New York’s Overmanaged Farmers Are Suffering
By: Dan Smith
Many New York farmers are hurting, as they are across the nation. The USDA estimates that 42,000 farms have folded in the past four years—many in New York. This is the largest agricultural downturn since the 1980’s and second largest since the Great Depression. Many are calling on President Trump to provide more subsidies, tax breaks and trade protections for American farmers. The New York Farm Bureau and other New York lobby groups are calling on Governor Cuomo and legislators in Albany to do the same.
You’d think that with the countless policies, rules and programs and trillions of dollars spent over the years helping American farmers, we’d have a growing and prosperous agricultural sector. But this just isn’t the case and all of our government’s meddling is a source of the problem, not its cure.
It’s easy to have empathy for struggling farmers, but these programs rarely do more than misdirect resources and mask the real underlying problems. The Economist calls such farm policies, “milking taxpayers”; and think tanks and pundits, left and right, recognize many farm policies as highly destructive.
Despite the reports of family farms receiving the benefits from our government agricultural policies, it’s been reported that “the largest 15 percent of farm operations and the richest farmers and landowners, with incomes and wealth that are many times the national average, receive over 85 percent of all farm subsidies.” In short, our farm policy starts to look a lot more like cronyism the closer you look.
Higher taxes and higher food prices are no way to help. We shouldn’t subsidize these businesses, no matter how romantic the notion might seem.
But there are ways we can help New York farmers.
Eliminate the Minimum Wage and Other Price Distortions
While we should not ask government to enact policies which distort markets—often raising taxes or food prices, we also should make certain that government does not hinder farmers, either. But that’s what happens with the minimum wage: it raises labor costs. Like many businesses in New York, farmers are feeling the pinch of the minimum wage hikes especially hard. With labor as a primary cost, many farmers just can’t afford to keep up with the escalations each year. The minimum wage is New York farmers’ chief worry these days and it’s hitting farmers’ bottom line hard, with profits down more than 65% since 2013, according to the New York Farm Bureau.
But while the New York Farm Bureau’s proposed solutions is to seek yet more tax credits to offset the hit minimum wage increases have brought, one might ask: why not eliminate the minimum wage in the first place? Why should New York taxpayers pay farmers so that they can pay employees more, why shouldn’t farmers just pay workers what they’re worth?
Another New York agricultural program requires that large portions of school lunches be sourced not based solely on obtaining the best value of food for our children, but often based on Albany’s political preferences—New York-based food sources. While this sounds helpful and while local-sourced food is popular these days, it shouldn’t be mandated—as it is often much more expensive than can be obtained elsewhere, costing local school districts and driving up our property taxes, which are amongst the highest in the nation.
Further, in New York and at the federal level, it is often the case where farmers’ excess crop are purchased through price support programs or where farmers are paid not to farm at all. These assistance programs can largely be met by farmers on their own by obtaining crop insurance or through their use of other financial products. Farmers are then free to make their own choices without becoming dependent on government handouts or confused by their market-distorting policies.
Eliminate Licensing and Countless Rules and Regulations
Just as Governor Cuomo shouldn’t be handing out money and favors to farmers, he shouldn’t be standing in their way, either. Cuomo just announced yet more licensing and rules for wineries, breweries and distilleries. These rules, as well as all licensing in agriculture make it harder for New York businesses to get off the ground and compete with other firms across the nation and around the World.
The New York Times reported last month that New York farmers are suffering from “regulatory fatigue.” They lament the “thick rule books laying out food safety procedures, compliance costs in the thousands of dollars and ever-changing standards,” and “unending layering of rules and regulations as more government agencies have taken an interest in nearly every aspect of growing food.” They estimate that apple orchards alone must follow 12,000 different rules and restrictions—a 26% increase from just 10 years ago. All of which drives up prices, with no discernable improvements in quality—with many of the rules amounting to “overkill,” at best but often prove to be totally useless.
Leave Farmers and Their Customers Alone
The bottom line is that farmers and food retailers should be left alone to determine the best way to serve their customers. Taxpayers shouldn’t even be participants in distorting agricultural markets.
And consumers should be left to make their own choices in the tradeoffs between quality and price.
To do otherwise is not only wasteful but problematic in that it masks real problems and often rewards cronyism and punishes productivity.