"Robert Casey" wrote:

I'm a city boy, so I don't know much about farming,
except for a vague idea that farmers grow stuff that
gets converted to food sold at supermarkets. And
that there are massive government subsidies for farmers.
To make for cheap food in the USA. Or something
like that........


Most of those subsidies are in the form of market management, Robert. In
other words, they're designed to prevent gluts or shortages of farm goods.
Perhaps the easiest way to understand it is to look at an example. Lets say
there is a shortage of green beans this year, which has driven up the costs
(and, for the farmer, sale price) of green beans. At the same time, there
are too many tomatoes on the store shelves this year, driving down costs
(and the sale price for farmers). Obviously, farmers want to make maximum
profits, so farmers throughout the country next year will decide not to grow
tomatoes and to grow green beans instead.

Of course, if this happens, there is going to be an extreme shortage of
tomatoes next year and way too many green beans. To prevent this, the
government steps in to ask some farmers to grow tomatoes instead of green
beans. But, to comply, the farmer has to give up any potential extra profit
he might make if he can beat other farmers to market next year before the
price of green beans fall as a result of the glut. And, of course, there
won't be any extra profits from the sale of tomatoes next year if the
government is successful in getting some farmers to grow them.

In the end, few farmers are going to agree to grow tomatoes. At this
point, the government sweetens the deal by offering money to some farmers in
the form of farm subsidies to encourage them to grow tomatoes instead. Since
this extra money is a sure thing, the farmers agree to grow tomatoes. The
end result is that there are both tomatoes and green beans on the store
shelves next year.

This is one form of market management. It also happens when the profits of
one product are always lower than the profits of another. For example, there
is always more profit in growing corn than watermelons (even with the
different prices in the stores). Watermelons are a low yield crop while corn
is a high yield crop, meaning yon can grow much more corn then watermelons
on the same amount of land. Without farm subsidies to encourage farmers to
grow watermelons, very few farmers would.

End of Government Agriculture Management, Lesson 101. ;-)

As far as I know, my grandmother has never received farm subsidies. In
fact, subsidies are rarely even available to farmers with family, small, or
mid-size farms since their contributions to the overall market is relatively
small. My grandmother's farm was considered a mid-sized farm.


Dwight Stewart (W5NET)

http://www.qsl.net/w5net/