What Are U.S. Farm Subsidies?

"Corporate Giveaways" "Federal Welfare for Farm Businesses" "Slush Fund"

Farmers Hire Drilling Crew To Search For Water To Irrigate Crops
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What are farm subsidies?

Farm subsidies are payments made and other support extended by the U.S. federal government to certain farmers and agribusinesses. Farm subsidies are also known as agricultural subsidies.

The original intent of U.S. farm subsidies was to provide economic stability to farmers during the Depression to ensure a steady domestic food supply for Americans.

"In the 1930s, about 25% of the country's population resided on the nation's 6,000,000 small farms," per Wikipedia.

However, "By 1997, 157,000 large farms accounted for 72% of farm sales, with only 2% of the U.S. population residing on farms."

Per the USDA, 62 percent of U.S. farmers in 2007 did not receive cash subsidies.

And yet, according to​ the Washington Post, "The Agriculture Department projects net farm income of $94.7 billion in 2011, up almost 20 percent over the previous year and the second-best year for farm income since 1976. Indeed, the department notes that the top five earnings years out of the past 30 have occurred since 2004."

How much does the U.S. government pay in farm subsidies each year?

The U.S. government presently pays about $20 billion in cash annually to farmers and owners of farmland. Between 1995 and 2005, the federal government paid about $250 billion in farm subsidies, per the Environmental Working Group in "Government's Continued Bailout of Agribusiness."​

Congress legislates the amount of farm subsidies typically through five-year farm bills.

The last, The Food, Conservation, and Energy Act of 2008 (AKA, the 2008 Food Bill) provided $299 billion for farm subsidies, and for other rural issues as nutrition, energy, conservation and rural development.

The 2008 Farm Bill was derided as bloated pork-barrel politics by a plethora of Congress members, both liberals and conservatives, who hail from non-farming communities and states.

However, the powerful farm industry lobby and members of Congress from agriculture-heavy states won out. Also, 2008 election year political pressure silenced critics who were seeking votes from the U.S. farm belt.

Who receives farm subsidies?

"More than 90 percent of agriculture subsidies go to farmers of five crops — wheat, corn, soybeans, rice, and cotton. More than 800,000 farmers and landowners receive subsidies, but the payments are heavily tilted toward the largest producers," per The CATO Institute.

"From 1995-2009 the largest and wealthiest top 10 percent of farm program recipients received 74 percent of all farm subsidies with an average total payment over 15 years of $445,127 per recipient – hardly a safety net for small struggling farmers. The bottom 80 percent of farmers received an average total payment of just $8,682 per recipient," per the Environmental Working Group.

From 1995 through 2009, seven states received the lions'share, 42%, of U.S. farm subsidies. Those states and their respective shares of total U.S. farm subsidies were:

  • Texas - 9.4%
  • Iowa - 8.5%
  • Illinois - 7.1%
  • Minnesota - 5.8%
  • Nebraska - 5.7%
  • Kansas - 5.5%
  • North Dakota - 4.7%

What are arguments against continuing farm subsidies?

Liberals: "Corporate Giveaway"

"In a time of growing federal budget deficits and increasing populist anger over government spending, it would seem prudent to trim wasteful agriculture programs. Instead Congress – at the behest of the biggest agriculture interests representing just five commodity crops – has constructed a system that ensures profits for the largest growers of corn, cotton, rice, soybeans and wheat.

"Despite claims of reform, many of the top subsidy recipients in this update are the same operations we've seen before... The vast majority of farm subsidies go to raw material for our industrialized food system, not the foods we actually eat. Even less money goes to support the production of the fruits and vegetables that are the foundation of a healthy diet...

"In 2009, a full 60 percent of farm subsidies flowed to states represented by Senators serving on the Senate Committee on Agriculture, Nutrition, and Forestry...

Finally, while this corporate giveaway has gone on unabated, conservation continues to be shortchanged," per the Environmental Working Group.​

Conservatives: "Federal Welfare for Farm Businesses"

"The extensive federal welfare system for farm businesses is costly to taxpayers and it creates distortions in the economy. Subsidies induce farmers to overproduce, which pushes down prices and creates political demands for further subsidies.

"Subsidies inflate land prices in rural America. And the flow of subsidies from Washington hinders farmers from innovating, cutting costs, diversifying their land use, and taking the actions needed to prosper in a competitive global economy," per the conservative CATO Institute.

"A Joke" and "A Slush Fund"

Wrote Mark Bittman in the New York Times "That the current system is a joke is barely arguable: wealthy growers are paid even in good years, and may receive drought aid when there’s no drought.

"It’s become so bizarre that some homeowners lucky enough to have bought land that once grew rice now have subsidized lawns. Fortunes have been paid to Fortune 500 companies and even gentlemen farmers like David Rockefeller. Thus even House Speaker Boehner calls the bill a 'slush fund'."

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White, Deborah. "What Are U.S. Farm Subsidies?" ThoughtCo, Oct. 5, 2016, thoughtco.com/us-farm-subsidies-3325162. White, Deborah. (2016, October 5). What Are U.S. Farm Subsidies? Retrieved from https://www.thoughtco.com/us-farm-subsidies-3325162 White, Deborah. "What Are U.S. Farm Subsidies?" ThoughtCo. https://www.thoughtco.com/us-farm-subsidies-3325162 (accessed February 21, 2018).