Ag subsidies are good --- they are the backbone of the farming industry.

America’s food supply must be protected from extreme weather like droughts, tornadoes, and hurricanes. The government has a role in ensuring food production during wars, recessions, and other economic crises. Food production is more important to the nation’s welfare than other business products.

Farms are susceptible to commodity price dips. Commodities traders determine the prices on an open exchange. They trade futures contracts that promise to buy or sell at an agreed-upon price on a specific date. Farmers can take their chances on what the price will be when it’s time to harvest. They can lock in a price with a futures contract.8 Either way, they are betting that their costs will be lower than their future revenue.

Note

Since these contracts are all priced in U.S. dollars, the value of the dollar will also affect farmers’ revenue. If the dollar value rises, then foreign buyers won’t want to buy as much, because it costs more in their currency.

Crops and animals are vulnerable to pathogens, diseases, and weather. In 2012, droughts forced farmers to slaughter cattle that had become too expensive to feed. In 2015, egg prices skyrocketed 17.8% due to avian influenza. In 2018, hurricanes caused temporary price spikes as the production of pecans, chickens, and hogs were affected.910

Farmers rely on loans. They borrow in the spring to plant seeds and pay the debt in the fall when they sell their harvest. This makes farming feel like a gamble. An emergency expense or several years of low prices can be catastrophic.

Farms can’t move. They can go out of business if a local processor cancels their contracts or goes bankrupt.