Pro-tax: The U.S. farm bill—of subsidies and soda

One person who commented on an article I read suggested that it “seems silly to subsidize a product on one end, and tax it on the other, but that’s what we’ll be doing with a soda tax.” I thought this was an interesting insight, and decided to investigate further.

This comment was referring to the U.S. farm bill, which covers a variety of issues, including the food stamp system and agricultural research, but is best known for its subsidies for farmers who grow crops like corn, wheat, and soybeans. (Farmers of fruits and vegetables are not eligible.)

As the argument goes, the corn subsidies make it cheap to produce high fructose corn syrup (HFCS), a common ingredient in processed foods and drinks of negligible nutritional value. And while I certainly wouldn’t argue that HFCS alone has caused the obesity epidemic, I would argue that it is unwise to continue with legislation that makes HFCS cheap and ubiquitous. (It is important to realize that the corn refiners that produce HFCS do not directly receive farm bill subsidies; however, the farm bill, by subsidizing corn crops and encouraging overproduction, does make it cheaper for corn refiners to purchase the corn.)

One writer notes that HFCS supporters stick with arguments like “corn sweetener isn’t any worse than regular sugar,” when the real issus is not so much the nutritional value—“empty calories are empty calories”—but that HFCS is so ubiquitous in our food supply. As Michael Pollan points out in his book The Omnivore’s Dilemma, of the 45,000 products in the average supermarket, more than 25 percent contain corn (p. 19).

It will probably take a full blog post to describe the dangers of the high-HFCS American diet (groups like the Corn Refiners Association would have you think it’s fine). For now, I’ll just mention a few studies that show that HFCS-laden soda affects our health. In an article published in the April 2007 issue of the American Journal of Public Health, a meta-analysis of 88 studies revealed “clear associations of soft drink intake with increased energy intake and body weight.” The article also showed that “soft drink intake was also associated with lower intakes of milk, calcium, and other nutrients” and that “studies funded by the food industry reported significantly smaller effects than did non–food-industry studies.” In a study of 548 schooldhildren, researchers found that for each additional serving of sweetened drink, the likelihood of a child’s becoming obese increases by 60 percent. And in a well-publicized policy report from the New England Journal of Medicine, proponents of a soda tax cite several other studies that confirm the link between soft drink consumption and risks for obesity, diabetes, and heart disease.

A 2006 report from the Insititute for Agriculture and Trade Policy summed it up well:

Within the U.S., the real cost of fresh fruits and vegetables has risen nearly 40 percent in the past 20 years. The real costs of soda pop, sweets, and fats and oils, on the other hand, have declined. Is it any wonder that people are eating too many calorie-dense foods high in added fats and sugars and not enough fruits and vegetables? Our misguided farm policy is making poor eating habits an economically sensible choice.

Although it is often referred to as the farm bill, its current official name is the Food, Conservation, and Energy Act of 2008. This bill does not simply affect farmers—it affects the way we eat, the national economy, and even the environmental impact of our amber waves of grain. So what does the future of the farm bill look like?

In April President Obama proposed significant cuts to crop subsidies, and although it’s hopeful that he’s open to change (isn’t that a nice rehash of his campaign slogans?), the farm bill is a complicated piece of legislation, and simply slashing subsidies won’t necessarily solve the problem of ubiquitous, cheap junk food. It does, however, need significant restructuring. I highly recommend this fact sheet and report from the Institute for Agriculture and Trade Policy. The institute recommends a number of changes to the bill, including the following: create incentives to grow crops that can be consumed locally; provide risk management and support for produce crops (rather than for commodity crops only); enhance the existing Conservation Security Program to promote crop rotation and other sustainable farming practices; support small and medium farms; provide incentives for grass-fed livestock instead of grain-fed livestock; and expand farm-to-cafeteria opportunities. I believe all of these are wise recommendations.

Most importantly, however, we need to stop using policy to keep corn prices artificially low. You could say the prices are about as artificial as the processed foods corn is used to produce. I think it’s time to get real.

Pro-tax: Choosing what to eat and U.S. food policy

One major argument of soda tax opponents is that the tax would deny Americans the right to choose what they eat and drink. Most notably, Coca-Cola CEO Muhtar Kent stated: “I have never seen it work where a government tells people what to eat and what to drink. If it worked, the Soviet Union would still be around.”

First, your “right” to choose what to eat and drink is nowhere in the Bill of Rights or the Constitution. You do, of course, have a wide array of wonderful rights, such as the freedom of speech and the right to due process of law. Perhaps you could argue, on the grounds of Amendment X, that the federal government does not have the right to tax you on soda, but still, the power of the states to tax soda is not prohibited therein.

Second, Americans would still be able to choose what they eat and drink. This soda tax is simply making it easier for us to choose healthier options. As the chart above shows (click on the picture for a clearer view), since the late eighties the price of fresh fruits and vegetables has been substantially higher than the price of sugary foods and carbonated drinks. Taxing soda would “level the playing field” as it were, allowing Americans to choose between healthy and unhealthy rather than expensive and inexpensive. However, it should be noted that taxing soda would be counterproductive unless we change another aspect of U.S. food policy: farm subsidies. This brings me to my final point. . .

Soda tax or not, the fact is that legislation and government policy is already dramatically affecting the American diet. According to the Farm Subsidy Database, “Over the past twelve years, taxpayers have spent $56 billion on corn subsidies paid to over 1.5 million recipients, making it the top crop for federal assistance. Wheat subsidies ranked second, which paid $22 billion to more than 1.3 million recipients, followed closely by cotton subsidies, which provided $21 billion to over 247,00 recipients over the period.”

Corn is commonly used in high fructose corn syrup, a primary ingredient in a variety of über-processed products, including Coke, Pepsi, Chips Ahoy cookies, Ritz crackers, Wonderbread, and (somewhat surprisingly) Campbell’s tomato soup.

Although Muhtar Kent opposes government intervention in the form of a soda tax, he certainly hasn’t complained of the generous corn subsidies which make it much cheaper to produce his products. Next week I’ll discuss the feasibility of reducing or eliminating corn subsidies, and whether it would be complementary to the aims of the soda tax.