As Congress debates the next Farm Bill, some farmers are sounding the alarm on the unintended consequences and hidden costs of subsidy programs that are meant to aid the agriculture industry.
As Congress prepares to reauthorize the Farm Bill, crop insurance subsidies and other aid programs are coming under criticism from farmers across the United States.
They say that the subsidies mostly benefit the largest and wealthiest farmers, drive up land prices, discourage innovation, and distort planting decisions in ways that seriously impact our food system.
“I don’t miss walking into those offices and doing the paperwork and they know every single thing about my operation. And they say, ‘Oh, but it takes away your safety net.’
“My safety net is the resiliency built into my soil.
“My safety net is the health of the operation. My safety net is the fact that I don’t rely on only one or two commodities to make my income.… That’s very liberating. It’s a good feeling.”
—Gabe Brown
US crop insurance subsidies have also caused other problems.
As subsidies flow to larger farms, the agriculture industry has consolidated, hollowing out small towns around the United States.
Then there’s the waste, fraud, and abuse.
Both handouts were marred by dysfunction.
The GAO found almost $800 million in improper trade war payments during 2018 and 2019.
The Farm Service Agency conducted spot checks on 90 farmers who received assistance related to the pandemic and found that over half of them, 48, may not have actually qualified for the support, such as one cattle producer who received over $6 million for animals that they may not have even owned.
Diets
Brown estimates that 95 percent of all planting decisions that American farmers make are based on how much money is guaranteed through subsidized crop insurance, leading to a highly centralized production system.
Agricultural economist Jeff Schahczenski notes that insurance for specialty crops like fruits and vegetables “are often available only in a few locations, have confusing eligibility requirements, and do not have easily assessable benefits,” trapping farmers into “growing the same few crops or livestock because they are the only options for which good insurance is available.”
As a result, about 80 percent of all premium subsidies now go to just four staple crops: corn, soybeans, wheat, and cotton.
Researchers with Emory University and the Centers for Disease Control and Prevention examined the diets of 10,308 people in 2016 and found that about 56 percent of all calories consumed belonged to major subsidized foods, such as sodas sweetened by high-fructose corn syrup and meals cooked with vegetable oil derived from soybeans.
The federal subsidization of these staple crops at the expense of specialty crops like fruits and vegetables has larger implications for the US food system and Americans’ obesity.
The United States could learn from New Zealand.
New Zealand’s farmers protested.
But once it became clear that no government assistance was coming, farmers went back to work, and the industry thrived.
The primary aim of lessening the burden on taxpayers was achieved, but agricultural productivity also shot up fourfold, and the sector’s share of economic output grew.
Biodiversity improved as fertilizer use dwindled, decreasing pollution in the country’s rivers and streams, and farmers innovated and allocated resources more efficiently in response to market forces.
US lawmakers on both sides of the aisle and various government agencies have suggested piecemeal changes to crop insurance subsidies over the years.
Want to learn more? As Congress rushes to reauthorize the 2023 Farm Bill, many American farmers are sounding the alarm on the unintended consequences of government programs meant to aid the US agricultural sector. Read about it in Cato’s policy investigation.
Agriculture
