Rudd Center for Food Policy and Obesity

Commodity Policy and Agricultural Subsidies

The Rudd Center is committed to collaborating with economists and policy makers to study and challenge policies that promote consumption of unhealthful foods, and to find new ways to make healthier foods more affordable.

In America, the average citizen spends a smaller percentage of his or her income on food than in virtually any other country in the world. Industrialization and massive increases in farm yields have lowered the price of food through advances in breeding and use of fertilizers, pesticides, herbicides, hormones, and antibiotics. Federal agricultural subsidies further lower the price of some foods.

Agriculture subsidies came into prominence in the United States in 1973, when President Richard Nixon and Secretary of Agriculture Earl Butz responded to high commodity prices by initiating subsidies to help financially crippled farmers. Subsidies favored some foods over others, with corn and soybeans taking the lead. The goal of the program was to provide income assistance to farmers. Since then, however, continued advances in industrialized farming have spawned overproduction that has reduced the prices of subsidized commodities and thus changed the price balance for all foods.

In addition to making grains cheap, subsidies have led to an artificially low cost of meat (corn and soy are the central constituents of animal feed) and allowed the food industry to inexpensively sweeten a variety of foods with high fructose corn syrup. Given the popularity of burgers, chicken, and soft drinks in America’s fast-food-driven culture, the link between agricultural subsidies, poor diet, and obesity is evident.

Michael Pollan described this loop in a 2003 New York Times column: “When yields rise, the market is flooded with grain, and its price collapses. As a result, there is a surfeit of cheap calories that clever marketers sooner or later will figure out a way to induce us to consume.”

As society begins to recognize the connection between government subsidies and food culture, many public health advocates are calling for a change in direction for federal agricultural practices.  The government recommends that a third of one’s diet should comprise fruit and vegetables, yet only 5 percent of USDA funding goes toward programs supporting fruit and vegetables. Balancing USDA spending could potentially lower the relative price of healthier food.