Question

Technology has been very important to agricultural markets for the United States and has made it a very large food-producing nation in the world. When looking at the money that the US government spends on agricultural markets with the subsidies that they provide, do you think there could be other options for the money spent? How can you measure the inefficiency of the subsidies that are provided in the market?

Answer 1

Case Specifics

The United States is one of the most developed countries across the globe and views sales of its technological advancements as the main source of income for the nation.

That said, the country is also actively spending millions of dollars directly from tax payers money in the agricultural market subsidies which go directly to the farmers as minimum support prices or otherwise.

However, the implications of such unnecessary and uncalled expenditures is largely affecting the country which finds itself in an urgent need for corrective measures to be taken.

The country relies heavily on the production of two prime agricultural goods which are soya bean and corn which the country has over the years excelled in production off. That said, the prices of these products has gone down so much so that about 25% of the prices are directly paid to the farmers from tax payer’s hard earned money.

Further the rebates on use of fertilizers has largely resulted in large scale down stream pollution and states such as Ohio and Iowa have even had to restrict their public use of water because of the same.

Due to the rise in pollution levels such as nitrogen and the lower prices of corn which farmers are fetching, there is a constant need for a shift in strategy and an informed decision on the inefficiency of subsidies is needed.

How can you measure the inefficiency of the subsidies that are provided in the market?

The inefficiency of the subsidies can easily be identified and quantified by the reduced prices which corn and soybean are fetching in the market place, the production of which is heavily subsidized by the United States Government. Further the environment implications can be analyzed and quantification of the same is also possible.

The loss in terms of drinking water and health need to carefully be looked into which is making tax payers money go waste in the sense that on one hand these mean lesser payments to the farmers and on the other they are still polluting the environment respectively.

Alternative Measures Suggested:-

The government must alter its programs in a manner than only volumes of production are not made the prime focus and other factors such as pollution are given equal weightage.

Gradually the shift from subsidizing production can be reduced particularly on heavy polluting fertilizers which are not really needed by the crop to grow.

This will largely help the country in reducing the double blow to the tax payers in the form of direct taxes for subsidies and then the money which is spent on taking corrective action to stabilize the ecology of the nation respectively.

Please feel free to ask your doubts in the comments section if any.