Subsidies for Foods

August 7, 2010 in GrandmaPedia by Victor Bunderson

The Government has created subsidies for certain foods, paid from tax revenues.  There are a number of subsidies. Corn and meat subsidies have been central to lower costs for these farm products.  One form of subsidy goes to government itself to set up bureaucracies to pay for part of the work (e.g, meat inspections). This subsidy benefits some companies in the food industry by reducing their costs further. Other subsides help the food industry directly by purchasing surplus output. Subsidies are also paid directly to farmers. This is also of great benefit to the food industry because it makes the raw ingredients from the farm much cheaper, and leads to overproduction.  It benefits farmers by enabling them to survive when it costs them more to produce farm products than the market will support, but at the cost of distorting the market.