In the US, 63% of agricultural subsidies support meat and dairy production1. I've heard that other countries also direct more money towards animal agriculture than to other agricultural activities. What is the rationale for distributing subsidies this way?


Many of the subsidies are based on rationales that may not really be relevant to how the industry is set up now such as lots of independent small farmers producing output independent of each other. Clearly, in the US, that's no longer the case. I think political inertia and the lack of a political base strongly advocating to eliminate them are why they still exist.

I think there are two main reasons that the US agricultural subsidies appear to be directed towards animal agriculture is that its traditionally more capital intensive than crop agriculture and its harder for the individual, small farmer to regulate the supply of their product to stabilize falling prices. Animal agriculture is also less diversified than crop agriculture.

For example, the dairy industry is/was uniquely volatile in a way that could easily bankrupt smaller dairy farmers. The business is capital intensive in that you need to buy cows, feed cows, and buy equipment to milk the cows. That doesn't even get into all the storage and distribution costs. This means dairy farmers were often highly in debt and had to make large, regular debt payments. The product, however, is a commodity that is highly perishable, which means the farmers lack the ability to not sell when prices collapse like most grain growers can. Their choices are to sell today at a lower price or never sell it. They may even buy additional cows to make up lost revenue, which pushes prices down even more. This means that when the price for milk drops, the supply doesn't drop, meaning the price just stays low until the farmers are bankrupt. The farmer can't use any of his dairy investments in other crops or uses, so he is locked into dairy farming. To help offset this, the US will buy surplus dairy to prop up demand for the milk and keep prices from falling too much. In many dairy producing states, there are additional controls on top of direct subsidies to help stop prices from falling too much. In Pennsylvania, where I am from, there are price floors on how low of a price you can sell milk.

  • 4
    Thanks for your answer! Can you improve it with sources for your information?
    – nloewen
    Mar 15 '17 at 16:13
  • 3
    Sure thing. May take some time since I didn't use a single source but rather my working knowledge on the topic (the subsidies drive me nuts). It's an interesting question so I may even be able to flesh out the answer a little more.
    – CMB92
    Mar 15 '17 at 16:16
  • Do you think you could use your knowledge to provide some insight on my question? vegetarianism.stackexchange.com/questions/526/…
    – Alex Hall
    Mar 16 '17 at 17:33

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