It is commonly argued that farm subsidies have led to the overproduction of commodity crops, such as corn, driving down the price of “junk food” made with commodity ingredients like high-fructose corn syrup (HFCS) and partially hydrogenated soybean oil relative to healthier alternatives. This cycle, it is suggested, has led to increasing rates of obesity. Removing subsidies, the argument goes, would help combat obesity by discouraging overproduction of crops that are the base ingredients of unhealthy food. This seems like a logical argument, yet few if any of those making these arguments reference academic findings and economic analysis to support their claims.
This white paper examines the public health and agricultural economics literature as well as primary and secondary agriculture policy documents. Based on this analysis, there is no evidence of a relationship between subsidies and the overproduction of commodity crops, or between subsidies and obesity. Instead, this paper finds that the deregulation of commodity markets – not subsidies – has had a significant impact on the price of commodities. Deregulation also has provided benefits and incentives to the food industry, including processors, marketers and retailers, and is one of a number of contributing factors impacting the availability of high-calorie processed foods in the marketplace.
Economic modeling of scenarios in which farm subsidies are eliminated shows a continued overproduction of commodity crops because of characteristics unique to agriculture – namely, that farmers are slow to respond to price signals and tend to overproduce regardless of price. Federal policies enacted in the 1930s responded to these market imperfections by encouraging farmers to idle land so that they would not overproduce, and by requiring grain buyers and food processors to pay fixed prices for commodity crops . However, after lobbying by food companies, these policies were dismantled between 1985 and 1996, and overproduction and often-low prices ensued. Subsidies were then enacted to keep farmers from going out of business.
The paper concludes that the public health and health care communities can find common ground with the family farm community by moving beyond the focus on subsidies and instead advocating for comprehensive commodity policy reform that reduces overproduction and stabilizes price and supply, as well as policies and programs that expand access to healthy food in rural and urban communities. Advocating for subsidy removal as a means to combat the overconsumption of unhealthy foods and beverages is an ineffective obesity prevention strategy, as subsidy removal will not affect the price or production of these products. The paper’s recommendations focus on the need for commodity policy reform and on ensuring that agricultural policies promote healthier options.
Specific recommendations include:
- Engaging in the long-term campaign to reform commodity policies by developing responsible federal supply management programs.
- Increasing consumption of fruits and vegetables, whole grains and other healthy foods through strategies that promote increased access and affordability for underserved communities.
- Expanding the supply of healthy foods by helping farmers diversify their production and supply local and regional markets with healthy food.
- Building the infrastructure needed to better link farmers and consumers and aid in the delivery of healthy foods.