Cons of Agricultural Subsidies

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There are many ways in which government helps small farmers, but two are the most common: tax breaks and governmental subsides. Every business owner is in favor of tax breaks, but subsidies are not that popular amongst the farming community.

There are reasons why this is the case and even though there are subsidies such as these in almost every country, case could be made against them. That’s what we will try to do, but have in mind that there’s a flip side to this story and that there are those who benefit from the subsidies.

It’s a governmental action

The decision to subsidies one industry and not the other or even one farm and not the other is made by the government. This presents a problem since the decisions made by the government are created in a political arena and often not with the interest of the farmers in mind. They could reflect the interest of the larger players in the field much more than the interest of every day working farmers.

This also means that changing a policy is rather difficult. It takes time until a governmental entity does something or even notice that there’s a need for something to be done and businesses often can’t afford the wait.

It interferes with the market

It’s a common argument that subsidies interfere with the market. That’s not accepted as a valid point by everyone working in the field, but no one doubts that it’s true. If one business has help from the government and the other one doesn’t, the relationship between them is no longer just about market forces and the free will of the buyer. One business has an advantage over the other.

Some would argue that this is unfair and that it gives too much power to the government, while others believe it’s still a useful way to break an entry barrier for the industry.

Less product diversity

If the government incentives certain behavior or a certain product, there will be more of it. That’s how most subsidies work since the government needs to set guidelines what kind of work it will subsidy. That means more farms will start growing the produce that receives subsidies.

This means there will simply be less diversity of produce. It’s not a good thing for the market, but also not a good thing for the soil and environment in which only one culture is grown.

The difference between landowner and farmer

There’s a difference between land owners and farmers. When it comes to small sustainable farms, those who work on the farms, are not always and even not often the owners of the land they are working on. It’s easier for a small farmer to rent the land they are using until they figure out how well the business side of things will work.

The subsidies are almost always there to help the owner and not the one using the land, since it’s much easier for the government to keep track of the owners. This will present a problem for the subsidy and its goal.

It helps companies

In a lot of cases subsides are what’s called corporate welfare. That refers to the government programs made to redistribute the wealth towards the companies instead of towards who need help the most.

It’s rather difficult to determine when a company becomes a company in terms of its impact on the society. A small business sometimes needs to be subsides since it’s a pillar of its community, while a company is an entity that’s profitable on its own. Often these subsidies can’t make a distinction and they keep helping those who are self-sustainable.

Upsides

There are also upsides to agricultural subsidies that shouldn’t be overlooked. Simply put they help small businesses get their way into the business that’s often hard to get into. Large companies aren’t really there to help those who want to make their way into the market.

This means that small farms get a leg up from the government and that often allows them to remain profitable and self-sustainable.  Small farmers usually say that they support subsides even when they are not using them.

Conclusion

Agricultural subsidies are there to stay since they are the governmental policy in most countries. However, there are many who feel that this isn’t a policy that worth keeping and using in the years to come. That’s sometimes a matter of principle since there are those who are against all subsidies and sometimes because this particular policy for specific farms isn’t what they wanted it to be.

This policy tends to affect the market and often has a negative influence on the environment since it encourages the farmers to plant only one culture at a time.

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