Green Acre$

How Taxpayers are Subsidizing the Demise of the Family Farm

Saturday, April 1, 2000

Green Acre$

How Taxpayers are Subsidizing the Demise of the Family Farm

View and Download the report here: Green Acres

Taxpayers may not realize it, but the money they send to Washington is hastening the demise of family farms through the agricultural subsidy pro- grams that purport to save them.

A computer investigation by the Environmental Working Group (EWG) concludes that the flow of farm subsidies has never been more biased in favor of large operations than it has been in recent years under the controversial “Freedom to Farm” policies introduced in 1996.

The study comes at a time of severe economic distress for many family farmers. A grow- ing number of farmers and many farm state leaders are calling for a moratorium to cool down the merger mania in agriculture that is concentrating ownership and control at every level in the food and fiber system, including farms and the companies that supply their inputs and buy their products.

EWG analyzed more than 30 million USDA subsidy payment records for the years 1996 through 1998 and found:

  • Taxpayers provided $22.9 billion in subsidies during the first three years of the “Freedom to Farm” law, but 10 percent of the recipients (144,000 participants) collected 61 percent of the money.
  • Nationwide, recipients among the top 10 percent averaged $32,000 in payments per year, 27 times more support than the $1,200 the typical participant received annually. Recipients in the top 1 percent of subsidy payments collected $249,000 over the three years—about $83,000 per year.
  • Some states showed an especially high concentration of payments to the largest recipients. In Mississippi, the state where the subsidy inequities were greatest, 10 percent of the participants took in 83 percent of all payments to the state—an average of $217,000 per recipient over three years. Payments were also highly concentrated in Alabama, Tennessee, and South Carolina.
  • Arizona’s biggest recipients (the top 10 percent) took in more than $521,000 apiece over three years.

The EWG investigation did not include payments made to farmers in 1999, when Congress approved an across-the-board doubling of subsidies for all recipients and loosened payment limits on large farms, allowing them to collect even more federal money. The study argues that the 1999 bail-out package was even more inequitable than Freedom to Farm, and heavily favored large operations.

Returning to the old farm subsidy programs is not the answer either. EWG says that earlier programs also concentrated program payments in the hands of the largest farms. The Freedom to Farm law simply magnified the problem.

EWG urged a series of reforms

  • Farm subsidy recipients should be required to document their financial need before being eligible for farm subsidy payments, and aid should be targeted to working farmers. Assistance for conservation and environmental improvements should be increased.
  • Payment limits should be sharply reduced to no more than $25,000 per recipient total, and payments should be eliminated to recipients who benefit from “paper farms” devised to funnel multiple payments to large landowners.
  • Payments to investors and absentee owners not fully engaged in farming should be phased out. Those funds should be devoted to conservation investments on the land.
  • Subsidies should be reapportioned to reflect rural needs, particularly in New England states, California, Florida and other states fighting to preserve green space and promote farming systems that protect the environment.
  • Support should be authorized to help farmers make the transition to organic farming, and environmental stewardship payments should be provided to those who have already made the transition.
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