Which crops are subsidized

Most of U. This concentration of benefits on a relatively few commodities is an artifact of the way that commodity programs were initially set up in the s. Tobacco, barley, corn, wheat, cotton, oats, rice, and grain sorghum were by far the most important commodity crops that had firm political backing because production was geographically concentrated in a relatively small number of states.

Livestock production was much more widely distributed throughout the states, and a significant portion of livestock products were consumed on-farm or locally. Soybeans was a relatively minor crop. Because today's farm programs are still based largely on the reality of agriculture from 50 to 60 years ago, we see the concentration patterns shown in Figure 1. Figure 2 shows that concentrating subsidies on crops also results in a geographic concentration of subsidies.

The ratio of subsidies to value is highest in the states that grow primarily program crops and that have relatively small livestock sectors. The high-end concentration of farm payments has increased over time. Politicians often claim that farm aid helps alleviate rural poverty. But farm aid goes to farm owners, and they have relatively high incomes. Just 2 percent of farm households fall below the poverty line, compared to 14 percent of all U. At the top end, many billionaires have received farm subsidies over the years.

Looking at the period from to , the Environmental Working Group EWG found that 50 people on the Forbes list of the wealthiest Americans received farm subsidies. Subsidies Harm the Economy. In most industries, market signals steer investment, businesses balance risks and rewards, and entrepreneurs innovate to reduce costs.

Federal programs blunt those market mechanisms in agriculture, causing a range of economic harms, including overproduction, distorted land use, distorted choice of crops, and inadequate cost control. Subsidized crop insurance, for example, creates "moral hazard" for farmers, meaning it induces them to make decisions that maximize their subsidies, not market efficiencies.

Subsidies induce farmers to take unwise risks since taxpayers pick up the tab upon failure. Agricultural economist Vincent Smith notes: "When farmers buy subsidized crop insurance coverage based on their farms' crop yields, they use fewer inputs that reduce the risk of crop losses.

In plain language, farmers change their production practices — and on average produce less output — when they have crop insurance coverage. Farm subsidies inflate land prices and land rental costs because — to an extent — the expected future stream of subsidies is capitalized. As a result, subsidies probably benefit landowners more than farmers, and those are often different people because more than half 54 percent of U.

Farm program supporters claim that an economic benefit of aid is that it helps consumers. But crop subsidies do not reduce food prices much, if at all. One reason is that commodity costs make up just 10 percent of the retail prices of domestic food, on average. Dairy and sugar market restrictions raise prices for those products, for example, and the federal ethanol mandate raises corn prices.

Some policymakers claim that subsidies support rural workers. But the vast majority of aid goes to the capital-intensive production of field crops such as corn, soybeans, and wheat. Subsidies Are Prone to Scandal. Like most federal subsidy programs, farm programs are subject to bureaucratic waste and recipient fraud.

One problem is that the government distributes disaster payments in a careless manner, with payments often going to farmers who do not need them. Another problem is that some farmers claim excess benefits — for example, by creating business structures to get around legal subsidy limits. The inspector general of the USDA recently found that more than 30 percent of the applicants for the Conservation Stewardship Program were either ineligible or receiving excess payments.

Another ongoing boondoggle is the "prevented planting" program, which covers farmers for losses if conditions during a season prevent them from planting some areas. EWG found that billions of dollars have been paid to farmers who probably would not have planted the areas they received subsidies for.

Perhaps the biggest scandal with regard to farm subsidies is that agricultural committees in Congress include members who are active farmers and farmland owners. Those members have an obvious conflict of interest whenever there is a vote on subsidies. There are 32 current members of Congress who have received federal farm subsidies. Subsidies Undermine U. Trade Relations. When countries subsidize farm production and doing so boosts commodity exports, it undermines foreign producers and distorts global trade patterns.

Most high-income nations subsidize their farmers, yet those nations often complain about subsidies in other countries undermining their own farmers. The solution is for all nations to slash farm subsidies, which would save taxpayers money and allow the most efficient producers to supply global markets.

One particular concern is that farm subsidies and trade protections in high-income countries — such as the United States — harm lower-income countries and undermine their efforts at economic reform. Global stability is enhanced when poor countries adopt markets and achieve growth through trading. But U. The Congressional Budget Office reviewed studies examining the repeal of U.

Trade liberalization would boost the exports of U. Subsidies Harm the Environment. Federal farm policies damage the natural environment in a number of ways. Subsidies cause overproduction, which draws lower-quality farmlands into active production.

Areas that might have been used for parks, forests, grasslands, and wetlands get locked into agricultural use. AEI scholars note that subsidizing crop insurance encourages farmers "to expand crop production on highly erodible land. Subsidies may induce excessive use of fertilizers and pesticides. Producers on marginal lands that have poorer soils and climates tend to use more fertilizers and pesticides, which can cause water contamination problems. Sugar cane production has expanded in Florida because of the federal sugar program, for example, and the phosphorous in fertilizers used by the growers causes damage to the Everglades.

