Friday, July 19, 2013

Farm Subsidies Stink like Fresh Bull-You-Know-What… and Cost Jobs Too

The Republicans have outdone themselves.  Last week those in the House of Representatives took a brief break from railing against big government, and split apart the latest farm bill, which, as usual, contained both the continuation of necessary, hitherto uncontroversial food stamp program with the usual obsolete, totally unjustifiable system of payments and price supports to large corporate farmers.  Was that move, as New York Times columnist Ross Douthat had first speculated, a way of separating two things which each needed legislative attention and were clearly opposite in merit?  No, it was so they could vote for just half of it.  Incredibly, that was not the stamps. 

So what is the problem with farm subsidies?  What do other observers, both left and right, think of them?
Created in the 1930s when farm incomes had then dropped two-thirds in three years, governmental support and tariff programs were meant to help safeguard small farmers.  They continued after World War II for protection from price and weather uncertainty.  From the 1960s through the 1980s, many family farms were consolidated into corporate structures without any reduction in governmental aid.  Those receiving subsidies are authorized by crop, not by size or need—as a farmer or corporation plants more, they increase.  From 1995 to 2004, 80% of commodity subsidies were for corn, cotton, wheat, rice, and soybeans. 

From 1970 to 2007, the American government funded a total of $578 billion in farm subsidies.  As of 2010, government spent $10 billion to $30 billion each year endowing farmers, mostly very large ones, with $5 billion in payments without regard to crop production, $4 billion to purchase crop insurance, and as much as $4 billion for bad-year protection.  Around 2009, farm subsidies cost the average taxpayer $322 annually.
While the payments have continued for 80 years, the nature of farming in the United States has changed greatly.  From 1932, around the time of the first subsidies, to 2002, the number of American farms dropped from 6.7 million to 2.1 million, with mean size climbing from 213 acres in 1950 to 434 in 2000.  Per capita farm income, in 1934 one-third of the American average, was in 2004 26% above it, and at the same time the share of those living on farms fell from 25% to 2%.  As of 2005, America had only 2 million farmers and just 350,000 of them worked at it full time, and the largest 150,000 American farms produced more than half of the country’s total output of food and fiber.

So who is getting the money?  As the Heritage Foundation wrote, most subsidies now go to “large farms, agribusinesses, politicians and celebrity hobby farmers.”  Subsidies, far removed from their origins of protecting poor farmers, have become the country’s chief benefit scheme for corporations, with Manulife Financial, MeadWestvaco, Chevron Texaco, and Caterpillar among those receiving at least $320,000 in 2002.  Between 1995 and 2005, 10% of subsidy recipients received 75% of the payments, averaging $91,000 per year.  In 2002, two companies in Stuttgart, Arkansas, Riceland Foods and Producers Rice Mill, received $110 million and $83.9 million, respectively.  Some people collecting more than $100,000 in farm subsidies from 1995 to 2002 included Representatives Cal Dooley, Doug Ose, and Tom Latham, Senator Mike DeWine, Sen. Charles Grassley, television network owner Ted Turner, and basketball player Scottie Pippen.
A previous farm bill, the Farm Security and Rural Investment Act of 2002, attracted comments such as “shockingly awful” from The Washington Post and “a 10-year, $173.5 billion bucket of slop” from The Wall Street Journal.  The cost of such programs to consumers is considerable; as one example, economist Daniel Sumner estimated that if subsidies and the governmental pricing system were removed, a gallon of milk sold retail in Chicago would be about 20 cents cheaper.  If tariffs alone, which cost American consumers money by stopping them from buying less expensive imported food, were discontinued, Americans would save $2 billion.

When asked if there was a good case to be made for farm subsidies, Daniel Sumner’s response was “no,” claiming their only justification was traditional.  Robert J. Samuelson called agriculture “the economy’s most pampered, protected and subsidized sector,” when asked, in the event of no subsidies, if “Iowa’s cornfields and Kansas’s wheat fields [would] go fallow”, and he said the subsidies hurt national interests by impeding trade negotiations.  Author Daniel Imhoff wrote that subsidies had become “a corporate boondoggle,” and Wall Street Journal correspondents Roger Thurow and Scott Kilman called them “a matter of addiction.”
So here we are.   It is 2013, not 1933.  The total number of full-time American farmers is fewer than the attendance at an Indianapolis 500 auto race.  Farm subsidies benefit the likes of Ted Turner, and others disproportionately in red states, but help hardly any small operators, and hurt obesity by encouraging grains instead of fruit and vegetables.  They cut jobs by taking money that would otherwise be spent on goods and services, and as with other protectionist schemes, they raise prices on many to benefit a few.  In all, farm subsidies are high on the list of government programs that have outlived their justifications and are now simply costly and destructive.  

Costly and destructive government programs – sponsored by Republicans?  That’s right!  It’s time for them to shape up their attitudes, if they want to be taken seriously by those outside their faithful core.  Or by those who truly and honestly, even when it hurts them and their own, oppose big government.


  1. Current farm subsidies do little if anything to foster the growth of organic farms, which eschew chemicals and GMO seeds and which often are part of CSAs (community supported agriculture) providing goods to "locovores," people who would prefer to buy their products from nearby, real people. More and more people want to buy eggs and meat from farms that treat their animals humanely and without antibiotics and growth hormones. Current farm subsidies go to agribusinesses that do the opposite. I don't think the subsidies should be eliminated; they need to be distributed completely differently.

  2. True - there's almost an inverse correlation between the healthfulness of the food and the amount it is subsidized. The locavore movement is growing, here in Sullivan County to name one place - listen to the June 5th WORK SHIFT episode for more, under "Audio Archive" at . But even if they are good, small farmers don't need subsidies either.