A Stink About Subsidies

In “Imports Spurring Push to Subsidize Produce”, NY Times reporter Alexei Barrionuevo discusses the increasing pressure on garlic farmers in the United States as cheaper imports from China come pouring into the market. In the face of such pressure, garlic farmers are in turn pressuring the government to set up entry deterrents in the form of subsidies for garlic producers in the United States. These requested subsidies are not exactly like those currently provided to U.S. producers of various other agricultural products. Instead, garlic farmers, along with other specialty crop producers, have formed a coalition that submitted a bill asking for about $1 billion for programs that would help them better compete in the global market. Specifically, they are asking for money to go towards marketing, research, and conservation.

One of the garlic farmers mentioned in the article spoke of this type of subsidy being better than the direct farm subsidies of more than $15 billion a year provided primarily to growers of corn, cotton, rice, wheat, and soybeans. This farmer said, “nobody learns from [direct] subsidies. But you want to give them opportunities and resources and tools to make their industry better.” However, a comment on this article points out that most economists are in favor of abolishing all farm subsidies, as we might expect.

If the proposed subsidy is approved, it could turn out to be an extremely successful entry deterrent. By hindering competition, this could make consumers worse off, and thus Team Awesome, while in agreement that this type of grant from the government is better than a direct subsidy, still feels that this is not an economically optimal option*.

- Jon Carrier, Joyce Chang, Dexter Galozo, Vinu Ilakkuvan

*Team Awesome, very respectful of the "fiercely independent vegetable and fruit growers" and their desire to avoid direct subsidies, would not go so far as to say this option stinks.