance payments, Market Loss Assistance, the Market Facilitation Program, the Coronavirus Food Assistance Program, and the Paycheck Protection Program, farmers are set to receive $35 billion in payments this year.
Depending on where you live and how far removed your life is from the farmland, that might seem like a big number. Detractors will argue farmers get too much help already and should fend for themselves. With the coasts voting one way and the heartland voting another, we have a recipe for conflict. The next administration may be less committed to farmers.
By subsidizing farmers, the government is ensuring the price of food stays reasonable. Without extra payments to farmers this year, food banks would have been empty.
Even now, there were thousands lining up to get free Thanksgiving supplies in North Texas. The last thing we need is even higher food prices than we have today.
When I was a child in Ireland, I remember learning about the butter mountains and wine lakes (surpluses of butter and wine). Back then, the USA and the European Union were massive overproducers of food. They were dumping much of that supply on the global market and suppressing prices.
Third-world countries argued in the World Trade Organization that U.S. and EU subsidies for farmers were unfair. Our own politicians agreed. They believed it was only right to give millions of poor people a chance to make a living selling their produce at a fair price. They cut subsidies to domestic farmers to support farmers overseas.
When subsidies were cut, the most efficient global producers grabbed market share. Instead of helping the whole world, it primarily benefited Brazil, Argentina, and Russia. Small African farmers missed out.
Since that fateful decision, commodity prices have hit a higher plateau. Even after the bust following the 2011 peak, prices never went back to where they were before the boom.
The USA is one of the most prolific and efficient producers of food in the world. Agriculture exports help feed the planet when natural disasters, war, or famine ravage other countries. However, domestic food security is more important. We are both energy- and food-independent. That’s a significant geopolitical advantage.
As the world emerges from the pandemic, food security is going to be a big challenge. The U.N. believes 270 million people are now at risk of famine. That’s double the number from last year. This is not the time for skimping on a sector that helps feed the world.
In fact, we must do everything to ensure it prospers. The Arab Spring started in Tunisia in 2010 following a significant rise in the price of wheat. After the 2008 global financial crisis, many people were unemployed. Combined with high food prices, it sparked a revolution.
We’ve already had a taste of what violent street protests look like. Those occurred when people received thousands of dollars a month in extra payments. Politicians are at a stalemate in negotiating a new stimulus package. At the same time, benefits are expiring. Access to affordable food is a major potential flash point.
$35 billion might sound like a lot. Compared to the trillions our government has already spent on benefits, maybe it’s not so much. To me, it’s a very low price to pay to ensure the welfare of society and keep the peace.
All the best,