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Factsheet #114 on Agriculture

September 14, 2012

Farm Bill: Ripe for Reform

Costly Depression-Era Subsidies as Corporate Welfare

  • With budget deficits soaring, Congress should reduce unnecessary spending in the farm bill. The Congressional Budget Office estimates that direct spending under the Senate’s proposed Agriculture Reform, Food, and Jobs Act (S. 3240) totals $969 billion for the 2013–2022 period.
  • Farm subsidies constitute the nation’s largest corporate welfare program, the purpose of which is to shift the costs of agricultural risk to taxpayers.
  • Those subsidies disproportionately benefit large and profitable businesses. Nearly 80 percent of large corporate agribusinesses with incomes of $250,000 to $999,999 receive subsidies, compared to 24 percent of farms with incomes of $10,000 to $249,999.
  • About 61 percent of farms function without taxpayer subsidies.

farm bill spending

Tariffs, Mandates, and Quotas Increase Food Prices

  • Americans pay two to four times higher prices for sugar than consumers in other countries as a result of government “protections” for the sugar industry, including quotas on imports.
  • Consumers pay hundreds of millions of dollars more for milk, butter, cheese, and a variety of other dairy products because of government-imposed artificial limits on milk production.
  • Biofuel subsidies to promote “renewable” fuels displace production of soybeans and other crops, thereby propelling food prices upwards.
  • The increases in food prices fall most heavily on the poor.

A Path for Reform

  • Meaningful reform requires lawmakers to focus solely on agriculture instead of omnibus bills that fund a host of other programs. All extraneous programs that clutter the farm bill should be handed off to relevant congressional committees.
  • Food stamps should be reformed along the lines of other modern welfare programs (such as Temporary Assistance for Needy Families) within the Department of Health and Human Services—not continued as an ineffective farmers’ aid program.
  • Congress should begin the process of fully eliminating farm subsidies by restricting eligibility and imposing income limits and subsidy caps.
  • The repeal of flawed farm policy such as direct payments should not be offset by the creation of new “safety net” programs, such as the proposed “shallow loss” program.
  • Farmers already have a variety of options to mitigate agriculture risks such as natural disasters, including diversifying product lines, buying insurance at market rates, leveraging assets, and maintaining cash reserves.

For more information, please visit http://www.heritage.org/issues/agriculture.

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