SPECIAL IDEAS REPORT

Idea of the DayTuesday, July 7, 2009

Tell Americans What They're Really Paying for Their Food

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Before you start spooning up your next bowl of Frosted Flakes, ponder this: driven partly by the demand for ethanol, the price of the corn in your flakes is about 40 percent higher than it was a few years ago; the sugar easily cost you more than double the world price; and your milk is at least 15 percent more expensive than it would be in many other countries.

Americans pay much more than they should for their food. Thanks to a thicket of subsidies and tariffs that support American farmers and tilt the growing field against cheaper foreign producers, we get ripped off twice: first as taxpayers who ante up for roughly $25 billion in agricultural subsidies each year ($4 billion for milk alone in 2006); then as consumers who pay higher prices at the checkout counter because we can't take advantage of low-price imports.

Subsidies and tariffs were originally intended to help protect small farmers--a purpose they've largely outlived. They keep rolling on, though, because the only people who focus on them tend to be their direct beneficiaries. Spread over tens of millions of consumers, the costs seem small: the average American taxpayer, for example, pays only $322 each year to fund subsidies. But for some of the thousands of farmers who get such payments, the benefits are huge: from 1995 to 2005, roughly 75 percent of subsidy payments went to just 10 percent of the subsidy recipients, who took in an average of $91,000 a year; and 55 farmers received more than $1 million each. Talk about a green thumb.

Given the megadeficit now darkening our fruited plain, $25 billion each year is real money; so is the roughly $2 billion in economic benefits that the U.S. International Trade Commission estimates we would get each year if we lifted all tariffs on food and agriculture items. We'd bring in more than $800 million by lifting tariffs on sugar alone. What's more, by ending this kind of subsidy profiteering and opening our markets, we would not only save money but enable some of the world's poorest agricultural producers to make a buck in the bargain.

So, how can we get more Americans to look up from their feedbags and demand that Congress restore some sense to the marketplace? I recommend a little truth-in-packaging. Just as food manufacturers now list their products' ingredients and nutritional value, they should also disclose their "free-market" value.

To wit, every product whose ingredients benefit from a subsidy should include the following language on the label:

"This product has been subsidized by the U.S. government at taxpayer expense. For more information, please visit usda.gov."

And every product that benefits from tariff protection should have the following language on the label:

"This product is protected from foreign competition by U.S. import tariffs. Its price is higher as a result. For more information, please visit usitc.gov."

Ideally, the Web sites of the U.S. Department of Agriculture and International Trade Commission would provide not just specific information on subsidies and tariffs, but contact information for the relevant congressional committees that oversee them--hmmmm, perhaps even their chairs' home phone numbers.

Let the angry 2 a.m. phone calls begin!

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Comments (9)

dang... I'm not sure if the food companies would go along with that...

This idea makes sense if you don't put a value on protecting the domestic production of food.

This is actually a subsidy for growers, producers, distributors and retailers. It's the only way a national macro system is viable. Otherwise, we'd be forced to buy local. See: http://www.michaelpollan.com/indefense.php

lindafranke1952

The elderly land owners get taken since the quasi-large farmers lease the land and THEN our government pays them. The owners don't see much for their vested interest. A slow trickle unlikely to stop.

Americans presently pay 10% or less of family living for food, the lowest in the world. Keep in mind that the cheaper foreign producers you talk about are the Chinese (I will not eat anything from there organic or not, it is an environmental disaster which shows up in the food, and can you trust them!!!) If you want to reduce your food bill adopt a local farmer and buy basic foods direct OR plant a garden and find out for yourself why food costs what it does.

That may be the dumbest thing I have ever read.
Do you understand the immense industrial scale it takes to feed 300+ million people in the United States, not to mention the security aspect, would you like our food supply to be held hostage by a foreign power just as our supply of petroleum is now.
Free markets are fine for things like shoes, TV's, and whatever other cheap junk China makes, but our supply of food is sacrosanct and if that means we have to pay a few hundred dollars a year more at the check stand so be it

Radical Independent (Replying to: yubanuba)

Wow!

You take free markeetering to a previous;y unknown low!!!!!!!!!!!!!!!
If you're right, thrn my privatly owned water company (no competition) should get federal guarantees or subsidizes for their cost, but they don't. Am I unAmerican?

Its business and they make a profit or they don't! Why do we pay certain industries and only some players. I own two businesses and the government has never helped me do it but you want us to pay multi $billion industries a subside?....you are such a brainwashed idealogue! Are you a Reagan era baby? It would make so much sence, I am a 45 year old Independent, I don't like idealogues.
I wish you well my friend,
Radical Independent

Not knowing if your “water” company provides a municipal like source of water to consumers who have little on no choice but to buy their water or a gourmet bottled water the is purchased out of choice and not necessity, your right “they” do not deserve a subsidy, but if they do in deed provide water as would a municipal source and through free market forces were driven out of business and there was no other business to provide water to their customers, the customers would expect the federal government to step in and provide a safe source of water for them, or should they be left to die.

What I was trying to convey is that food is the most basic foundation of the free market system and as such should be protected from the irrational fluctuations of the free market (yes, I know that’s an oxymoron), having seen the effects of half assed agricultural policy in other parts of the world (you my friend probably have never had to watch a child die from lack of food, I have. Sudan 1993) I take comfort in the knowledge that the bone headed Republicans, Democrats and even a few “Independents” in congress have the far sightedness to insure that agricultural system in the United States is stable enough to feed not only the population of this country, but of a good many of others in the world.

As for being an ideologue, I do not think is irrational to see the big picture. I too own a business and do quite well for myself (and have never, nor will I ever ask for government subsidies), but there are others who are a lot less fortunate than you and I, and it is not un-American to want your tax dollars to go to programs that help the system as a whole.

More like an Eisenhower baby.

I wish you well too my friend.

I am all for the more informed consumer (including, indeed especially, consumer of government services) so I think it is the great idea. Other commenters seem to not get it or think not being transparent about a policy is a good thing.

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