The Problems with Farm Subsidies

The Problems with Farm Subsidies

Subsidies are payments, economic concessions, or privileges given by

the government to favor businesses or consumers. In the 1930s, subsidies

were designed to favor agriculture. John Steinbeck expressed his dislike of

the farm subsidy system of the United States in his book, The Grapes of

Wrath. In that book, the government gave money to farms so that they would

grow and sell a certain amount of crops. As a result, Steinbeck argued,

many people starved unnecessarily. Steinbeck examined farm subsidies from a

personal level, showing how they hurt the common man. Subsidies have a

variety of other problems, both on the micro and macro level, that should

not be ignored. Despite their benefits, farm subsidies are an inefficient

and dysfunctional part of our economic system.

The problems of the American farmer arose in the 1920s, and various

methods were introduced to help solve them. The United States still

disagrees on how to solve the continuing problem of agricultural

overproduction. In 1916, the number of people living on farms was at its

maximum at 32,530,000. Most of these farms were relatively small (Reische

51). Technological advances in the 1920's brought a variety of effects. The

use of machinery increased productivity while reducing the need for as many

farm laborers. The industrial boom of the 1920s drew many workers off the

farm and into the cities. Machinery, while increasing productivity,

was very expensive. Demand for food, though, stayed relatively

constant (Long 85). As a result of this, food prices went down. The small

farmer was no longer able to compete, lacking the capital to buy productive

machinery. Small farms lost their practicality, and many farmers were

forced to consolidate to compete. Fewer, larger farms resulted (Reische 51).

During the Depression, unemployment grew while income shrank. "An extended

drought had aggravated the farm problem during the 1930s (Reische 52)."

Congress, to counter this, passed price support legislation to assure a

profit to the farmers. The Soil Conservation and Domestic Allotment Act of

1936 allowed the government to limit acreage use for certain soil-depleting

crops. The Agricultural Marketing Agreement Act of 1937 allowed the

government to set the minimum price and amount sold of a good at the market.

The Agricultural Adjustment Act of 1938, farmers were given price supports

for not growing crops. These allowed farmers to mechanize, which was

necessary because of the scarcity of farm labor during World War II

(Reische 52). During World War II, demand for food increased, and farmers

enjoyed a period of general prosperity (Reische 52).