Born as part of FDR’s New Deal to protect struggling farmers coming out of the Great Depression from unpredictable weather and fluctuating crop prices, America’s farm program has evolved today into the largest form of corporate welfare, say critics calling for reform.
The Environmental Working Group, a public interest research and advocacy group spearheading the push for reform, recently put online a searchable database tracking 11 years of farm subsidy payments totaling nearly $165 billion.
The lion’s share, subsidies for rice, helped the 9,000-member cooperative of farmers in five states become the world’s largest miller and marketer of rice. With retail markets in the United States and more than 75 countries, Riceland Foods reported 2006 revenues of $937 million.
The EWG database, the fullest disclosure to date about who benefits most from the current U.S. farm policy, revealed that nearly two-thirds of America’s farmers do not receive any subsidies. That is because they don’t grow one of five crops that account for 90 percent of subsidy payments–rice, wheat, corn, cotton and soybeans.
Among those who receive subsidies, the top 10 percent of recipients collected 73 percent of subsidies between 2003 and 2005, with the top 1 percent claiming 17 percent of crop payments.
The average annual payment to the top 10 percent of the subsidy pyramid, $34,190, was 48 times the amount paid to the bottom 80 percent.
A 742-page farm bill passed Friday in the House of Representatives expands subsidies to growers of fruits and vegetables. It includes $4 billion for nutrition programs–increasing the Food Stamp program, which currently serves 25 million Americans–an important element for religious lobbyists like Bread for the World. It provides new funding for conversation and development of renewable energy.
But critics say it doesn’t go far enough in reforming an antiquated subsidy system they say benefits a relatively small number of wealthy farmers, makes it harder for small farmers to make a living and harms subsistence farmers living in the Third World.
The $280 billion, five-year House bill now moves on to the Senate. It ends subsidy payments to farmers earning more than $1 million a year, down from the former cap of $2.5 million, but still well above the $200,000 cap sought by President Bush.
“If you have an adjusted gross income of $200,000 or more, you should be disqualified from the commodities program,” contends Environment Working Group president Ken Cook. “That’s the top 3 percent of taxpayers in that income bracket.”
Owners of large farming operations say they need the government handouts in order to make a profit. Gross earnings–without accounting for overhead like fuel, equipment and land prices–they say, create a different impression than net income.
Large modern family farms look more like businesses managed with computers by people with college degrees than the Forty Acres and a Goat image popularized in the title of a 1986 memoir by Baptist civil rights champion Will Campbell.
The Crop Subsidy Program paid U.S. farmers $34.7 billion from 2003 to 2005, according to the EWG database.
The No. 1 recipient during those years received nearly $8 million. The 12,000-acre Balmoral Farming Partnership in Newellton, La., for many years the state’s top cotton producer, passed payments through to 17 farmers, with amounts ranging from $360,000 to $543,000.
The third-largest operation at the subsidy trough, Due West Plantation in Glendora, Miss., started out as a plantation worked by slaves in the 1840s, moved through the era of tenant farmers and is today a fully mechanized 12,000-acre family agricultural operation. The USDA directly contributed more than $5.6 million in subsidy payments to Due West in program years 2003-2005.
While farm subsidies have targeted large farms for decades, critics say, record amounts of money siphoned into the program in recent years have turned it into corporate welfare.
According to an issue brief by Citizens Against Government Waste, the primary justification to defend farm subsidies has always been they are necessary to protect the “small family farm.” The truth, according to the group, is that current subsidies benefit the largest and wealthiest agriculture producers. Rather than keeping smaller farmers on the land, farm subsidy programs actually have contributed to farm consolidation and higher land prices, making it even harder for younger farmers to enter the trade.
Farm subsidies increase consumer costs by an average of $10.5 billion a year, according to the brief. In an effort to keep milk prices artificially high, the group says, a “milk tax” costs consumers an additional $1.5 billion a year, hitting hardest on low-income families with children. A U.S. sugar program costs consumers $1.9 billion annually, with more than half of those subsidies lining the pockets of the wealthiest 1 percent of plantation owners.
Rather than helping rural economies, the EWG database found that many farm subsidies are going to absentee landowners living in some of the most affluent zip codes in the United States.
A database search of Scarsdale, N.Y., a fashionable New York suburb ranked No. 2 in a listing of the 25 top-earning towns in America–with a median household income of $219,000, median home price of $1.5 million and the average amount spent on vacations of $10,400 a year–revealed 16 beneficiaries of farm payments.
Proponents of farm subsidies say they are necessary to allow U.S. farmers to compete in the international marketplace. The truth, according Citizens for Government Waste, is that U.S. farm programs are an obstacle to expanding international trade and hurt the world’s poorest farmers.
Farm subsidies encourage farmers to grow surplus crops, undercutting subsistence farmers in developing countries that cannot afford to subsidize their own farmers. Those countries in turn retaliate with tariffs to protect their own farmers, with a net effect of hurting U.S. farm earnings.
Testifying in April before the Senate Committee on Agriculture, Nutrition and Forestry, Bread for the World President David Beckmann said after studying the current farm bill for four years his group decided it isn’t working well for poor and hungry families.
Beckmann said he understands the argument for rewarding production and doesn’t criticize farmers for taking advantage of the programs that exist.
“But it doesn’t seem fair to me that our farm bill is biased in favor of big farms,” he said. “I don’t think it would have seemed fair to biblical prophets like Isaiah or Hosea either.”
Bob Allen is managing editor of EthicsDaily.com.