The Most Coddled Industry in America

Kara Henderson

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.

Mowing the Money

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.

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3 comments

  1. I think you need to do some more research before you label Agriculture as the most coddled industry in America. My vote goes to the oil industry. They receive billions more in aid than agriculture does.
    Many of your “facts” are out of date, or cherry picked to show the worst, and not the average of all farms.
    With the average farm size in the U.S. at around 500 acres I don’t think you could find many if any “giant corporate farms.” In fact 98% of the farms in the U.S. are owned by family farmers. These are not the family farms of the 1920’s, but they are still family owned.
    There is a limit to how much a farm can receive in government program dollars, and I do believe Riceland Farms is over that limit. I wonder how they got away with that, if they did. They are not the norm in agriculture, but the exception.
    2005 was a good year for some farmers. If you take a 10 year average, you will find that farmers make considerably less than in 2005. In fact most farmers make more money from off farm income, or their spouses job than they do on the farm.
    The reason for a subsidy is to lower the price of food, not raise it. Until recently the U.S. had a cheap food policy. It was so efficient a policy that farmers could not make enough money to pay their bills and we were in danger of losing our countries food production capacity. Farm income was held at below break even for many years.
    It is only in the last few years that farmers have started to approach the income of city folks. This is mainly because food production world wide is not keeping up with demand. China and India have a growing population of consumers with more money than their parents had and they are demanding something other than rice to eat. Food supplies are going down because of that growing demand, and the market will respond with rising prices.
    Did you know that less than 10% of the dollar you spend on food actually makes it to the farmer? 33% of that food dollar goes to processing and preparing your food.
    Farm income may average over that of city folks some years, but hours spent at work does every year. A 40 hour work week is unheard of out here. During the busy seasons it’s not unusual to see folks put in an 80 hour week. Children grow up knowing what real work is on the farm, and they may not get a paycheck at all for the work they do.
    With less than 2% of the U.S. population farming we need someone to replace the aging farm population, now at an average age of 58 years.
    Instead of complaining about farm policy with your mouth full of farm products, why not come out and join us. The air is clear, the people are great and there is plenty to do. It’s hard work, but we enjoy it here.


  2. There are many ways to argue about who the most coddled is and that proves the general point that free markets have nothing to do with this silent depression.
    Who is actually going to advocate for more government spending at this point besides Paul Krugman? Every government operator and operation can (and must) withstand repeal, abolition or nullification.
    The billions of welfare dollars in worthless fiat paper money will only further disrupt the economic flow of food to consumers costing them more and more. That money would be better well spent by the rightful claimants to the wealth than by elected puppets.

  3. But the argument you will get from the pro-industry pelope is: Jobs.Where will they find these jobs you speak of?Bottom line ….. the government will never let the big three go bankrupt. They will tell you that the effects to the economy will be catastrophic. That is not the case. The only reason bankruptcy is off the table is if it goes before a judge, union contracts will be voided.

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