Friday, June 27, 2008

Agricultural subsidies vs. the Everglades

Most economists would applaud the purchase of land for environmental concerns as it assures, through market mechanisms, that the land is moving to a higher-valued use.
The dream of a restored Everglades, with water flowing from Lake Okeechobee to Florida Bay, has moved a giant step closer to reality after the largest sugar cane producer in the United States agreed to sell all of its assets to Florida and go out of business," reports the International Herald Tribune. "Under the proposed deal, Florida will pay $1.75 billion for U.S. Sugar, which would have six years to continue farming before turning over 187,000 acres, or about 75,500 hectares, north of Everglades National Park, along with two sugar refineries and other assets."
The irony, in this case, is that the purchase price would have been a lot lower, perhaps even zero, but for the US Department of Agriculture sugar import quotas and price supports.
Daniel Griswold, director of Cato's Center for Trade Policy Studies, writes: "[T]he deal is yet another cost Americans continue to pay for our misguided agricultural programs. ...The company selling the land, United States Sugar, has for decades benefited from a federal program that guarantees a minimum price for United States Sugar's crop through a system of loan guarantees and strict import quotas. This means American families and sugar-consuming industries are typically paying two to three times the world price for sugar."
- "U.S. Sugar Program Costs Another $1.75 Billion," Griswold's full response
- Cato Handbook on Policy: Agricultural Policy, by Chris Edwards
During this 1999 trip to the Everglades, I learned that my wife is afraid of alligators after the one in the photo began hissing at us.

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