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Econ Commentary 2

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Introduction

Jeff Leeson I.B. Comparative Politics and Economics (SL) Steve Smith South PM3 March 1st, 2009 (due March 3rd, 2009) Commentary 3 Source: Stone, Matthew. Local Dairy Farms Try to Remain Viable. 15 Feb. 2009. 1 Mar. 2009 <http://news.tradingcharts.com/futures/6/2/120697326.html>. I.B. Syllabus 2.6 Word Count: 657 This article's main focus is about subsidies for Maine's dairy farms. Questions are raised when government starts thinking about cutting the state's subsidy program. It explains the importance for subsides and also things like who will be affected, how will they be affected and what would happen if their industry were to fall. The economic concepts reveled in this article include: * Subsidy: An amount of money paid by the government to a firm per unit of output. ...read more.

Middle

So, if subsidy program is cut, that means that these farmers will have to sell their products for higher prices. This will make them undesirable to buy, the farmer's will lose profit and may go out of business. The whole purpose of a subsidy is to guarantee the supply of a product that the government thinks is needed for the economy. I don't really understand why they're taking out money of such and essential subsidy program. * Infrastructure: The article also goes off on the horrible consequences of the dairy industry as a whole collapsing. If most of the 330 farms went out of business this would greatly affect other infrastructures like trucking and veterinary services. ...read more.

Conclusion

At no point does it say why the government is taking out money from the subsidy program or what they're planning to do with it. It also says that they rely on the federal subsidy system before using up funds in the state dairy-stabilization program (the one that's getting partially cut). We do not know any specifics on how much they use either program nor do we know how much they can do without it. It also isn't very clear on the consequences of a loss of local dairy farms to larger corporate farms, and it doesn't say much on other industries that rely on dairy products. In my opinion, I believe that we shouldn't cut funding for dairy farm subsidies because, if the industry fails, it could be disastrous for other industries not to mention Maine's economy. ...read more.

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