Title: What Are Commodity Crops and Why Do They Matter? | Hampden Park Food Cooperative | Saint Paul, MN
Headings: What Are Commodity Crops and Why Do They Matter?
What Are Commodity Crops and Why Do They Matter?
— by Lois Braun
How price supports work
Industrial ag gets involved
Politics and the Farm Bill
What's wrong with the system
A better way?
Resources
International Year of Cooperatives

Content: What's wrong with the system
There are many problems with this system, because subsidies are inherently market-distorting. 1) Because direct payments are tied to the land and not to production, they are often bid into land values, to the benefit of landowner, who are often absentee city dwellers, not farmers. High land prices are the primary reason it is so difficult for beginning farmers to get started. 2) They incentivize farmers to grow subsidized crops to the exclusion of non-subsidized crops, such as pasture, hay, vegetables, fruit, and nuts. That is why the Midwestern landscape is dominated by corn and soybeans, making it vulnerable to soil erosion, water contamination, and the pest problems that result from lack of diversity. Because payments are tied to volume, farmers overproduce, seeking top yields by over-application of fertilizer, pesticides, and tillage. 3) Overproduction keeps prices low for commodity traders and food processors, who are their real beneficiaries. For example, subsidies result in below-production-cost prices for feed grains, which gives confinement animal factories an advantage over more environmentally sound grass-based animal production systems. Subsidies also make products derived from corn, soybeans, and wheat exceedingly cheap, leading to their overuse in our food system, in things such as corn syrup and cooking oil, which may be a contributing factor to our obesity epidemic. Cheap commodity crops are also dumped on the world market as food aid.