You Know It’s An Insane World When…

You Know Its An Insane World When. Graphic © herbshealthhappiness.com. Background photo © AdobeStock 132117575 (under license)

American farmers have been supported by subsidies from the U.S. government since the 1930s when drought and the Great Depression wreaked havoc on the nation’s agriculture industry. Federal subsidies to agriculture have evolved into today’s Farm Credit System, ^[1] which is a government-sponsored financial muscle that has more than $280 billion in assets.

The U.S. government pays around $20 billion per year to farmers in agricultural subsidies and insurance, according to the U.S. Government Accountability Office. ^[2] That support is backed by farm bills which pre-date the economic turmoil of the Great Depression.

Types Of Farm Subsidy

1. Insurance ^[4]

The U.S. Department of Agriculture’s Risk Management Agency handles the crop insurance program which has an annual outlay of about eight billion dollars and covers more than 100 crops including corn, cotton, and soybeans.

2. Agricultural Risk Coverage ^[5]

This subsidy program is designed to help farmers if their revenue per acre falls below a benchmark level. It covers more than 20 crops including wheat, corn, chickpeas, and mustard.

3. Price Loss Coverage

Under this program, the larger payout is given to farmers if there is a steep drop in the price of their crops. PLC subsidies are subject to fluctuation cost taxpayers about $1.2 billion as of 2016.

4. Marketing Loans ^[6]

The program offers higher payments to farmers when market prices are low. Last year, the U.S. government released $400 million in subsidies to farmers, under this program.

5. Conservation Programs

Farm lands that are out of production are one of the recipients of these programs which cost taxpayers more than $5 billion a year. The Conservation Reserve Program covers these farm lands which receive about $1.7 billion a year.

6. Disaster Aid

Different types of farmers including wheat growers, livestock producers, and orchard operators are entitled to various disaster aid programs which also provide additional aid after adverse events.

7. Marketing and Export Promotion ^[7]

The agricultural industry receives $3 billion for food and agriculture research. The USDA also has a research arm that gathers statistical information and conducts economic studies for farmers. Farm and food promotion activities are supported by the USDA’s Agriculture Marketing Service which spends about $1.2 billion a year. The USDA operates 93 foreign offices to market U.S. farm and food products.

Why Washington Should End Or Reform Agriculture Subsidies

According to the Environmental Working Group, ^[8] a nonprofit, farm programs have become a cash cow for big businesses. Farm policies were influenced by lobbyists to disproportionately benefit large landowners and wealthy farm operations. Opponents of the farm subsidies argue that these programs cause overproduction, inflate land prices, and harm the environment. Here are some of the reasons why American farms do not need these dole-outs:

1. According to economist Vincent Smith, ^[9] 85% of all farm subsidies are cornered by the largest 15% of farm businesses. Well-off farm businesses and landowners are the main recipients of the subsidies and not small farmers. Some of them include private equity magnate Henry Kravis, Senator Chuck Grassley, and rock star Jon Bon Jovi.

2. The U.S. government’s micromanagement of the agriculture causes a range of economic issues including overproduction, ^[10] inflated land prices, and inadequate cost control.

3. Congressional agriculture committees ^[11] are populated by active farmers and farmland owners who have big influence whenever the Congress votes to increase subsidies.

4. Some subsidies go to farmers that create business structures to get around legal subsidy limits. Bureaucratic red tape ^[12] and conflict of interest pave the way to recipient fraud and financial waste.

5. U.S. farm subsidies and protections undermine progress on achieving open trading relationships ^[13] with other countries. The U.S. Congressional Budget Office conducted a study that called for the repeal of U.S. and foreign agricultural subsidies and trade barriers.

6. Excessive use of fertilizers ^[14] and pesticides is induced by subsidies especially in marginal lands that have poorer soils and climates. Subsidies also cause overproduction which results in the conversion of parks, forests, and wetlands for agricultural use.

7. Agricultural subsidies promote poor health. The California Public Interest Research Group published a report ^[15] in 2013 that criticized the many subsidies for favoring foods that contribute to the nation’s obesity epidemic.

Are The Subsidies Anti-Organic Farming?

Farmers must meet strict regulations to be certified organic. The cost of organic certification is supported by a mandatory funding stated in the 2014 U.S. Farm Act. ^[16] Financial assistance is also provided for organic research. The USDA’s National Organic Program implements the standards for organic farms and processing facilities.

The National Certification Cost Share Program provides funding of $57.5 million dollars to assist organic producers and handlers with the cost of certification. This funding is a small fraction of the support received by agricultural practices that rely on pesticides and fertilizer.

The minuscule support offered by the government towards the organic sector reflects the tendency of the Congress’ agriculture and appropriations committees to favor the agribusiness giants – who make large contributions to lawmakers’ election campaign coffers. Does this campaign money influence the kind of agriculture our national policy supports? It sounds exactly like the kind of “pay for play” politics that undermines our best interests.

Conclusion

The follies that besiege the federal farm policies are nothing new. They are just reiterations of the setbacks that come along when a government manhandles an industry. New Zealand is one of the few countries in the world to prove the farming sector can prosper without government subsidies. This kind of thinking should be applied in the United States.