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Why governments subsidize some crops and not others

Economics · 5 min listen

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HostI was looking at the price of a big bag of corn chips versus a small head of lettuce the other day. It feels like the stuff that's not exactly great for us is always way cheaper than the fresh stuff.

HostWhy does the way we fund farms make some foods so cheap while others get left behind?

GuestIt really goes back to a time when the biggest fear wasn't what we were eating, but if we had anything to eat at all. Think back to the nineteen thirties. We had the Great Depression and the Dust Bowl happening at the same time. Farmers were going broke because they grew too much, which crashed the prices, and then the soil literally blew away. To keep the country from starving and to keep farmers on their land, the state started cutting checks. But they didn't just hand out money for everything. They picked a few specific crops that were easy to dry out, pack in a sack, and keep in a shed for years if they had to.

HostSo they went for the stuff that doesn't rot. That makes sense for a crisis, but we're a long way from the nineteen thirties now. Why are we still stuck on those same few plants?

GuestWell, once you build a whole world around corn, soy, wheat, rice, and cotton, it's very hard to stop. Those are often called the big five. Because they stay good for so long, we built massive grain bins, train tracks, and ships just to move them. If you're a farmer, it's a lot safer to grow corn because you know there's a silo down the road that will take it. If you grow strawberries or broccoli, you're on a ticking clock the second you pick them. If they don't sell in a few days, you lose everything. The state keeps the money flowing to the big five because they're the bedrock of the food system. They go into animal feed, they become the oil we fry things in, and they turn into the syrup that sweetens our drinks.

HostBut if we know we need more green stuff on our plates, why not just shift the money? It seems like we're paying to make ourselves less healthy.

GuestYou would think it would be a simple fix, but the system is built like a heavy flywheel. It takes a lot of push to change the speed. If you're a farmer in the middle of the country, your bank might not even give you a loan unless you're growing one of those backed crops. The bank sees corn as a sure bet because the state guarantees a floor for the price. If the price of corn drops too low, the state steps in to help. But if you want to try growing kale or peppers, you're mostly on your own. It's a huge risk. Plus, the big five have very strong groups in the halls of power. They have spent decades making sure the laws stay in their favor.

HostSo it's not just about what's easy to store, it's about who has the loudest voice when the laws are being written.

GuestThat's a huge part of it. These groups are very good at pointing out that these crops are a matter of safety for the whole land. They argue that if we stop helping our own grain farmers, we might have to rely on other countries for our basic calories. That's a scary thought for any leader. So, even when we see that we have a mountain of extra corn and not enough cheap apples, the money keeps going to the corn. It also makes our exports very strong. We grow so much of this stuff that we can sell it to the rest of the world for very little money, which gives us a lot of pull in global trade.

HostBut what about the farmers who do want to grow the healthy stuff? They're basically called specialty crops, right? Which sounds like they're a luxury, not a need.

GuestExactly, that name says it all. In the rule books, a carrot is a specialty, but a field of soy is a staple. The people growing those veggies do get some help now, but it's a tiny drop compared to the billions that go to the big grains. And because the grains are so cheap, companies find clever ways to use them. That's why almost every box in the middle of the store has some form of corn or soy in it. It's the cheapest raw material on earth because we, as taxpayers, already paid for part of the cost before it even left the farm.

HostIt sounds like we're trapped in a loop where the cheapness of the crop creates the demand, and the demand keeps the money flowing.

GuestIt's a very tight circle. To break it, we would've to rethink how we value a farm. Right now, we mostly value how many bushels of grain they can pull out of the dirt. We don't really pay them for how much health they're providing to the people nearby. There's some talk about changing this, but when you have a system that has been running this way for nearly a hundred years, the people who benefit from it are going to fight very hard to keep the doors open and the checks coming.

HostFarmers are caught in a trap where they have to grow the crops the banks and the state like, even if the world needs something else.

GuestThe real test is whether we can ever make a head of lettuce as safe a bet for a farmer as a field of yellow corn.

HostThe price of those chips starts to look a lot higher when you think about the century of help it took to get them into that bag.

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