There are many ways in which a government can help small farmers, but the most common methods are through the use of tax breaks and governmental subsides. Every business owner is in favor of tax breaks, but subsidies are far less popular.
This is the case for many reasons. Subsidies exist in almost every country, and the case can certainly be made against them. That is what we will try to do here, but keep in mind: every story has a flip side. Ultimately, there are those who do benefit from subsidies.
Governmental Action
The decision to subsidize one industry over another is ultimately made by the government. This presents a problem, as government decisions are often made in a political arena, rather than with the interest of farmers in mind. Their choices could reflect the interest of larger players on the field, much more than the interest of everyday working farmers.
As a result, enacting policy changes is difficult. It takes time for a governmental entity to do something, or even notice the need for action. All too often, businesses can’t afford to wait.
Market Interference
It’s a common argument that subsidies interfere with the market. This is not accepted as a valid point by everyone in the field, but certainly it has a ring of truth. Should one business receive help from the government while another does not, the relationship between them is no longer purely based on market forces and the free will of the consumer. One business has a defined advantage over the other.
Some would argue this is unfair, placing too much power into the hands of the government. Others believe it is still a useful way to break an entry barrier for the industry.
Less Product Diversity
If government incentivizes certain behaviors or products, there will be more of it. This is how most subsidies work, as the government must set guidelines for what kind of work it will subsidy. This means more farms will start growing the produce that receives subsidies. As a result, produce will become less diverse. This is not a good thing for the market, nor for the soil and environment where only one type of culture is grown.
The Difference Between Farmer and Landowner
When it comes to small, sustainable farms, those who work on the farms are not always the owners of the land they tend. It is easier for small farmers to rent land, until they figure out how the business side of things will work.
Subsidies are almost always there to help the owner, rather than the person who is using the land. This will present a problem for the subsidy and its goal in the long term.
Aiding Corporations
In many cases, subsidies are referred to as corporate welfare: government programs made to redistribute wealth towards corporations, instead of towards those who need help the most.
It is rather difficult to determine when a company becomes a company, in terms of its societal impact. Small businesses sometimes need subsidies because they are the pillars of their community, while a company is an entity that is profitable on its own. Often, these subsidies can’t make the distinction, and keep aiding those who are already self-sustainable.
Upsides
There are upsides to agricultural subsidies as well, and they must not be overlooked. Simply put, they can aid small businesses find their way in the field, giving them a leg up that allows them remain profitable and self-sustainable. Small farmers will generally say they support subsides, even if they are not personally using them.
Conclusion
Agricultural subsidies are here to stay, having become governmental policy in most countries. However, many feel it’s a policy not worth keeping: one that may be challenged in the years to come.