'Food for Thought'

Farming Matters!
Facts and figures

Countryside Matters!
'Burning Issues'
2002

Helplines

The farm subsidy programme can be compared to the minimum wage. The ‘Legal Minimum Wage’ law sets a floor on payments by employers to workers. Suppose The Government changed this programme and permitted business owners to pay whatever they wanted for a wage while requiring the worker to collect the difference between the minimum wage and what his/her employer pays from the Social Security office. In this example who is being subsidised? While the worker still earns the minimum wage, the employer is being subsidised because he receives the benefit.

Farm subsidies function much the same way. The price of barley for feed is around £65 a tonne. Few farmers even in the eastern counties of England can genuinely grow grain across their whole acreage for less than £80 a tonne. The IACS ‘subsidy’ cheque goes to make up the difference. Cargill and other trans-national corporations each purchased millions of tonnes of grain this last year for less than the cost of production because they have no competition. This applies world-wide, as other countries, chiefly the U.S.A. and Canada also pay ‘subsidies’. The effect of subsidies is to reduce the price paid by the wholesale grain merchants. Under present conditions if the subsidy were to be increased, the wholesale price paid to the producer would fall. It would not increase the profit gained by the farmer.

The truth is that all farmers, regardless of size, must use the subsidy just to raise the value received for their commodity above the cost of production. In most instances, the cost of production is covered and something is left over for living expenses. In practically no instance is anything left over that would be considered a return on investment (land and equity).

The wholesaler, processor, retailer and consumer are being susidised, not the producer.