Since the Great Depression the American government has wasted taxpayer money on unnecessary farm programs. At a time when the US government is looking at ways to cut the federal budget, farm subsidies should be an major target for any budget buster. Taxpayers shell out $35 billion every year to subsidize 5 crops: cotton, wheat, soybeans, rice and corn.
There are 3 types of subsidy payments that farmers can receive. The first type is the most offensive to anyone who holds to any free market ideas. These “direct payments” go to farmers and landowners regardless of the current crop price. Therefore even if crop prices and farm profits are at record highs, the government still issues these direct payments. In fact, recipients do not even need to have planted anything to receive payment. Leave it to the US government to pay people to do absolutely nothing and pretend that they are saving the family farm. Since 2005 the average direct payments have totaled around $5 billion a year.
The other two types of subsidy payments are essentially the same because bureaucrats just love to make redundant programs. “Counter-cyclical” payments and “market loss” payments are sent out when crop prices fall below a standard set by Congress. Yet Congress has help deciding this “price level” from the very influential agribusiness lobby industry, which spent $121 million in 2010. These duplicate programs serve as key components to “farming safety” that many farm interest groups desire. Yet the farm industry acts as if it deserves its own taxpayer-funded safety net.
These wasteful subsidies are marketed to the public as essential for the survival of the small family farmer, who guarantees the country’s food supply and keeps the country from starving. No one could possibility argue against a program that does so much good, right? Wrong, because it’s all lies. In fact, it is not the small farmer that gets subsidy money, but rather it is the giant corporate farms. Current subsidy programs serve as welfare for corporate farms that take advantage of and manipulate the subsidy system. According to the Environmental Working Group 10% of the recipients of subsidy payments receive a whopping 70% of the benefits. Riceland Foods is the single largest recipient of subsidy money, receiving $68.9 million in 2003. That is more than all the farmers in Rhode Island, Hawaii, Alaska, New Hampshire, Connecticut, Massachusetts, Maine, Nevada, and New Jersey combined. Subsidies ensure that the small farmers have to struggle to compete with multimillion-dollar agribusiness firms, like Riceland Foods.
During a time of economic hardship, every taxpayer can rest easy knowing their hard earned money is going to ensure that millionaires can make ends meet. In fact, even millionaires such as David Rockefeller receive farm subsidy benefits.
But while most of the subsidy money is paid to millionaires and massive corporate farms, the remainder goes to another group of people who live better than the average American, the farmers themselves. Farmers make significantly more than the average American. According to the Cato Institute, in 2005 the average farm household income was $79,965, while the average income of all US households was $63,344, 26% less.
Subsidies also serve to inflate the price of food. In a time when enrollment in food stamp programs is higher than ever, why are taxpayers funding programs that make food more expensive? Inflated food prices hurt the poor who must spend a disproportionally larger proportion of their income on food and makes them more dependent on food stamp programs. Most industries must respond to market pressures thus prices are balanced by supply and demand and efficient production is incentivized. However, this is not the case when an industry is subsidized and can ignore the market mechanisms. Farm programs encourage overproduction of subsidized crops and the under-producing of others, thus inflating food prices.
Most farms do not receive subsidies and most crops are not subsidized yet the farmers’ stay in business and the food is well priced. The farm industry does not need a safety net made of taxpayer money. It needs free market principles, principles that would drive down the cost of food and production. Farms should be allowed to adjust to market demands, planting different crops and diversifying their income sources. A stronger and more innovative industry would form as a result to ending farm subsidies.
Kara is a junior in Warren College majoring in political science.