It would be challenging to find another piece of recent federal legislation so blatantly subservient to special interests and wasteful with taxpayers’ money than the massive $867 billion farm bill passed by Congress in December.
Handouts to the agricultural industry have long been a staple of federal policy, but instead of reversing course and ending these anti-competitive practices, lawmakers doubled down.
The law provides funding for dozens of federal farm programs overseen by the U.S. Department of Agriculture (USDA), including crop insurance, agricultural risk coverage, price loss coverage, conservation incentives, marketing loans, disaster aid, and many more.
Farm subsidies are sold to the public as crucial supports to keep struggling family farms afloat and our nation’s food supply stable. But this narrative, which was used to justify the initial expansion of federal farm programs during the Great Depression, bears little resemblance to today’s realities.
In fact, more than 80 percent of all farm subsidies go to the largest 20 percent of producers; only a tiny percentage of total spending benefits small, family-operated farms. Since 2008, some 6,618 entities have collected more than $1 million in farm subsidies, and the top 10 recipients received an average of $18.2 million. In 2015, about half the money (several billion dollars) from the biggest farm programs went to farmers with household incomes over $146,000 — that year, the median household income in the U.S. was $56,516.
These subsidies constitute a massive redistribution of wealth from ordinary taxpayers to wealthy farmers, landowners, and investors. Many of the richest Americans — including 50 billionaires, according to Forbes — collect farm subsidies. Even some city dwellers are finding ways to milk the system; over three years, more than $626 million flowed to recipients in urban areas where no farms exist.
Due to their size and complexity and the lack of adequate oversight, federal farm subsidies are prone to fraud and abuse. A 2013 investigation by the Government Accountability Office found errors in 19 of the 22 cases it reviewed in two states. One of these errors may have led to an improper payment of $40,000. In 2011, the IRS reported that 172,801 deceased farmers had received $1.1 billion over a six-year period.
The USDA estimates that since 2004, “improper payments” of farm subisides have totaled a whopping $3.7 billion, and the agency’s internal watchdog found that in 2017, for the seventh consecutive year, program administrators failed to take adequate steps to curb fraud and abuse. To pick just one example, over the years billions of dollars have been paid through the “prevented planting” program, which is meant to compensate growers when conditions prevent them from planting their crops, to farmers who would not normally have planted the areas included in their USDA claims.
Beyond their redistributive effects and administrative shortcomings, farm subsidies damage our economy. Government intervention and micromanagement in the agricultural industry stifles the market forces that normally dictate supply and demand, investment, and entrepreneurship. As a result, farmers are often incentivized to use their land inefficiently or overproduce crops — simply to qualify for additional federal benefits.
In passing the latest farm bill, Congress missed an opportunity to send farm subsidies to the compost pile where they belong.