Market should determine prices

CNJ Editorial

Have you ever found yourself in a situation that seemed like a good idea at one time and no longer does, but extricating yourself presents as many problems as the status quo?

If so, you know how the federal government must feel as it tries to end its involvement in tobacco growing.

Begun like most other giveaways to farmers as a result of the Great Depression, the tobacco program limits the amount of tobacco each farmer can grow. Such limits create a shortage, which keeps prices stable.

This worked fine for a few decades, before tobacco became the social pariah it is today. These days farmers don’t have the market they need to keep prices high, so they want to switch to other crops. Their problem is they have so many assets tied up in tobacco production, they find it difficult to change.

Enter the federal government with yet another plan to help.
Last year Congress decided to phase out production quotas and compensate tobacco farmers for the loss of their quotas. Good for the farmers, but bad for the rest of the taxpayers who get nothing for their money.

However, it turns out it might not be as good of a deal as the farmers thought.

The Department of Agriculture based its calculations on actual production rather than the quotas as farmers had expected. For some farmers, the payments were about a third of what they had expected, according to an Associated Press report.

This being America, where people getting paid for not producing a product can consider themselves aggrieved parties when payments are less than expected, a couple of Virginia tobacco farmers sued. They charge that the Department of Agriculture ignored the clear language and intent of Congress to withhold money they have coming for growing … nothing.

If the tobacco payments and the lawsuit weren’t costing taxpayers money, it would be easy to enjoy the irony of the situation. However, since taxpayers are on the hook for all the money involved here, it’s more productive to use the case as an example of why government shouldn’t try to guarantee supply or prices.

Decades of farm supports have helped large corporations that are able to weather ups and downs in farm prices. However, every time lawmakers attempt to ease out of the business of propping up an entire industry, someone cries foul and stops the process.

It’s time to change the status quo in price supports, let the market set prices for farm produce, and get the government out of the farm business.