Rural poverty, farm subsidies and the way forward
Rural poverty is a serious issue. In 2014, the poverty rate in what the U.S. Census Bureau defines as “nonmetro areas,” which this policy short uses as a definition of rural areas, was 16.6 percent. This is higher than the overall U.S. poverty rate of 14.9 percent, but lower than the poverty rate in inner cities. Poverty obviously is a complicated issue with numerous causes, including but not limited to underperforming educational systems, declining economic and geographic mobility, falling labor-force participation, stagnating wages, rising public health concerns, misaligned government incentives and even changing cultural norms. All of these factors have contributed to dampened labor-market dynamism and economic opportunities in rural and urban settings alike.
But rather than put forward thoughtful ideas to address the root causes of rural poverty, certain politicians have reverted to the stale idea that more generous farm subsidies can serve as a panacea. This is a mistake that obfuscates more serious problems.
There are some legitimate causes for concern among struggling rural farmers. Agricultural prices have dropped in recent years. While the United States remains the largest exporter of agricultural products in the world, it is true that U.S. farmers and ranchers lack preferential or tariff-free market access in certain major countries into which they could sell their products.
The Trans-Pacific Partnership, which was jettisoned by the Trump administration as one of its first official actions, would have opened notoriously closed agricultural markets in Japan and other Pacific Rim nations to American exports. Likewise, the World Trade Organization’s (WTO) Doha Development Round, which would have dramatically reduced tariffs across the globe for agricultural products, has been stalled, in large part due to the United States and Europe Union’s unwillingness to curb domestic farm subsidies. President Trump’s recent saber rattling about withdrawing from the North American Free Trade Agreement (NAFTA) marks a further cause for concern and source of economic uncertainty for the agricultural community. The effects of NAFTA withdrawal would fall particularly hard on U.S. farmers and ranchers.
As Congress begins to piece together the 2018 farm bill, it is of utmost importance to disabuse policymakers of the notion that farm subsidies are a silver bullet in the fight against rural poverty. In fact, farm subsidies do not meaningfully help most rural farmers. It’s time the United States gets serious about reforming a broken system.
Image by Everett Historical