Local Nonsense

by Don Boudreaux on June 6, 2014

in Agriculture, Food and Drink, Myths and Fallacies, Seen and Unseen, Subsidies

Here’s a letter to WTOP Radio in Washington, DC:

Interviewed on your station today during the noon hour, foodie and attorney Mary Beth Albright correctly noted that economies of scale mean that vegetables are now produced at far lower costs on large-scale farms than on tiny “urban farms.”  She then leapt to the conclusion that the high costs of growing vegetables on urban farms can be lowered if government were to subsidize these farms.

She’s wrong.

Government subsidies, of course, can enable urban farmers to remain in business by covering losses they incur when selling at prices low enough to compete with large-scale rural farmers.  But because subsidies do not transform small urban farms into large-scale farms - because subsidies do absolutely nothing to reduce the quantities of resources required on urban farms to grow each potato, each head of lettuce, or each stalk of artisanal asparagus - subsidies emphatically do not lower the costs of urban farming.  Subsidies at best can only shift the burden of bearing many of these high costs from urban farmers and their customers to taxpayers.  And because subsidies would likely encourage the expansion of urban farming, they’d result in an increase in the total cost of producing food as relatively more food comes to be grown on inefficient urban farms and relatively less on efficient rural farms.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030

Ms. Albright ought to read Pierre Desrochers’s and Hiroko Shimizu’s superb 2012 book, The Locovore’s Dilemma: In Praise of the 10,000-Mile Diet.

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