Farm Bill Subsidies Often Harm Not Help Family Farmers
The Real Winners Have Been Animal Feedlot Operators, Corporate Mega-Farms, Input Suppliers Like Monsanto, And Big Grain Traders Like Cargill
Excerpted from the book Food Fight. To learn more about the Farm Bill and purchase a copy of Food Fight please visit www.foodfight2012.org
Billions of Farm Bill dollars flow into America’s rural communities each year to boost income for farmers, who continue to face an onslaught of financial, environmental, and agricultural challenges. But which farmers are receiving payments? Following the Farm Bill money trail involves understanding the complex circumstances surrounding what it means to be a “farm.” It also requires focusing in on why the government singles out so few crops for subsidies. Finally, it means drilling down into deep divides: family farms versus corporate mega-farms, producers versus buyers, commodity versus diversified agriculture.
The USDA identifies approximately 2.2 million farms in the country. The agency’s definition of a farm is quite broad: “any place from which $1,000 or more of agricultural products were produced or sold, or normally would have been sold, during the census year.” When the USDA averages farm income, it includes a sizable category called “rural residence farms”—households that may own a cow or a few sheep, but do not list their occupation as “farmer.” Only 23.5 percent of farms actually grow enough crops or animals to earn over $50,000 a year, and 31 percent are producing so little that they don’t even clear $1,000 a year. Such mini-farms generally do not receive subsidies and their households rely primarily on off-farm income.
Just a fraction—around 15 percent—of all farms generate most of the agricultural output, primarily because they have specialized in commodity crops. Family farms are a dying breed. Although the average American farm measures about 441 acres, farms of that size are becoming increasingly difficult to find. While mega-farms and so called “hobby farms” (not my favorite term) are on the rise, it is the medium-scale operations, with acreage between 50 and 2,000 acres, that are declining.
Farm Bill funding is undoubtedly skewed toward a very narrow group of crops. Of the $246 billion U.S. taxpayer dollars spent on commodity subsidies between 1995 and 2010, almost 70 percent went to the production of just five crops: corn, cotton, wheat, rice, and soybeans.
Focus on the slice of small and mid-sized farms that comprise less than 10 percent of all operations—those that gross between $100,000 and $250,000 from farming and whose operators claim farming as their primary occupation—and a far different picture develops. According to an analysis of USDA farm data by Tufts University researcher Timothy A. Wise, 82 percent of farms in this bracket received some sort of government payment and relied on them to keep their operations afloat. Even as commodity prices reached record highs in 2007, family farmers continued to struggle. While corn prices increased 87 percent between 2003 and 2007, fertilizer costs jumped 67 percent. Fuel costs doubled. At the same time, counter-cyclical payments to small and mid-sized farms, which kick in when the market price of a crop falls below a set target price, dropped by half. As a result, small and mid-sized farms’ net income from agriculture actually declined between 2003 and 2007, from $30,000 to $26,000. Farm households supplemented their income with an average of $31,000 from off-farm jobs during the period of Wise’s study. Combined, household income was just barely above the U.S. average. Without the farm subsidies, many of the small and medium-sized farms would border on poverty.
The elite group of mega-farms felt no such squeeze. These are the large commercial farms earning over $250,000 per year that control vast acreages, benefiting from farm payments tied to land ownership and historical production. According to Wise’s analysis of USDA data, very large commercial farms were responsible for 44 percent of commodity crop production and received 32 percent of commodity payments in 2003. “The concentration of farm payments,” Wise says, “is caused primarily by the concentration of land and production in the hands of a relatively small number of large farmers. It may be necessary to address the root causes of this concentration in order to meaningfully address inequities in U.S. farm programs.”
Even among those “wealthy farmers” at the top of the scale, however, the statistics can be somewhat misleading. Of the top 20 recipients of government farm and conservation payments between 1995 and 2010, none was an individual family farm. Instead, their ranks included corporations, Indian tribes or cooperatives that distributed payments among their members, and, to a lesser extent, conservation organizations.
