Disaster-Prone: For Many Farms Disaster Aid From Taxpayers Is A Staple Crop

Disaster-Prone: For Many Farms Disaster Aid From Taxpayers Is A Staple Crop

Wednesday, June 6, 2007

The plight of Florida's farmers in the aftermath of four successive hurricanes has been a focus of media attention, and of calls from political leaders for an estimated $400 million or more in much needed aid for the state's devastated citrus, vegetable and dairy operations. But farm groups are pressing Congress, as they have every year for decades, for a disaster aid package that would disburse taxpayer funds far beyond the hurricane zone—and add $3 billion to the cost of this year's Homeland Security Department spending bill.

graph showing year by year comparison

The Congress appears ready to comply. But rather than using emergency appropriations, lawmakers propose to pay for agricultural disasters outside of Florida by raiding conservation programs to the tune of $1.6 billion. Much of this money would go to disaster-prone farmers who receive disaster payments one out of every three years, and in the case of tens of thousands of farmers, even more often than that. What's worse, funding disaster payments with conservation dollars means taking money from farmers who spend it to make on-farm improvements with significant long-term environmental and productivity benefits, and giving it, in too many cases, to disaster-prone farmers who are overly dependent on regular, stop gap, disaster payments from the government.

Disaster Dependency Pays. A farm-by-farm review of $11.3 billion in federal disaster payments over a nine-year period (1995 through 2003) finds that similar annual emergency measures approved by Congress have funneled checks from taxpayers to hundreds of thousands of farms on a regular basis. Indeed, it appears that tens of thousands of 'disaster-prone' crop and livestock operations, most of them in the arid Great Plains, have become highly dependent on disaster payments. And the more disaster-prone and dependent farmers and ranchers not only received the bulk of the taxpayer aid, they have also averaged the highest disaster payments per year.

The disaster payments analyzed in this report came on top of a record stream of nearly $105 billion in subsidy payments to farmers because production of corn, wheat, cotton, soybeans, rice and other government-supported crops far exceeded domestic and export demand, depressing prices.

For most farms, disaster aid is an occasional, but vital form of government assistance, and one that taxpayers might well consider a fair and important investment in the nation's family farmers and ranchers. Computer records obtained from USDA under the Freedom of Information Act, and maintained in EWG's Farm Subsidy Database, show that taxpayers provided farm disaster payments to 1,160,705 individuals, partnerships, corporations and other recipients over the nine years. About half of the recipients (578,198 farm entities) collected aid just one year in the period studied. Moreover, they accounted for only 14 percent of the total disaster money provided by taxpayers ($1.6 billion) and received a modest $2,771 on average. Another 22 percent of recipients were provided aid two years out of nine. They collected 16 percent of farm disaster assistance, about $1.85 billion, averaging $3,663 apiece.

But as disaster aid dependency increases—measured by the number of years out of nine that a farmer or rancher received taxpayer help—USDA data reveal a segment of farm operations chronically dependent on disaster aid collecting the majority of federal assistance.

EWG's analysis found that over 28 percent of the recipients — 329,604 individuals, partnerships, corporations or other entities--collected disaster aid from taxpayers at least one year out of three, accounting for 70 percent of total farm disaster aid over the period—some $7.86 billion.

Chronically Dependent. Over 15 percent of the recipients (176,379 farm entities) collected disaster aid at least four years out of nine (44 percent of the time). This group, which we consider chronically dependent on disaster aid, took in just over half of the farm disaster payments provided over the period, $5.7 billion.

About 30 percent of the taxpayer assistance ($3.36 billion) went to an even more dependent group of 76,287 recipients (7 percent of the total for the period) that collected disaster checks every other year (five years out of 9, or 55.5 percent of the time).

At the extreme end of the disaster-dependency spectrum are about 26,000 truly disaster-prone recipients who received disaster money at least 6 years out of nine; this 7 percent of all recipients took in 13 percent of the disaster aid, about $935 million. Among that group are 8,384 who claimed disaster aid for 7 years out of nine, 1,686 who got disaster payments 8 years out of 9, and 27 recipients who got a disaster check from taxpayers every year for nine straight years.

EWG also found that the more often a subsidy recipient collected disaster aid, the higher their average disaster payments tended to be. The fifty percent of farm operations that received disaster aid just one year out of nine collected just $2,771. But those who got payments for three years collected $4,677 per year, and the 100,092 disaster subsidy recipients who got payments four years out of 9 averaged $5,836 annually. Chronically disaster-prone operations that collected aid checks more than half the time routinely received payments averaging $8,000 or more per year.

Geographically Concentrated. Disaster payments are concentrated in states with persistent drought conditions where crop failures are relatively common. One third of all disaster payments over the nine years analyzed went to farmers in 6 states: Texas, Oklahoma, North Dakota, Kansas, Missouri, and South Dakota.

Payments to farmers chronically dependent on disaster payments are concentrated in even fewer states. More than half the farmers who received disaster aid four or more of the nine years analyzed — our definition of chronically dependent — are from just 5 states: Texas, Oklahoma, North and South Dakota, and Georgia.

Half of the farmers chronically dependent on disaster payments are from five states.

