As the Senate considers the farm bill, the crop subsidy system is in need of reform. This map shows how much money each state received in total from the crop subsidy program from 2003 through 2005, the number of farms in the state that received that money, and also the top 10 farm business recipients of crop subsidy program payments across the country. These top 10 businesses combined received more than $45 million in subsidy money over the three years.
The map also looks at so-called “direct payments” for corn—the most heavily subsidized crop—in the same time period. These direct payments are subsidies that are automatically paid year after year to landowners of historically productive lands regardless of market conditions.
The bill the Senate is considering makes progress on conservation, nutrition, food stamps, and renewable fuels. But the glaring weakness in the farm bill is its failure to make significant reforms to the agricultural subsidy system.
Our current farm policy does not benefit as many American farmers, the American public, or small farmers in other countries as it should. Today’s commodity price-based programs do not apply to over 61 percent of U.S. farms. In 2005, 54 percent of all farm subsidies went to 9 percent of the nation’s farms. Five commodities—corn, soybeans, cotton, rice, and wheat—receive 90 percent of all farm payments.
Many of these subsidies distort prices, encourage overproduction, and leave small farmers in some of the world’s poorest countries unable to compete in agriculture—a critical sector of the global economy for sustainable development and poverty reduction. The reason: The U.S. government’s price-based subsidies encourage farmers to produce more and more. As commodity supplies increase, prices on open world markets tend to drop, leaving small farmers in developing countries unable to get a good price for their own unsubsidized crops.
Direct payments alone will cost U.S. taxpayers $26 billion over the next five years. Furthermore, the largest 10 percent of the beneficiaries receive 60 percent of the direct payments.
Some estimates suggest that the federal government has paid over $1.3 billion in subsidies for rice and other crops since 2000 to individuals who do no farming at all. In addition, commodity-based direct payments also tend to inflate land values, which is a particular barrier to small farm operators and young, new farmers who rent land in order to farm.
To fix this system, we need to enhance the safety net for all U.S. farmers while imposing limits on the subsidies that encourage trade distortions and overproduction. This would mean enacting stricter payment limitations to ensure that assistance goes to actual producers and limiting payment limits to $250,000 per farm rather than the current $360,000 per farm.
Eliminating the so-called “Three Entity Rule,” which allows some land investors to reap more than their fair share of income support, would also go a long way toward making subsidies fairer. Instead, we need to reward all farmers for environmental stewardship, including growing dedicated energy crops sustainably, by encouraging reinvestment of $26 billion in direct payment subsidies into green payments for environmental programs on working lands. Additionally, voluntary alternative safety net proposals based on average revenue, rather than price, deserve strong consideration.
But the Senate’s farm bill includes $10 billion in new aid funding without enacting significant reforms. This week, it’s time to act in the best interests of the entire nation and pass a farm bill we can all be proud of.
Read more about the Farm Bill from CAP: