On August 23, the US Department of Agriculture announced its plan to purchase 11 million pounds of cheese, at a cost of $20 million. The cheese will be “provided to families in need through USDA nutrition assistance programs,” but the real purpose of the purchase is to reduce excess cheese inventories, “assisting the stalled marketplace for dairy producers whose revenues have dropped 35 percent over the past two years.
Economics 101: When so many people produce so much of the same thing that the supply of that thing exceeds the demand for it, prices fall. When prices fall far enough that not all the producers can turn a profit, some of them go off to do other things. Prices then rise as the market moves back toward “equilibrium” between supply and demand.
Farming 101: When so many people produce so much of the same thing that the supply of that thing exceeds the demand for it, prices fall. When prices fall far enough that not all the producers can turn a profit, the producers claim that farming is extra super special and that it’s the government’s job to make it profitable so that no one who wants to farm must instead go build houses, drive trucks or mop floors to make ends meet.
That’s why each and every American pays more than $300 to farmers each and every year before actually getting any edible farm goods — and then pays artificially high prices for those goods. The Agricultural Act of 2014 provides for $956 billion in government subsidies for farmers over 10 years, including “price supports” and other jiggery-pokery to keep prices above their natural market level.
I come from a farming family. My grandfather started out as a “share cropper,” eventually farming several hundred acres of his own. I spent my formative years living on a subsistence farm and working on others’ commercial farms. My father retired from a dairy operated by a farmers’ cooperative. If anyone should appreciate the extra super specialness of farmers, it’s me.
But I don’t.
In 1940, a single farmer fed 19 people (and my mother went to town on a horse-drawn wagon — yes, really; her family didn’t get a truck until after World War 2). Today, a single farmer feeds eight times as many people (and probably drives a nice shiny pickup truck), even though the US population is only two and a half times what it was back then.
Modern technology and methods mean fewer farmers can feed far more mouths. That’s a good thing that frees up labor to provide other desirable goods and services, not a “problem” to be offset by having government tinker with the market and attempt to guarantee someone’s “right” to make a living as a farmer at everyone else’s involuntary expense
Thomas L. Knapp
Director, The William Lloyd Garrison Center for Libertarian Advocacy Journalism