  Recipients Total 1995-2003 Percent receiving disaster payments in 4 or more years out of 9
Texas 42,849 $1,475,831,380 24%
Oklahoma 17,129 $392,045,852 10%
North Dakota 13,710 $577,136,264 8%
South Dakota 10,057 $356,701,383 6%
Georgia 8,743 $308,923,770 5%
Kansas 7,740 $181,551,901 4%
Arkansas 7,370 $141,832,564 4%
Alabama 6,577 $149,782,813 4%
Montana 5,717 $264,549,850 3%
Nebraska 5,574 $152,430,086 3%
Total 175,745 $5,652,493,833  

Source: EWG, compiled from USDA data.

Conclusions and Recommendations

EWG's analysis shows that as taxpayers are asked, year in and year out, to provide disaster aid to farmers, they end up subsidizing many of the same farming operations and farming regions over and over again. For these chronic and disaster-prone recipients, disaster aid from taxpayers has become a routine business revenue.

For decades, Americans have made enormous investments to support family farmers, including a nearly annual stream of disaster aid that has cost tens of billions of dollars. We don't have much to show for it except a continuing demand from a narrow set of farm interests for an unending stream of subsidies that are funneled to fewer and fewer farm operations each year.

The American taxpayer deserves an agricultural investment strategy from our leaders that will make the farm economy more sustainable and rural America more prosperous, not one that spends scarce tax dollars indefinitely to subsidize the government dependency and financial benefit of the few.

Commodity subsidies are highly concentrated, with two-thirds of the payments going to 10 percent of the recipients, and the concentration is increasing. Farm disaster aid also is concentrated among a segment of chronically dependent and 'disaster-prone' recipients who routinely collect aid checks from taxpayers every other year, or even more often.

Recommendation. Congress should not fund agricultural disaster payments with money already dedicated for agricultural conservation programs. If these disasters are truly emergencies, they should be paid for with an emergency appropriation as Congress has done routinely in the past. Congress recognized the broad benefits of conservation programs to farmers across the country when it made the commitment to fund these programs, and they should not go back on this commitment.

Further, Congress should not approve any farm disaster-funding package without directing USDA, and independently, the GAO, to conduct an expedited, thoroughgoing assessment of patterns of dependency among 'disaster-prone' recipients and regions over the past decade. A similar assessment of federal crop insurance has reduced, though not eliminated, well-documented abuses and subsidy dependence in that program.

This review should analyze underlying reasons for disaster aid dependency, including the agronomic suitability of climate and soils for the crops for which disaster aid is routinely claimed. USDA should develop an assistance strategy for such farms and regions to help farmers shift to agricultural enterprises that are sustainable--suited to the agronomic conditions in the region, without the need for regular disaster aid.

Finally, the farm disaster aid review should also examine the need to require crop insurance within disaster-prone regions and among disaster-prone farmers, with appropriate premiums.


Disaster Aid Recipients and Payments, 1995-2003

  Recipients Total 1995-2003 Percent of all recipients
Texas 139,709 $2,057,026,773 11.9%
Kansas 77,917 $510,853,176 6.7%
Missouri 68,416 $288,092,315 5.8%
Oklahoma 63,181 $534,255,288 5.4%
Nebraska 58,438 $497,966,479 5.0%
Kentucky 56,079 $149,021,016 4.8%
Iowa 42,732 $158,617,908 3.7%
Tennessee 42,504 $155,388,697 3.6%
North Dakota 42,169 $795,858,442 3.6%
Minnesota 39,741 $355,369,379 3.4%
South Dakota 39,214 $563,014,631 3.3%
Illinois 36,470 $124,964,250 3.1%
Ohio 31,627 $162,808,247 2.7%
Arkansas 30,339 $274,789,553 2.6%
Alabama 27,813 $236,298,316 2.4%
North Carolina 26,642 $297,784,156 2.3%
Wisconsin 25,173 $119,450,021 2.2%
Georgia 24,995 $468,301,238 2.1%
Montana 23,376 $417,931,932 2.0%
Indiana 22,922 $110,423,104 2.0%
California 22,374 $502,112,987 1.9%
Mississippi 21,597 $243,956,342 1.8%
Colorado 21,325 $284,096,190 1.8%
Louisiana 20,242 $196,880,937 1.7%
Virginia 18,870 $108,127,407 1.6%
Michigan 17,855 $191,332,436 1.5%
Pennsylvania 15,469 $108,478,279 1.3%
New York 13,112 $109,393,465 1.1%
Florida 11,882 $250,224,216 1.0%
New Mexico 10,756 $133,336,623 0.9%
Washington 10,378 $115,170,220 0.9%
Idaho 10,120 $114,677,721 0.9%
South Carolina 9,157 $149,356,738 0.8%
Oregon 7,868 $86,064,451 0.7%
Wyoming 6,763 $101,975,554 0.6%
West Virginia 6,754 $16,724,786 0.6%
Utah 6,297 $70,245,749 0.5%
Arizona 5,336 $63,125,597 0.5%
Maryland 3,599 $33,467,544 0.3%
Vermont 2,582 $21,242,041 0.2%
Maine 1,994 $20,704,557 0.2%
Massachusetts 1,456 $27,369,800 0.1%
New Jersey 1,452 $24,644,361 0.1%
Nevada 1,288 $20,975,196 0.1%
Delaware 689 $7,224,892 0.1%
Connecticut 658 $17,486,852 0.1%
New Hampshire 605 $4,519,491 0.1%
Hawaii 420 $5,436,317 < 0.01%
Alaska 186 $2,849,516 < 0.01%
Rhode Island 158 $1,817,376 < 0.01%
Total 1,160,705 $11,311,232,564  

Source: EWG, compiled from USDA data.


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