Benefits of Farm Subsidies
Farm subsidies refer to the economic tool used by the government for influencing food prices and maintaining food supply. These funds are normally given like a cash payment or a grant to the farm. Some farm subsidies may also be given as low interest bank loans. Most farm subsidies are given as cash payments every year and they offer varying advantages like these ones.
1. Protect against price fluctuations
The government provides farm subsidies to offer them protection against sharp variations in the charges of farm commodities. This ensures a form of supplemental income and support for produce prices. Various events like droughts, floods and other disastrous weather conditions can affect produce prices significantly.
2. National security
Farm subsidies provide national security and thus advocates recommend continued cash payments to American farms. Competition from cheaper priced imported agricultural commodities could drive American farmers bankrupt. American consumers are thus going to start depending of foreign nations for basic foodstuffs like rice, soybeans, corn and wheat. Farm subsidies prevent hostile countries from using food like a weapon.
3. Protect domestic business
Farmers are unable of protecting themselves from cheap products that their counterparts in foreign countries produce. However, the farm subsidies can level the agricultural field and allow them to produce cheap goods like their overseas colleagues. This protects them from bankruptcy, especially during these tough financial times.
4. Provide insurance
Aside from aiding in controlling prices, farm subsidies provide a valuable cushion to farms. The funds basically make up for any sum of money lost in times of bad crops. Furthermore, disaster payments act like insurance and assist farmers deal with crops destroyed due to a freeze or tornadoes.
Conversely, opponents of farm subsidies believe that the cash provided prevents the typical price fluctuation caused by demand and supply. This makes prices totally reliant on government intercession.