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Subsidies are an alternative to having massive granary stores to supply an entire nation. If you don't guarantee overproduction, you will soon find yourself hav
by AngryData 5y ago
Subsidies are an alternative to having massive granary stores to supply an entire nation. If you don't guarantee overproduction, you will soon find yourself having shortages as crop yields can vary up to 30% each year. Without subsidies farms will optimize towards producing only barely enough to satisfy demand so they don't waste money on crops they can't sell, profit margins are usually 1% or less so there is very little room for overproduction. Once everyone is trying to thread that thin line, a single bad month of weather or a large wind or hail storm would turn you from a food exporting nation to a food importing nation overnight, and crop prices will swing wildly in either direction from it.
Subsidies certainly are poorly applied and could use some serious work fixing them, but just getting rid of them outright is foolish.