Why Subsidize Rice Farmers?

Fromn the Cato Institute

Rice is the world’s most important food commodity and also the most protected and subsidized. Tariffs, tariff-rate quotas, escalating barriers to processed rice, production and export subsidies, and state monopoly trading enterprises are common. Worldwide, tariffs on rice imports average 43 percent, and border protection and production subsidies account for three-quarters of income for rice farmers in wealthier countries.

The U.S. rice program is no exception. The U.S. government supports domestic rice production through tariffs on imported rice and direct taxpayer subsidies based on production, prices, and historical acreage. Those programs make rice one of the most heavily supported commodities in the United States, with ramifications for U.S. taxpayers and consumers and rice producers abroad.

Americans pay for the rice program three times over—as taxpayers, as consumers, and as workers. Direct taxpayer subsidies to the rice sector have averaged $1 billion a year since 1998 and are projected to average $700 million a year through 2015. Tariffs on imported rice drive up prices for consumers, and the rice program imposes a drag on the U.S. economy generally through a misallocation of resources. Rice payments tend to be concentrated among a small number of large producers.

Globally, U.S. policy drives down prices for rice by 4 to 6 percent. Those lower prices, in turn, perpetuate poverty and hardship for millions of rice farmers in developing countries, undermining our broader interests and our standing in the world. The U S. program also leaves the United States vulnerable to challenges in the World Trade Organization.

For our own national interest, the U.S. Congress and the president should work together to adopt a more market-oriented rice program in the upcoming 2007 farm bill, including repeal of tariffs and a rapid phaseout of subsidies.

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9 Responses to Why Subsidize Rice Farmers?

  1. Chris says:

    Sometimes CATO gets it right. I certainly have more respect for the libertarian CATO Institute than the odious Heritage Foundation, which seems to exist solely to pooh-pooh the plight of the poor.

  2. Dewey says:

    How many in congress collect subsidies and write the farm bill?

    LOL Congress works for the donors period

    Doug La Malfa is guilty

  3. Tina says:

    I agree with CATO that we should take a more market-oriented approach. Of course a question could from the left…shipping jobs overseas? Market forces will mean that we import more rice because of cheap labor.

    Some people are just never happy.

  4. Tina says:

    Those who remain stuck in the progressive worldview cannot tell the difference between “pooh-poohing the plight of the poor” and observing with a critical eye the total failure of government programs aimed at lifting people OUT of poverty.

    Heritage is attempting to educate toward a more effective approach, addressing the massive problem of poverty in America. We have continued down the same path for fifty years and the problem of poverty has not been improved much and many of the problems associated with poverty have increased.

    Heritage

    While the U.S. welfare system may have succeeded in boosting living standards of the poor, it has tragically failed to promote self-sufficiency. Sound anti-poverty policy must address the causes, not merely the symptoms, of poverty. The two greatest drivers of poverty today are the rise of unwed childbearing and the culture of dependence that discourages work. Policy should focus on strengthening marriages in low-income communities and helping able-bodied welfare recipients to work or prepare for work as a condition of receiving aid.

    It is time to reform welfare and make it work for the poor and not against them. Too many Americans remain trapped in a system of government dependence, unable to rise and pursue the American Dream. The way to change course, and the key to truly helping those in need, is to point the way to upward mobility.

    Heritage:

    Although liberals constantly lament the level of defense spending, annual spending on means-tested-welfare has exceeded defense spending for nearly two decades — and on President Obama’s watch, means-tested-welfare spending has increased by more than a third. This isn’t a temporary increase because of the recession: Under Obama’s budget plans, welfare spending would continue to grow in the next decade, reaching $1.56 trillion by 2022. Under the same budget plan, during that decade the U.S. would spend well over $2 on welfare for every $1 it spent on national defense.

    Over the summer, the administration announced that it would waive work requirements in the Temporary Assistance to Needy Families program. This illegal move puts at risk the successes of the 1996 welfare reform — which created TANF and resulted in major declines in the welfare rolls and higher rates of employment among low-income Americans.

    Gutting TANF’s work requirements also means that only two of the nation’s 80-plus welfare programs will require able-bodied recipients to work or prepare for work as a condition of receiving aid.

    For liberals, a bigger welfare state and greater dependence on government seems to equate with helping the poor.

    Heritage:

    Child poverty is an ongoing national concern, but few are aware of its principal cause: the absence of married fathers in the home.

    According to the U.S. Census, the poverty rate for single parents with children in the United States in 2008 was 36.5 percent. The rate for married couples with children was 6.4 percent. Being raised in a married family reduced a child’s probability of living in poverty by about 80 percent.[1] (See Chart 1.)