Graphic courtesy Watershed Media
It is important to keep in mind the type of agriculture—for both plants and animals—that our federal subsidy system has intentionally perpetuated. The farm sector has been converted to a manufacturing model, designed to provide buyers with a lowest-cost product. Labor is replaced with energy-intensive machinery and chemicals whenever possible. These are extremely expensive costs that are most economically beneficial when spread over a maximum number of acres or animals. Once invested in such a capital-intensive system, it is extremely difficult for an operator to make any significant change in the scale or approach to farming. In fact, as harvests and production become more and more efficient, the main response, as in manufacturing, is simply to try to grow the scale of the operation.
The goals, strategies, and rules for today’s Farm Bill subsidies represent a complete departure from the price-stabilization policies that dominated the first four decades of Farm Bills. In general, the government purchased grain from farmers during harvest time when it was plentiful and sold it off when grain was more scarce. Other programs, such as land set-asides, also helped manage supply, boost prices, and impose some fundamental soil conservation practices.
These programs were slowly dismantled beginning in the 1970s, when globalization began to shape the political and economic agenda. The U.S. encouraged its farmers to plant fencerow to fencerow to generate exports. By 1996, the grain reserve program was eliminated by a Republican dominated Congress. With the government out of the supply management game, farmers once again planted as much as they could, hoping to get ahead. The result was deflationary oversupply. In the ensuing years, the market price of corn fell to an average of 23 percent below the farmers’ cost of production. As rural communities foundered, a flustered Congress instituted so-called “emergency payments” in 1998 to help keep farmers afloat. Those payments were made permanent in the 2002 Farm Bill.
It’s understandable that we want to ease the plight of the family farmer. But in practice, the Farm Bill often subsidizes the expansion of a mega-farm operation that puts family farmers out of business. Legal loopholes, lax enforcement, and loose definitions of what it means to be actively engaged in farming have resulted in tax dollars supporting people who either don’t need or don’t deserve subsidies. Included in this group were subdivision developers who bought farmland and advertised that prospective homeowners could collect subsidies on their new backyards. Congress members past and present have also been beneficiaries, sometimes raking in sizable yearly payments. According to the Environmental Working Group, 24 members of Congress or their immediate family members received farm subsidies between 1995 and 2010, some totaling millions of dollars.
Meanwhile, farmers who grow the perishable produce so necessary for a balanced diet have been kept out of the subsidy game for decades. With 20,000 miles of waterways, nearly 80,000 farms, and over $30 billion in annual on-farm revenues, California tops all states in terms of agricultural sales, yet 90 percent of its growers receive no subsidies. Florida is another prolific food producer, with extensive citrus, row crop, dairy, and calf-breeding operations. Yet only 10 percent of Florida’s farms and ranches receive direct subsidies. According to the Environmental Working Group, if farm payments were based on overall contributions to the nation’s food and fiber supplies rather than the narrowly targeted commodity groups, five other states with large, but mostly unsupported, farm sectors would immediately benefit: North Carolina, Pennsylvania, Washington, Oregon, and Colorado.
In understanding the subsidy game, it’s important to consider who ultimately benefits from policies, in addition to who directly gets the money. The real winners in the subsidy explosion of the last decade and a half have been the animal feedlot operators and the largest corporate mega-farms, along with input suppliers like Monsanto, a host of service industry providers, and the big grain traders: ADM, Bunge Cargill, and Dreyfus. Small and mid-sized growers depend on subsidies to stay afloat, sometimes even in big years; meanwhile big industrial growers thrive. Isn’t there a better system to qualify who actually needs support and under what conditions? The answers may require a fundamental shift from 20th-century policies that encourage overproduction and low prices. Rather, policies should be reoriented toward a complete economic system, one that helps qualifying family farmers earn a fair price for their products, caps payments, rewards environmental stewardship, incentivizes more diversified and resilient food and farming systems, and recognizes the value of family farms as key drivers of community health and economic development.