Agricultural subsidies refer to governmental subsidies paid to agribusinesses and farmers to assist them in managing agricultural commodities, influencing the demand and supply of these commodities, and supplementing agricultural income. The American government holds that agricultural subsidies are necessary; especially given role that corn-based ethanol has in the energy security plan of the United States.
The government also argues that subsidies are important in securing America’s domestic agricultural sector as a homeland security measure. The purpose of this is to protect the country from reliance on food imports should a catastrophic, world-changing event occur. However, subsidies can have both negative and positive outcomes. Some advantages are that subsidies ensure a stable farming system and permit Americans to enjoy affordable and reliable access to food at a lower cost.
Opponents of agricultural subsidies, however, contend that subsidy distribution is now determined solely based on political gain. They argue that eliminating subsidy programs is almost impossible because the beneficiaries have formed interest groups to defend the handouts unrelentingly. Family farmers, who often require subsidies the most, receive only a small portion. Agricultural subsidies also alter market prices and constrain free trade, occasioning harmful market distortions that unfavorably affect peasant farmers in developing nations. In addition, such subsidies burden American taxpayers and harm the environment.
Small farms in foreign countries are often forced to go out of business when subsidies constrain free trade. As a result, foreign countries are forced to rely on imports and, therefore, American produce must then be shipped to these countries. Energy is needed to facilitate transportation and to maintain the produce during shipment process, leading to increased environmental degradation. In sum, government intervention in the form of agricultural subsidies goes against the American ideal of “free market,” in addition to costing taxpayers billions of dollars every year.