What Are U.S. Farm Subsidies?

Some Say Corporate Welfare, Others a National Necessity

Farmer riding tractor with sunset in background

Bill Hinton Photography / Getty Images 

Farm subsidies, also known as agricultural subsidies, are payments and other kinds of support extended by the U.S. federal government to certain farmers and agribusinesses. While some people consider this aide vital to the U.S. economy, others consider the subsidies to be a form of corporate welfare.

The Case for Subsidies

The original intent of U.S. farm subsidies was to provide economic stability to farmers during the Great Depression to ensure a steady domestic food supply for Americans. In 1930, according to the USDA Census of Agriculture Historical Archive, nearly 25 percent of the population, or roughly 30,000,000 people, lived on the nation's nearly 6.5 million farms and ranches.

By 2012 (the most recent USDA census), that number had dwindled to about 3 million people living on 2.1 million farms. The 2017 census is predicted to indicate even lower numbers. These numbers assume it's more difficult than ever to make a living farming, hence the necessity of subsidies, according to proponents.

Farming a Booming Business?

That does not necessarily mean that farming isn't profitable, According to an April 1, 2011, Washington Post article:

"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."

The most recent numbers, however, are not as rosy. Net farm income for 2018 is predicted to be the lowest since 2009, down to $59.5 billion, a $4.3 billion decrease from 2018.

Yearly Farm Subsidy Payments

The U.S. government presently pays about $25 billion in cash annually to farmers and owners of farmland. Congress legislates the number of farm subsidies typically through five-year farm bills. The last, The Agricultural Act of 2014 (the Act), also known as the 2014 Farm Bill, was signed by President Obama on Feb. 7, 2014.

Like its predecessors, the 2014 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. 

Who Benefits Most From Farm Subsidies?

According to the Cato Institute, the largest 15 percent of farm businesses receive 85 percent of the subsidies. 

The Environmental Working Group, a database that tracks $349 billion in farm subsidies paid between 1995 and 2016 backs these statistics up. While the general public may believe that the majority of subsidies go to helping small family operations, the primary beneficiaries are instead the largest producers of commodities like corn, soybeans, wheat, cotton, and rice:

"Despite the rhetoric of 'preserving the family farm,' the vast majority of farmers do not benefit from federal farm subsidy programs and most of the subsidies go to the largest and most financially secure farm operations. Small commodity farmers qualify for a mere pittance, while producers of meat, fruits, and vegetables are almost completely left out of the subsidy game."

From 1995 through 2016, reports the Environmental Working Group, seven states received the lion's share of subsidies, nearly 45 percent of all benefits paid to farmers. Those states and their respective shares of total U.S. farm subsidies were:

  • Texas - 9.6%
  • Iowa - 8.4%
  • Illinois - 6.9%
  • Minnesota - 5.8%
  • Nebraska - 5.7%
  • Kansas - 5.5%
  • North Dakota - 5.3%

Arguments for Ending Farm Subsidies

Representatives on both sides of the aisle, in particular, those concerned with growing federal budget deficits, decry these subsidies as nothing more than corporate giveaways. Even though the 2014 farm bill limits the amount paid to a person who is "actively engaged" in farming to $125,000, in reality, reports the Environmental Working Group, "Large and complex farm organizations have consistently found ways to avoid these limits."

Furthermore, many political pundits believe that subsidies actually harm both farmers and consumers. Says Chris Edwards, writing for the blog Downsizing the Federal Government:

"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." 

Even the historically liberal New York Times has called the system a "joke" and a "slush fund." Although writer Mark Bittman advocates for reforming the subsidies, not ending them, his scathing assessment of the system in 2011 still stings today:

 "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'."