Posts Tagged ‘Daryll Ray’

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Addendum from Daryll Ray

October 13, 2010

A couple years ago I saw a panel on which Daryll Ray, one of the co-authors of the report I cited in my last post, elaborated on his thoughts on ag subsidies. These are among the most interesting points in my notes, and in Econ 101 lingo to boot:

We have been subsidizing agriculture since the very beginning, as a society. We’ve always had specific agriculture programs – land distribution, land grant universities, extension services, all designed for agriculture to shift the supply curve to the right. Generally we shift it faster than the demand curve, and prices go down. In other industries, consumers buy more or producers produce less and prices go back up. In agriculture it doesn’t work that way. Consumers buy the same, prices stay low, producers produce more (farmers don’t produce enough to have an influence on the market; the only thing they can do is produce more), and prices get lower. We “fix” by direct payment to producers. This is not a real adjustment.

He concluded: “It is unrealistic to assume that just because we don’t like the program we have right now, that we don’t need a program. We need a program that keeps prices more consistent and at higher levels… if we don’t do that, it’s naive to think our farmers will reduce production and prices will rise globally. It doesn’t work that way.”

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