Breakingviews - U.S. farm aid bonanza is free market nightmare

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From Breakingviews: Propping up the United States' struggling farms long-term just creates an unsustainable market imbalance. The government could help more by doing less, says Three_Guineas

Corn stalks are seen on Roger Hadley's corn and soybean farm in Woodburn, Indiana, U.S., October 16, 2020. REUTERS/Bing Guan

Agriculture was enjoying hefty handouts long before the coronavirus. Last year’s over $22 billion in promised aid, mostly to offset trade-war-related losses, was the highest in over a decade. In the previous five years, annual support averaged almost $12 billion, according to the U.S. Department of Agriculture, with the majority going to the wealthiest.

The U.S. government could also enlist policies that control supply – something farmers might support in the absence of further handouts. But these cause unsustainable distortions. For example, the Food and Agriculture Act of 1977’s dairy support resulted in the government amassing roughly 560 million pounds of cheese by 1981. And the Organization of the Petroleum Exporting Countries has discovered that raising prices by reducing supply can just invite new entrants.

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