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Freedom to Farm

Thursday, February 1, 1996

Freedom to Farm

An analysis of payments to large agribusiness operations, big city residents, and the USDA bureaucracy

The "Freedom to Farm" legislation, approved by a partisan vote of the House Agriculture Committee, will be taken up by the House of Representatives soon after it reconvenes on Tuesday, February 27. The Senate has already passed a version of the bill. In its current form, the "Freedom to Farm" bill will be one of the most generous Federal farm subsidy programs ever considered in the U.S. House of Representatives.

  • Because of surging market prices for subsidized crops over the past 6 months, and robust long-term export demand projections for U.S. crops, most analysts now agree that the guaranteed payments authorized by the House Republican "Freedom to Farm" bill will result in a massive increase in government farm subsidy costs relative to simple extension of current laws.
  • According to USDA's latest (Feb. 21) budget projections, extension of existing farm programs would result in government outlays of $12.2 billion over the next 7 years, compared to $35.6 billion in fixed, guaranteed payments under the House Agriculture Committee's "Freedom to Farm" bill.
  • Four factors make "Freedom to Farm" one of the most generous Federal farm subsidy programs in history. First, the bill will commit taxpayers to very large government payments at a time when subsidy recipients will also receive exceptionally high market prices for crops. Current law would have zeroed out payments for several crops in 1996 and probably in 1997. Second, the bill guarantees subsidies for 7 years instead of the traditional 5 years. Third, "Freedom to Farm" bases future payments entirely on past eligibility, eliminating the requirement that recipients be active farmers or managers in order to receive subsidies. Finally, the bill in effect allows subsidy recipients to keep $1.7 billion in Federal payments from previous years that would have been repaid to taxpayers under existing law.
  • "Freedom to Farm" does not end or phase out farm subsidies. CBO's baseline projects continued, $4 billion annual outlays for farm subsidies after Freedom to Farm "expires" in 2002. This $4 billion is equivalent to spending levels in years 6 and 7 of the bill.
  • EWG estimates that the top 2 percent of "Freedom to Farm" subsidy recipients will be eligible to receive an estimated $7.8 billion over 7 years, 22 percent of total payments. The average payment to 28,000 operations in the top 2 percent will be $281,000 over 7 years -- or more than $40,000 per year in guaranteed payments with no work requirement and no means test. This compares to an estimated $26,000 for the average recipient. At least 368 recipients will be eligible for more than $1,000,000 over 7 years.
  • The top 2 percent of recipients in Arizona, mainly partnerships and joint ventures, will be eligible for an average of $1.6 million in "Freedom to Farm" payments over 7 years. In Mississippi, the top 2 percent of recipients will average over $1 million.
  • Top 2 percent of rice recipients will be eligible to collect $677,000 apiece over 7 years; top cotton producers, an average of $419,000 over 7 years.
  • The top 10 states for "Freedom to Farm" payments, and the average amount paid to the top 2 percent of recipients in each of those states over 7 years, are as follows (Table 1).
  • EWG estimates that over 37,000 individuals, corporations, joint ventures and other recipients with mailing addresses in America's 50 largest cities will be eligible for an estimated $365 million in "Freedom to Farm" payments. Many recipients in large cities will be eligible for hundreds of thousands of dollars. Because all farming requirements are eliminated, "Freedom to Farm" will increase the number of subsidized, absentee farmers. EWG estimates that at least $1.1 billion in "Freedom to Farm" payments will be made to recipients who do not reside in the same state in which subsidized farms are located.
  • EWG analysis indicates that over 18,000 recipients in the local USDA bureaucracy -- full-time employees and farmer "committeemen" -- will be eligible for more than $785 million. These recipients will be eligible for an average of more than $42,000 over 7 years, almost $17,000 (65 percent) more than the average recipient. An estimated $22 million will be paid to 1,105 full-time, permanent county employees.
  • "Freedom to Farm" also perpetuates the peanut, sugar and dairy programs that cost consumers billions of dollars in increased food prices each year.
  • By retaining provisions that cap spending, but reducing the level of "Freedom to Farm" payments, Congress could provide billions of dollars over the next 7 years to rural areas for water and sewage treatment, housing construction, and conservation and environmental protection programs. Congress could also use some of the savings for deficit reduction.
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