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Another Emergency Bail Out for Agriculture

Another Emergency Bail Out for Agriculture

How Congressional Districts Will Fare
Wednesday, June 27, 2001

Summary

An emergency farm aid bill to be considered in the House of Representatives today (June 26) will provide an additional $4.6 billion in "Freedom to Farm" payments, but over half of the funds will go to just 20 congressional districts where farmers grow crops that have been subsidized since farm programs were established during the Great Depression. Those districts account for only 23 percent of total agricultural production value nationwide. The bill allocates another $900 million, much of it to farmers already receiving other forms of support, but provides no money for a backlog of farmer applications for conservation aid.

EWG estimates that 344 Congressional districts would receive an increase in federal aid if Congress allocated the entire $5.5 billion in emergency supplemental farm assistance according to the value of agricultural production (all crops and livestock), instead of providing a fourth consecutive year of add-on payments to farmers whose crops have been subsidized since the Great Depression.

 

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Introduction

Today (June 26) the House of Representatives will consider a measure from the Agriculture Committee to provide another $5.5 billion bail-out package for a portion of the agriculture sector in 2001. Supporters of the measure claim it is needed to make up for the extreme inadequacies of the 1996 "Freedom to Farm" policy. The emergency measure will be brought to the House floor under "suspension" of House rules that is intended for "non-controversial" legislation.

But this year's "Freedom to Farm" bail out has become highly controversial.

The 2001 measure marks the fourth straight year of "emergency" supplemental assistance. Overwhelmingly, the funds have gone to relatively small group of very large farm operators growing crops that have been subsidized more or less continuously since the Great Depression. Payments were doubled in 1999 and 2000. In 2001 the payments will be increased by 85 percent above 1999 levels.

"Freedom to Farm" payments are made without regard to economic needs of individual recipients. (No assessment of economic need is required of applicants.) The same is true of emergency supplemental funds that were provided for the past three years and are proposed for 2001. Moreover, recipients are not required to farm in order to receive "Freedom to Farm" payments.

A number of policymakers have been arguing that it is time to consider new approaches to federal support for agriculture, for several reasons:

  1. Most farmers, including many with economic needs just as pressing as "major crop" producers, will once again receive no support whatsoever, simply because they produce the wrong agricultural products. Some entire regions receive little or no aid.
  2. Despite strong demand, no funds will be provided to assist farmers who want to protect natural resources, wildlife, open space, and air and water quality, or address other conservation challenges.
  3. Many policymakers are troubled by inequities in the distribution of "Freedom to Farm" payments and emergency supplemental payments made to the same recipients. Nationally, over 60 percent of the payments will go to 10 percent of the recipients, the vary largest farm operations. In some states, more than 70 percent of the money will go to 10 percent of the recipients.

Many policymakers feel that their farming constituents are severely underserved - not to say ignored - by longstanding farm subsidy programs. To illustrate how agricultural aid might be distributed by other criteria, EWG has analyzed shifts in payments that would occur among congressional districts if farm support funds were allocated on the basis of the value of agricultural production in each county instead of according to the production history of subsidized crops.

EWG Analysis of Payment Shifts by Congressional District

Using the Freedom of Information Act (FOIA), the Environmental Working Group has obtained a complete set of payments made under the "Freedom to Farm" program since 1996, including emergency supplemental add-on payments. Databases created from these records enable us to assign "Freedom to Farm"" payments by county and to aggregate county payments by congressional. The most recent (1997) Census of Agriculture provides county-level data on the value of agricultural production. We utilized both sets of data to estimate how payments would shift among congressional districts if emergency supplemental funds were allocated on the basis of the value of all agricultural production.

Because of data limitations, our results may overestimate or underestimate payments for congressional districts in instances where only part of a county (or counties) lies within the district. However, the analysis reliably captures the general geographic shifts in patterns of payments among counties, and the resulting economic impacts.

Assumptions

  • A total of $4.6 billion in emergency supplemental "Freedom to Farm" payments would be made under the proposed Agriculture Committee bill. The bill provides another $900 million, allocated arbitrarily, to various commodity crops. EWG was unable to allocate the vast majority of this $900 million among counties. Therefore, our analysis compares allocation of the $4.6 billion in supplemental "Freedom to Farm" payments to an allocation of the entire $5.5 billion supplemental appropriation based on value of agricultural production. The effect of this assumption is to underestimate what some congressional districts would have received under the Agriculture Committee passed bill (again, because the geographic distribution of $900 million could not be estimated).
  • Allocation of the $4.6 billion in emergency supplemental "Freedom to Farm" payments among districts was based on allocation of calendar year 1999 contract payments by county (corresponding closely to FY 2000).
  • Guaranteed "Freedom to Farm" payments for 2001 total $4.13 billion, as provided in the 1996 Farm Bill. Payments by district were allocated by county, based on location of recipients in the EWG farm subsidy database. We added this $4.13 billion to determine total 2001 "Freedom to Farm" contract payments by county and district.
  • The $5.5 billion in emergency supplemental funds were allocated among counties in proportion to a county's share of total national agricultural production value, including all crops and livestock, based on the 1997 Census of Agriculture.

Results

  • We analyzed the distribution of the $4.6 billion in "Freedom to Farm" payments provided for in the Agriculture Committee bill. We estimate that 20 congressional districts would get 52 percent of those payments, even though those district account for only 22 percent of the value of agricultural production. (For comparison, 48 congressional districts account for half the value of U.S. agricultural production.)
  • The vast majority of the House, some 344 congressional districts in all, would gain under an allocation system based on the value of agricultural production.
  • In 91 of those 344 districts, the increase would exceed $10 million, and in another 79 districts the increase would be between $5 million and $10 million.
  • 86 congressional districts would receive less of an increase in assistance, but overall aid would remain substantial. Allocations in 16 of those districts would be lowered by less than $1 million.
  • A total of 37 states would see an increase in agricultural assistance if it were allocated by value of production. 13 states would receive less funding than under the conventional allocation, but they would still receive very substantial assistance.

Summary tables follow. Because of potential double counting of counties that fall within more than one district, adding districts nationally or within states will produce overestimates of payments.

Key Issues: