Old MacDonald Had a Farm Subsidy

This may sound strange coming from a social worker but I really hate welfare. I hate the whole concept of welfare whether it’s for people, farms or corporations. It’s not that I’m opposed to giving people money; on the contrary I’m actually fine with that. What irks me to no end is when it actually costs more money or more problems to institute a means tested welfare program rather than to just give back money to people freely without all of the pomp and circumstance. In short, it shouldn’t cost the average taxpayer $20 dollars to give somebody else $1 dollar, that’s a bit of a waste.

Normally when the subject of free money comes up, people are referring to those folks on the welfare lines whom collect food stamps and live in Section 8 housing or even in “da projects”. However, the ugly truth of the matter is that poverty relief actually costs less than subsidizing the “American family farm”.

The whole concept of the “family farm” is a bit of a misnomer. While there are of course many true family farms, the subsidy plan actually only benefits agribusiness and large mass production farms rather than Hoss and Mabel on Mayberry Way. The Heritage Foundation reports that, “farm subsidies are not distributed to the small, struggling family farmers whom lawmakers typically mention when defending these policies. Rather, most farm subsidies are distributed to large farms, agribusinesses, politicians, and celebrity "hobby farmers.” (Heritage.org)

The Heritage Foundation also reports that, “Farming may be the most federally subsidized profession in America. The persistence of farm subsidy programs results from the popular misconception that they stabilize the incomes of poor family farmers who are at the mercy of unpredictable weather and crop prices. Yet a recent U.S. Department of Agriculture report concluded that, "On average, farm households have higher incomes, greater wealth, and lower consumption expenditures than all U.S. households." This statement can be broken down into three parts:

• Higher incomes. In 1999, the average farm household earned $64,437--17 percent more than the $54,842 average for non-farmers. Incomes were even higher among the 136,000 households with annual farm sales over $250,000--and who also receive the largest subsidies. Their 1999 average income of $135,397 was two-and-a-half times the national average. Farmer incomes are not only high, but also quite stable from year to year, despite agricultural market fluctuations.

• Greater wealth. The average farm household had a net worth of $563,563 in 1999--well above the $88,000 national average.

• Lower consumption expenditures. Farm households have fewer costs than other households because (1) the cost of living is lower in rural America; (2) farm households need to purchase less food from outside sources; and (3) mortgage and utility bills are often classified as business expenses. Consequently, the average farm household spent only $25,073 on goods and services in 1999, which is $11,000 less than the average non-farm family.

Because farmers are relatively wealthy, alleviating farm poverty would not be very expensive. Just $4 billion per year would guarantee every full-time farmer in America a minimum income of 185 percent of the federal poverty level ($34,873 for a family of four in 2004). However, farm subsidies are more corporate welfare than poverty relief, so Washington instead spends $12 billion to $30 billion annually subsidizing large farms and agribusinesses that are much wealthier than the taxpayers footing the bill.”

So now that we know we’re being fleeced in order to secure votes from the Farm lobby, why is this important news today? President Bush uncharacteristically has called for a reduction in farm subsidies in the new budget proposal. Here is part of the story from the Washington Post, “No one is talking about eliminating federal subsidies, just reducing them. But in North Dakota, where more than three in four farmers receive payments -- the highest percentage of any state -- the proposals working their way through the hearing rooms on Capitol Hill are big news.

Bush proposed cuts of $5.7 billion from agricultural programs over the next 10 years as part of a deficit reduction package. The House Budget Committee set the figure at $5.3 billion, while its Senate counterpart said $2.8 billion should be trimmed.”

If we’re going to talk about getting people off of welfare and out to work I think we need to be consistent. It’s ridiculous and inherently racist to point fingers at minorities who legitimately need the assistance in most cases and then stay silent in the face of farm subsidies that only benefit the agribusiness class. And I’ll remind those of you who may have forgotten, it isn’t minorities whom eat up the majority of welfare in American, that would be white folks.

There’s also an environmental issue that should compel our representatives in Congress to eliminate these archaic measures. According to an article in the Chesapeake Bay Journal, “Some environmental groups also oppose the income subsidies, as currently designed, for two reasons.

Income subsidies make it financially possible for farmers to grow row crops on lands that are too arid or too wet, and they encourage farmers to convert pasture and rangeland to row crops that require more chemicals and water.

What’s more, income subsidies and conservation payments come from the same pot of money.

So, farmers seeking USDA conservation payment to improve air, water and wildlife habitat are locked in a low intensity struggle with farmers seeking income subsidies.

Conservation payments flow to all farmers (including subsidized farmers) regardless of what they grow.”
Lastly, farm subsidies completely go against our free market principles and generally harm competition from developing nations in places such as Africa. Part of why, “they hate us” has nothing to do with freedom but has everything to do with food. Because Americans farmers don’t have to compete with the world food market, we end up harming nations that are depending on selling their crops in the international marketplace and then cannot compete with an inflated American market. AllAfrica.com has a piece on the cotton trade regarding this topic:

“Pressure to reduce rich-country subsidies for agricultural exports ratcheted upward this month when the World Trade Organization (WTO) issued its final ruling that U.S. current payments to cotton farmers were illegal. The Bush administration's 2006 budget submitted to Congress proposes reduction in these subsidies by setting new upper limits on payments. But the outcome in Congress is uncertain, and African cotton farmers need more than promises of somewhat fairer terms for their exports in the distant future.

This AfricaFocus Bulletin contains excerpts from a press release from Oxfam International on the latest WTO decision, calling for immediate action to eliminate the illegal subsidies as well as compensatory support for African cotton producers. It also contains excerpts from a February 2005 briefing by the Institute for Agriculture and Trade Policy (IATP), on dumping of US agricultural exports at prices below the cost of production.”

We can’t have it both ways. We can’t encourage developing nations to enter the world market and then say the road only runs one way. I’ve said it before and I’ll say it again, the US politicians in both major parties better start understanding that the world is smaller and more interconnected than it ever has been and we need to play nice in the sandbox or somebody (China) is going to be strong enough to kick us off the playground entirely. Ham-fisted isolationism and shortsighted foreign economic policies are a surefire way to lead us down the ugly path of tariffs, sanctions and embargos.

I don’t think a few votes in Iowa and North Dakota are worth all that. Let’s think and act globally and begin to dismantle the farm subsidy system.