Do Taxpayers Benefit from Risk Management Subsidies?
Left on their own to manage risk, farmers would choose to buy products and to use strategies that reduce the probability of financial ruin to levels that reflect the cost of the risk reduction. Given that many farmers in the United States and other countries survive and thrive without large risk management subsidies, it is apparent that farmers’ actions combined with products provided by the private sector would be sufficient to keep U.S. agriculture viable and producing abundant supplies of food for U.S. and world consumers. It is difficult to find the extraordinary circumstances that make the production and marketing of corn, soybeans, wheat, rice, and cotton so different from that of other crops around the world that U.S. producers require heavily subsidized risk management to grow these crops. But this does not mean that elimination of all the risk management subsidies would have no impact. Because the cost of risk is a real production cost, risk management subsidies are essentiall