    The flip side of the decline in marriage is the growth in the out-of-wedlock childbearing birth rate, meaning the percentage of births that occur to women who are not married when the child is born.[3] As Chart 3 shows, throughout most of U.S. history, out-of-wedlock childbearing was rare. When the War on Poverty began in the mid-1960s, only 6 percent of children were born out of wedlock. Over the next four and a half decades, the number rose rapidly. In 2008, 40.6 percent of all children born in the U.S. were born outside of marriage.[4]

    Out-of-wedlock births are often confused with teen pregnancy and births. In fact, few out-of-wedlock births occur to teenagers. As Chart 4 shows, of all out-of-wedlock births in the United States in 2008, only 7.7 percent occurred to girls under age 18. Three-quarters occurred to young adult women between the ages of 19 and 29.[5] The decline in marriage and growth in out-of-wedlock births is not a teenage issue; it is the result of a breakdown in relationships between young adult men and women.

    Heritage:

    Writes former Director of the National Institute of Justice, James K. Stewart: “Crime is the ultimate tax on enterprise. It must be reduced or eliminated before poor people can fully share in the American dream.” (James K. Stewart, “The Urban Strangler: How Crime Causes Poverty in the Inner City,” Policy Review, Number 37, Summer 1986, p. 8.) Controlling crime is a precondition to improving the lives of the urban poor because no neighborhood can grow economically unless it is first safe. As sociologist Charles Murray, Visiting Fellow at the American Enterprise Institute, notes, the key to reducing crime is to create an atmosphere of lawfulness. (Charles Murray, “Crime in America,” National Review, June 10, 1988, p. 35.) Low-income neighborhoods explicitly should project the message to the would-be criminal, whether a resident or not, that crime is not tolerated, that moral principles are observed and enforced.

    Government at all levels must launch an aggressive strategy to create such an atmosphere if a national urban anti-poverty effort is to succeed. This strategy especially should explore ways of involving the law-abiding urban poor in anti-crime activities. In this empowerment strategy, the poor themselves work with police and other local officials to identify sources of potential crime and restrict access of potential criminals to their neighborhoods and housing projects. …

    …Crime is increasing rapidly in America’s cities. By November of last year, eight of the twenty largest cities already had set new records for homicides in a single year. …

    …Most obvious, of course, are the immediate costs of crime; the victim’s injuries or loss of some wealth. The poor usually suffer most not just because they have little wealth to lose but also because they live in neighborhoods where crimes are common. …

    …Fear of crime forces innocent people into forms of behavior that would be unnecessary in a crime-free environment. The fear of being beaten, robbed, or murdered can make it impossible for residents of a crime-infested neighborhood to become productive employees or business owners. Writes the National Institute of Justice’s Stewart: “The traditional means by which poor people have advanced themselves — overtime, moonlighting, education to improve future opportunities — can be easily obstructed by crime and fear. Why risk a late job or night school if the return home means waiting at deserted bus stops and walking past crowds of threatening teenagers?” (Stewart, “The Urban Strangler,” p. 6.)

    Perhaps nothing illustrates the fear gripping so many of today’s low-income urban neighborhoods than the construction by the City of Los Angeles of a concrete wall around one of its junior high schools to keep stray bullets from hitting children on the playground. (James Q. Wilson and John J. DiLulio, Jr., “Crackdown,” New Republic, July 10, 1989, p. 21.)

    Urban schools deteriorate. According to Karl Zinsmeister, crime and education expert at the American Enterprise Institute, each year about 3 million crimes are attempted or completed inside schools or on school grounds. (Karl Zinsmeister, “Growing Up Scared,” Atlantic, June 1990, p. 61. All the educational data here come from this article.) Assaults alone constitute about 10 percent of these offenses. The response to the climate of fear by some children is to avoid school altogether. A significant portion of today’s truancy problem, observes Zinsmeister, results from a child’s fear of being terrorized. He notes that about 8 percent of all urban junior and senior high school students miss at least one day of classes each month because they fear physical assault by other students. It is not simply students who are fearful. According to Zinsmeister, about one in five teachers are assaulted on the job each year, with 12 percent hesitant to confront the guilty party for fear of reprisal. Not surprisingly, talented and ambitious teachers will avoid transfers to crime-ridden schools, reducing the ability of the school to provide a good education.

    Now I ask you, is it really “odious” to notice a lot of kids are being denied opportunity in America because of government programs that promote dependency and poverty…that allow people to get by but don’t uplift enough people…that fail to address the fundamental needs of the people born into poverty?

    The party on the left sees itself as the party of “progress”…they are sure stuck in old ideas about diminishing and eliminating poverty. They haven’t done very well in addressing education for the poor either. And they constantly pooh pooh anyone who mentions that the attacks on religion and morality have not helped the poor.

