4 ms·
Yet there are automated apple pickers. There is no money in agriculture. The only reason why most farms aren't bankrupt is because of subsidies.
by konjin 6y ago
Yet there are automated apple pickers.
There is no money in agriculture. The only reason why most farms aren't bankrupt is because of subsidies.
- Retric 6y agoIn a competitive market long term subsides don’t actually benefit the industry’s profit margins. Suppose we subsidize toilet paper, suddenly prices drop and people might start using toilet paper for random other stuff if it’s cheap. However, the industry would simply expand until things stayed about the same. Where farm subsides play a role is dampening the boom bust cycle.
- wing-_-nuts 6y agoThere's also a very big national security concern. Each country should be able to grow enough food to support it's people. If it can't, it literally faces the threat of starvation in the event of war or natural disaster.
- estsauver 6y agoThat's just not true. It's about 15% of net incomes currently, but has hovered around 25% of net (in the US): https://www.agriculture.com/news/business/us-heads-for-highest-farm-income-in-seven-years#:~:text=The%20USDA%20revised%20its%20estimate,livestock%20revenue%20and%20direct%20payments https://www.agriculture.com/news/business/us-heads-for-highe....
- konjin 6y agoIt can be 1% and still be what keeps the majority of farms from going under. 15% is absolutely "I will go bankrupt if I don't have this" territory.
- Retric 6y agoIf you drop that in one year sure, but remove all subsidies globally over even 10 years and the market would adjust.
- konjin 6y agoBy having firms go bankrupt.
- Retric 6y agoFar from 1:1, like everything there are diminishing returns from fertilizer use etc. So the efficiency per unit of corn etc would be pushed up as the effective price* declines. The price gets pushed up if insufficient food supply gets produced, but demand in a world of obesity is somewhat elastic. Net result fewer workers, a shift in which farms are profitable, and a ripple effect up the supply chain, but most bankruptcy would be from farms that do so sooner. Aka they would have been bankrupt in a 10 years and now it happens in 5. *Effective price being the sales price plus total subsidies.
- konjin 6y agoYes, very impressive high school economics. In the real world you'd be looking at the tax implications of going under and minimizing them. This of course is too complex to model is completely ignored. A lot like ignoring the atmosphere when designing air planes.
- Retric 6y agoModeling such interactions is the entire point of economics. We focus far to much on the math but very complex economic system really can be modeled rather accurately. Farm subsidies have been studied extensively and like all long term subsidies end up being harmful to the overall economy.
- konjin 6y agoI wasn't aware economics had solved the halting problem. Good on them.
- yardie 6y agoFood is incredibly cheap. If you can get to a farmers market on a not busy day you'd be really impressed what you can get. Food distribution is a complete disaster. Lots of middlemen between farmers and consumers inflate prices
- imtringued 6y agoThis is by design, you don't want your farms to underproduce for even a single season. Subsidizing them is worth it. However, we can always talk about whether the current subsidy structure is good for us. I don't think USA's obsession with corn is healthy.