Farm subsidy program suffers as a result of crop prices

7/26/2011

Prices of corn and soybeans are especially high for this year's harvest, and farmers are cashing in. While the United States Department of Agriculture's lending and advances in agricultural technology have allowed farms to expand as the number of farmers decreases, many agricultural subsidies are being termed obsolete.

The Agricultural Adjustment Act, passed in 1933, pays farmers to regulate the amount of crop they grow in order to control prices, but as farming changed, the relevance of the program, however ratified and adjusted, came into question.

This harvest season has seen prices so high that subsidies provided by the USDA simply can't afford to keep up with the market and are unable to pay farms, although certain subsidies continue to pay out regardless of the market because they aren't directly tied to fluctuations in price.

While many view the subsidies expensive and obsolete and note the problems inherent in essentially paying farmers not to grow crops, some caution against completely scrapping the programs, which are designed to support what is by definition a fragile and risky market.

According to the USDA, corn and soybeans represent some of the top exports and agricultural commodities in the United States.