Farm subsidies transfer cash to rich

George Monbiot says farming subsidies are a transfer of cash to the rich.

The main subsidy, the single farm payment, is doled out by the hectare. The more land you own or rent, the more money you receive. . .

When our government says “we must help the farmers”, it means “we must help the 0.1%”. Most of the land here is owned by exceedingly wealthy people. Some of them are millionaires from elsewhere: sheikhs, oligarchs and mining magnates who own vast estates in this country. Although they might pay no taxes in the UK, they receive millions in farm subsidies. They are the world’s most successful benefit tourists. Yet, amid the manufactured terror of immigrants living off British welfare payments, we scarcely hear a word said against them. . .

Thanks in large part to subsidies, the value of farmland in the UK has tripled in 10 years: it has risen faster than almost any other speculative asset. . .

An uncapped subsidy system damages the interests of small farmers. It reinforces the economies of scale enjoyed by the biggest landlords, helping them to drive the small producers out of business. . .

He could have added that subsidies  distort the usual rules of supply and demand, increase inefficiencies, limit choice and add costs for consumers, protect poor performers from their own folly and create unfair competition for non-subsidised produce.

Most New Zealand farmers were somewhat less than enthusiastic about being dragged into the real world by the Lange-Douglas government in the mid 1980s but I haven’t met a single one who would want to go back to subsidies.

It’s better to face the market and prosper, or not, as a result of your own efforts than be at the mercy of political and bureaucratic whim.

Hat tip: Tim Worstall

24 Responses to Farm subsidies transfer cash to rich

  1. robertguyton says:

    How are the millions of dollars of public money to be sunk into irrigation schemes not subsidies to farmers?

  2. The gop want these type of breaks for big farmers just so they will line their pockets, come next election time,.

  3. Mr E says:

    Is spending taxes on the industry that creates much of NZ wealth a subsidy? I think not.

  4. robertguyton says:

    That’s exactly what the British farmers will argue, Mr E, when defending their right to subsidies from the British taxpayer. Private gain from public money. Subsidies. Thought you guys despised them. Now you are demanding them.
    Odd.

  5. TraceyS says:

    This scheme was a subsidy too was it?

    http://www.mpi.govt.nz/forestry/funding-programmes/afforestation-grant-scheme

    Public money was used to encourage farmers and others to plant trees for carbon sequestration.

    And how about this one?

    http://www.dunedin.govt.nz/services/biodiversity/biodiversity-funding

    If farms benefit from increased biodiversity as you say, then surely the farmer is gaining from private money in this case too. Subsidy you say? I would call it targeted support.

    There is a glaring difference between the type of subsidies described in the post by Ele and these examples along with the recent funding announced to kick-start irrigation projects. Contestability.

    $80m is not a huge amount for irrigation in a national context. Contestability for this limited sum will encourage the best and most innovative projects to rise to the top. Innovation is not always appreciated by banks who tend to prefer tried and true approaches. Just ask any entrepreneur. No matter how good your idea is, it is hard to convince lenders to support something unique and new. That does not mean it should not go ahead. We need people to be pushing the boundaries.

  6. Mr E says:

    Robert,
    I can see you are playing ignorant to put your spin on things.

    The company will provide bridging finance to facilitate irrigation. The government considers itself a short term investor…. Investor – Investment Robert. Should farmers feel bad the Government wants to make money from them?

    Farmers will have to pay for water from such schemes.

    Many British farmers have subsidies that is equivalent to their Gross farm income. Try justifying that as ‘we are just getting our fair share of taxes’

    ES is a significant investor in infrastructure in Southland. It makes dividends from this investment yet primary industries are the major user. Subsidy? I think not.

    Your divisive statements are easy to poke holes in.
    Mr E

  7. homepaddock says:

    That is money for infrastructure for a scheme, not for farmers directly or individually. It’s similar to money for a road which might enable people to develop tourism businesses.

  8. robertguyton says:

    “Subsidy you say? I would call it targeted support.”
    By all means give it another name, Tracey but it’s still a subsidy.
    Farmers eschew subsidies, right? The criticise overseas farmers for receiving them, right? They pride themselves on leaving subsidization behind decades ago, right?

  9. robertguyton says:

    Short-term investor – yeah, right.

  10. Armchair Critic says:

    However, it differs from a road in that a road can be used by anyone once it is built, however the irrigation schemes will only be accessible to the shareholders of the irrigation scheme. That’s a fairly fundamental difference.

  11. Armchair Critic says:

    There seems to have been a fairly serious effort at creating a strawman, based on robertguyton’s comments, then demolishing it. Well done, Mr E and Tracey S.
    A theme of this post is “subsidies to farmers are bad”. Robert has suggested that government support for irrigation schemes, through the provision of capital, is a form of subsidy to farmers. As Ele has endorsed the government’s support for irrigation schemes an apparent contradiction has arisen.
    It is possible to validly argue that no contradiction exists because, for example, the government support does not constitute a subsidy. No one has argued this.
    It is also possible to argue that some forms of subsidy are OK. These arguments would be best directed at Ele, as the author of this post, rather than Robert.
    My reading if the comments to date leads me to believe that Robert has not stated his position on subsidies, and that he is merely questioning the consistency of Ele’s position.

  12. TraceyS says:

    Actually, Robert the two examples I gave you look much more like subsidies than the irrigation initiative does. The core difference being whether or not the money has to be paid back.

    If lending money in order to support projects getting off the ground is a subsidy then are all bank loans subsidies?

    If think your definition is far too broad, to the point of it having very little relevance.

  13. TraceyS says:

    Yes AC, I’m sure Robert doesn’t mind subsidies, grants etc. if they are coming his way for projects that HE thinks are worthwhile.

  14. Armchair Critic says:

    Now we’re getting somewhere! I suspect we all (well, almost all) like subsidies when they come our way.
    Your comment at 1:01 is also very good.

  15. robertguyton says:

    Yes AC, I’m sure Tracey doesn’t mind subsidies, grants etc. if they are coming her way for projects that SHE thinks are worthwhile.

  16. TraceyS says:

    The AFG scheme was under a Labour government and National axed it didn’t it?

  17. JC says:

    “and that he is merely questioning the consistency of Ele’s position.”

    Thats determined by the article by Monbiot. Its specifically about the direct payment of money per hectare to individual owners.. Ele’s position on that is pretty clear.

    Irrigation schemes as proposed around the country are premised on raising the gdp of the region and the nation with a whole set of benefits to most people in the region.. thats simply an investment determined by environmental and feasibility studies plus voter support.

    JC

  18. Armchair Critic says:

    Ele said “…I haven’t met a single [farmer] who would want to go back to subsidies.”
    For that to be true, either she hasn’t met many farmers (seems unlikely) or the government support for irrigation schemes is not a subsidy (not established, though Tracey has come close).

  19. TraceyS says:

    By Robert’s implied definition the Student Loan Scheme is also a subsidy.

    There is a difference, I believe, between arrangements where money has to be repaid and those where the money doesn’t.

  20. Armchair Critic says:

    Without trying to put words in Robert’s mouth:In this case the subsidy is in the form of a loan; the two are different but not mutually exclusive. The loan is provided on more favourable terms than could be provided by the market. As it is funded by the government, it comes from our taxes, and exposes citizens to risk.

  21. TraceyS says:

    I get it now AC. The point at which the arrangement becomes a subsidy is the point at which the risk outweighs the returns to government. If it does. If.

    You assume it will. But that is because you don’t have all the facts yet.

  22. TraceyS says:

    Loan.

    Investment.

  23. TraceyS says:

    I wonder if your kids have student loans Robert.

    Subsidy or investment?

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