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Monday, February 18 , 2019, 7:17 pm | Fair 50º


Nuvigreen Project: The Agricultural Subsidies Behind 99-Cent Chips

Government assistance keeps the cost of farming low and supply up, but there is a darker side

[Noozhawk’s Note from Green Hawk Interactive Producer Sarah Ettman-Sterner: The Nuvigreen Project is a mentorship experience that helps bring to light a new source of environmental reporting, while supplying the community with up-to-date eco-news from fresh, youthful perspectives. Nuvigreen serves as terra firma to support and encourage high school and college students to pursue green careers, especially green journalism. Now, inspired young environmentalists have an outlet — a place to be seen, heard and published, and get feedback. It is a cooperative effort supported by Noozhawk and Santa Barbara educational institutions including Dos Pueblos High School and UCSB.]

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The supermarket is a delightful place — chips for just 99 cents, sodas for only a dollar. The quantities of food are endless, and at the cash register, there’s still money left in your pocket. But what really causes those cookies, crackers and breads to be so cheap? Good economic times? Hardly. Rather, the agricultural subsidy system and resource subsidies behind U.S. agriculture allow farmers to profit while consumers pay less.

Subsidies — government funding provided to a group of public interest (GN 4), allow farmers to produce large quantities of food and sell it at a profitable price. Without these agricultural subsidies, the price of producing corn, because of water, fertilizer and pesticide costs, in many areas is too costly for the profits received from the market price. At same time, if farmers were to sell corn at a profitable price, low-income families would be unable to afford corn products, such as high fructose corn syrup, often found in sweets and sodas.

Water subsidies and other resource subsidies keep the cost of farming low — sometimes to nearly zero. Because of this “free” cost of resources, farmers are able to produce more. However, this creates an incentive for farmers to produce as much corn as possible. The incentive to produce more causes an increase in supply. As a result, as supply increases, demand decreases, further driving prices down, making farmers unable to profit.

To amend this gap, the U.S. government provides agricultural subsidies and buys a portion of the corn and other crops at an above-market price and resells it at a lower market price. In California, large farmers received $169 million in direct payments in 2005 (Mulch Blog). In many cases, the government sells it at a price lower than the cost of production.

In Santa Barbara, we don’t have many large farms, yet we are all still affected by subsidies. The Vons and Albertsons grocery stores price their food as a result of these subsidies. Furthermore, small farms in Goleta and Santa Barbara also are affected by subsidies.

Sodas contain high fructose corn syrup, a sweetener made from corn, a government-subsidized crop. Subsidies and the resulting surplus make corn sweetener significantly less expensive than cane sugar
Sodas contain high fructose corn syrup, a sweetener made from corn, a government-subsidized crop. Subsidies and the resulting surplus make corn sweetener significantly less expensive than cane sugar. (Camille Schiess photo)

Typically, orchard/tree crops are not subsidized by the government. The heavily subsidized crops are cotton and corn. As a result, the crops that most small local farmers grow are not subsidized. In addition, small farmers usually can’t get subsidies from the government since small farms are unable to compete with large farms (greater than 500 acres) for subsidies and other costs.

At first, subsidies seem like a win-win situation. Low-socio-economic families are able to afford meals, and farmers are able to produce at a quantity necessary to feed demand and make a profit. However, in a global and environmental perspective, subsidies have a darker side. While the subsidy system is beneficial to the American consumer and corporate farmer, the lack of pricing concern allows for wasteful management of resources.

Furthermore, the U.S. subsidy system produces a surplus of food. Because of the surplus of food, the United States is able to sell food at rock-bottom prices. Third World countries that try to compete with this can’t, simply because they can’t profit against subsidized prices. As a result, farmers in Third World countries are unable to sell the crops they produce. This contributes to the cycle of poverty in those countries.

The U.S. subsidy system produces a surplus of food, keeping it at rock-bottom prices. Third World countries can't profit against subsidized prices
U.S. subsidies produce a surplus of food, keeping it at rock-bottom prices. Third World countries can’t profit against subsidized prices. (DPHS Agriculture Subsidy Team graphic)

Whether or not one supports the subsidy system in the United States, there is no question that subsidies are both extremely beneficial and damaging. However, compromises to the environmental impact of agricultural subsidies have been proposed.

One solution is an environmental protection subsidy, which would pay farmers not to grow food, thus ensuring income for the farmers while controlling supply and preserving the environment. Another is to support local farms by buying their produce. The debate is still open as to whether these large subsidies are really worth their costs, but being informed is a key first step to the right solution.

So the next time you buy your favorite soda or chips, think about where it came from.

To learn more, check out the NPR article, the Heritage Foundation Report on Subsidies and the “Agricultural Subsidies Behind Your 99 Cent Chips” Facebook page.

Dos Pueblos High School students Nina Marchiando, Camille Schiess, Helen Wang and Dani Wasjutin are participants of the Nuvigreen Project, a student-produced reporting series in Noozhawk’s Green Hawk section.

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