Americans involved in agriculture are no longer the tenant farmers and sharecroppers of days past. I’ve yet to hear of a “disaster harvest” which forces the sale of the family cow. Banks are not repossessing their land, and the range wars between farmers and ranchers have long ended.
There are exceptions of course, but on average the American farmer is quite wealthy. Part of this is due to the fact that most farms are no longer family owned; instead, they are often corporations. Even many of those which are still family owned are on average 10 times larger than the average farm size in 1950.
In fact, between 1950 and 1970 the average size of the American farm doubled from 200 acres to 400 acres and the number of farms collapse from 6 million to 3 million. By the 70’s fewer than 10 million Americans lived on farms, half the number from just twenty years before. The trend has not ended as rural dwellers continue to leave for cities.
I put these figures forward to emphasize a couple of points; that farm subsidies benefit a very small part of the American citizenry and also that, by and large, farmers are not suffering the way they did in the 30’s.
And this brings us to the Farm Bill.
Every five years congress passes this bloated agricultural bill, spending billions in taxpayer dollars. It gives farmers the option of purchasing cheap crop insurance with a payout coming directly from taxpayers. The federal government first created federal crop insurance in response to the plight of the agriculture industry during the Great Depression in 1938. What the subsidized insurance actually did was ensure the business risk involved in farming was put on the back of taxpayers.
The insurance does not only act as a guarantee against catastrophic losses but also pays out if a harvest is less bountiful than expected or even if crop prices are not as high as originally thought. Essentially the insurance guarantees them a set income.
The current farm bill expired in 2012 but was extended through September of 2013. Over the next month Congress will likely introduce and vote on a new farm bill. The Senate version of the bill is expected to contain over $963 billion in spending over the next 10 years. The house bill proposed by Republicans would spend some $950 billion over the same time frame. These bills both cut subsidies compared to the 2007 incarnation of the bill.
These proposals, however, do very little to improve cost effectiveness of the farm bill. It was determined by the Congressional Budget Office (CBO) that the two proposals would actually save less than expected. The Senate bill would save only $13.1 billion over ten years and the savings in the House bill would only amount to $26.6 billion.
More importantly, the proposals fail to address the fundamental issues with the bill. Because of the changing nature of agriculture in the United States, the bill has for decades amounted to a giant corporate subsidy.
Some 80% of the farm bill sends money to cotton, wheat, corn, and soybean growers. There is also, however, another group of producers who are perhaps the biggest beneficiaries of the bill; sugar producers. Big Sugar has long been one of the most successful lobbying groups in Washington. They defend their special status in the farm bill by asserting sugar producers cost the taxpayers almost nothing, especially when compared to cotton, wheat, corn, and soybeans growers. Sugar’s biggest benefit, however, doesn’t come from subsidized insurance.
Instead, sugar enjoys a special trade status which makes the importation of sugar very expensive. This artificially raises the price of American sugar, making candy and soda companies spend more on operating costs. These costs are of course passed along to the consumer. Hence Americans may not be spending many tax dollars helping Big Sugar but they are definitely spending a lot more at the grocery store because of it.
Wonder why Mexican Coke tastes so much better? The increased sugar prices forced Coca-Cola to switch to high fructose corn syrup in the early 80’s. So not only is the Big Sugar lobby making you pay more for chocolate, but it’s also guaranteeing you an inferior cola.
Though farmers are in general a hardworking and admirable group it’s time to stop treating them like Okies fleeing from the Dust Bowl. If the nation’s politicians and voters are serious about tackling debt then it’s high time to address corporate welfare. Democrats, with their mistrust of corporations should welcome farm insurance reform, and Republicans need to end their hypocrisy on the issue and do the same.
It remains to be seen if the new farm bill being considered in the coming weeks will provide any meaningful fix to this long broken bill.
FreedomWorks Letter to Congress in Support of Fiscal Commision Act (H.R. 5779)