    Sorry Jack, this has nothing to do with rice farming and government subsidies but I couldn’t let the spit wad just sit there on our ceiling without setting the record straight.

  5. Dewey says:

    Maybe these 2 congressmen can shed some light on their subsidies for you. La Malfa being the elected Tea Party of this area collecting subsidies and congressional salary.

    Remember La Malfa split up the farm for more and to hide from his real involvement. This was disclosed during the election and Tea Party voters voted him in with approval.

    http://www.huffingtonpost.com/2013/05/23/food-stamp-cuts_n_3324418.html

    http://www.businessweek.com/news/2012-04-30/tea-party-congressmen-accept-cash-from-bailed-out-bankers

    Lets admit it they say one thing and do another. Scott Walker another Koch Tea Party Politician now linked to campaign fraud. Let’s not pretend here.

    http://article.wn.com/view/2013/09/20/Rep_LaMalfa_pockets_his_farm_subsidies_votes_to_cut_food_sta/

    Tax dollars diverted into the hands of the rich and politicians is their whole goal

  6. Chris says:

    Tina, quoting Heritage:

    “Over the summer, the administration announced that it would waive work requirements in the Temporary Assistance to Needy Families program. This illegal move puts at risk the successes of the 1996 welfare reform — which created TANF and resulted in major declines in the welfare rolls and higher rates of employment among low-income Americans.

    Gutting TANF’s work requirements also means that only two of the nation’s 80-plus welfare programs will require able-bodied recipients to work or prepare for work as a condition of receiving aid.”

    See, this the problem I have with Heritage: the blatant, unapologetic lying. Obama did not “waive” or “gut” the work requirement for TANF. This claim has been fact checked multiple times, and each time has been found to be completely false. Heritage has yet to correct the record.

    http://www.politifact.com/truth-o-meter/statements/2012/aug/28/rick-santorum/Santorum-Romney-claim-Obama-ending-welfare-work/

    http://www.factcheck.org/2012/08/does-obamas-plan-gut-welfare-reform/

    Heritage does this all the time, and it’s why I describe them as “odious.” If they cannot make their points without lying, I am not going to take them seriously. CATO is usually a bit more intellectually honest.

  7. Tina says:

    The Huffington Post wrote about this controversy and covered how it unfolded fairly well, including the following:

    Congress required that states make sure a certain percentage of enrollees participate in “work activities” when it enacted the 1996 welfare reform, which gave states more power to run their own programs within federal guidelines.

    “Generally the [1996] reforms offer states new flexibility in designing welfare programs. However, in exchange for that flexibility, strong new federal work requirements were put in place,” Rep. Tom Cole (R-Okla.) said Wednesday. “However, the current administration … has decided it does have the authority to waive these work requirements.”

    Last July, in response to requests from governors — including Republican ones — the U.S. Department of Health and Human Services announced it would consider suspending certain requirements for states that implemented “demonstration projects” that would help more welfare beneficiaries find jobs. …

    …Although the law gives the Department of Health and Human Services broad authority to waive certain requirements for experimental projects, Republicans also insist the administration overstepped its authority in offering the waivers. The Government Accountability Office and the Congressional Research Service looked into the claim and came to different conclusions: The GAO backed the Republican criticism; the Congressional Research Service did not.

    While reactions from some Republicans and the Heritage Foundation at the time may seem a bit over the top, after witnessing the way this administration has attempted to change or has changed or ignored our nations healthcare, immigration, and marriage laws, their reactions don’t seem so out of whack after all.. He was found in contempt of court in one case. His pen and phone campaign shows contempt for the document he has sworn an oath to protect and defend…an oath that happens to include something about the “faithful execution” of our laws.

    See here for more regarding national security, cap and trade regulations, the drilling moratorium, union elections, and more.

  8. Pete says:

    Hi all,

    Having grown up in Colusa I am very familiar with agriculture and rice farming in particular. I’ve watched over the years as many land owners, previously rice farmers, turned to leasing their property to people like you and me. These new farmers contract out almost all of the work involved in the growing of their crops just to get the subsidies paid out by us. It’s become a real scam.

    BTW…There’s a large plot of farm land just outside of Gridley that is dead center of the Pacific Flyway. It was once owned by the actor Robert Stack and it was not uncommon to see him in Colusa. He purchased the property for one reason…duck hunting. This property is now owned by the stockbroker Charles Schwab and he purchased the property for two reasons…duck hunting and the farm subsidies that come from farming rice.

    • Post Scripts says:

      Pete, I know just the place you are talking about. I go by there twice on Fridays, going from Butte City to Gridley. They sure made a fancy hunting lodge there. Lot’s of game in that area, we’re always watching out for deer, racoons, possum, skunks, cotton tails, etc. We don’t want to hit any so we take it easy. Wish other drivers would.

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