Finally, subsidies may discourage crop rotation in favor of planting only a subsidized crop, which in turn can lead to increased use of fertilizers. The boom in corn production driven by subsidies and the ethanol mandate is apparently generating pollution problems in the Mississippi River and Gulf of Mexico. Subsidies Are in Addition to Favorable Taxation. If farmers were large payers of federal income tax, they might argue that they were covering the costs of the spending subsidies they are receiving.

But that is often not the case. Income tax data over recent decades show that, in general, farm businesses are lightly taxed. About 87 percent of farms are structured as sole proprietorships and file under the individual income tax with a Schedule F. Farms structured as partnerships and S corporations also pass through their business income to their individual returns.

A small share of farms are structured as C corporations and pay the corporate income tax. Paying them to restore degraded farmland would help create sustainable value chains for forest products and lower the initial cost that landholders shoulder as they wait for the benefits of new trees to take root. This, combined with new mechanisms that compensate farmers for the environmental benefits of their land, can accelerate restoration and generate higher returns.

Shifting farm subsidies is also important because protecting, sustainably managing and restoring forests are the least expensive and most effective nature-based solutions that tropical countries can use to meet their nationally determined contributions NDCs to the Paris Climate Agreement. Some countries are already making the change. In Burkina Faso, forest cover had halved since due to increasing demand for farmland and cattle pasture.

Large landowners and corporations often benefit disproportionately from existing subsidies. Small farmers also need more clearly defined land rights. Without legal title to their land, they are often ineligible for subsidies. Farmers both big and small can work together in coalitions to encourage governments to facilitate markets for the ecosystem services, like clean water and carbon sequestration, that restored land produces. Ghana has applied these lessons. There, wildfires — caused by hunting, slash-and-burn farming and charcoal production — ravage forests and threaten local livelihoods every year.

To prevent future fires, officials encouraged small farmers to adopt more sustainable land management practices like plowing post-harvest crop residue into their fields rather than burning it. When people saw their neighbors receive their first payments, participation tripled. For starters, the Farm Bill contains rules against it.

Historically, commodity crop growers have had to forfeit their subsidies if they suddenly decide to plant a specialty crop. In part as a result of lobbying by environmental groups, the Farm Bill changed the rule to allow up to 15 percent of acreage to be converted to non-commodity crops.

Other opposing forces are cultural. Small-scale, diversified farming goes against the get-big-or-get-out mentality of modern agriculture. The subsidy system encourages not only monocultures but also consolidation. Subsidy payments are so baked into the system that farmers concoct business plans based entirely around maximizing their potential subsidy payments, says Hoefner.

The Farm Bill set a cap on total payouts to individual farmers, but Hoefner says that widely exploited loopholes render the rule virtually irrelevant. According to NFU data, farmers receive an average of To be fair, the USDA already provides a number of incentives for sustainable agriculture. To receive subsidies, farmers must have conservation plans in place to show that they are taking basic precautions to protect the environment, though the USDA has limited resources to check that what every farmer puts on a piece of paper is practised.

The USDA operates a number of low-interest loan and cost-share programs to support upstart organic farmers and develop local and regional food systems. Johnson, head of the NFU, disagrees with the notion that more acreage in specialty crops would be a good thing — at least, from an economics perspective. In fact, he points out that specialty-crop growers have traditionally lobbied to keep the rule that prevents commodity growers from making the switch in an effort to limit competition, which, according to the laws of supply and demand, would drive down prices.

One upshot of that scenario is that low-income Americans could finally afford to eat more fresh produce rather than rely on the cheap calories of processed foods. But fruit and vegetable growers might end up struggling to sell their crops for more than what they cost to produce and become reliant on government subsidies to make ends meet.

Or maybe the built-in resilience of smaller, more diversified farms, which can more easily ramp up the production of crops with the highest demand in a given year, would resolve that conundrum.

Either way, it might be a good — or, at least, better — farm problem to have. This site uses Akismet to reduce spam. Learn how your comment data is processed. I do not think subsides should go to corporate farms. Only to small independent family farms. Corporate farms are not what they were designed for. The corporate farms are the ones putting our family farms out of business.

Not a bad article. I am surprised that not much is being said about the farm bill allowing the largest farms to avoid the payment limits by qualifying nephews, nieces, uncles etc. Rep Senator Grassly tried to amend this language. Farmers Union, which I am a memeber, has said little about this.

This would normally be a huge deal. I think we need some perspective, before we get to excited. When I was growing up, I read about the millions of people around the world starving to death. You make it sound the the productivity of the American farmer is something bad.