Sunday, January 17, 2010
Subsidies Help Missouri Cotton Farmers
Missouri’s Bootheel cotton country has been given millions in federal farm subsidies to help against the recession. Four of the top 50 cotton-growing counties are included in Missouri’s Bootheel. These counties that are heavily dependent on agriculture have a per capita income that’s at least 30 percent lower than the U.S. average. Thanks to the $70 million in subsidies given in 2008, cotton could be grown and harvested this year. However, critics of the subsidies say they don’t produce enough jobs and that much of the money farmers spend goes to fertilizer and pesticide makers outside the Bootheel area.
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2 comments:
This is a very interesting report. It seems to ask what is the proper role of government action when it comes to economics. Is the government over stepping their place by keeping the cotton farmers afloat? It seems to me that the government wants to keep the industry going in order to help an economically distressed area from slipping further into poverty. The money may be better spent in some other manner, as suggested in the article. One way would be to try to help people develop the skills for a new trade and to let the inefficient producers leave the market. This may lead to a shortage in cotton in the short run, but eventually the producers who survive will be able to produce enough to bring prices back down to an efficient level.
When the government gives subsidies, it lowers the cost of production and the supply curve shifts to the right. This may have negative implications in the long run because prices would fall and thus the revenue for the farmers would also decrease further as most of their money goes to the fertilizer and pesticide makers.
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