March 6, 2002

March 6, 2002 | News Releases on Federal Budget

Analyst: Farm Policy Now America's Biggest Corporate Welfare Program

WASHINGTON, Mar. 06, 2002-If Congress truly designed farm subsidy programs to help struggling family farmers make ends meet, they would cost $40 billion over 10 years instead of $171 billion, and they wouldn't be biased in favor of high-income farms, says a new paper from The Heritage Foundation.

"The problem is that the larger farming concerns receive the highest subsidies, which merely gives them more money to buy up smaller farms," says Brian Riedl, Heritage's Hermann fellow for federal budgetary affairs. "It's called the 'plantation effect,' and it's turning independent farmers into share croppers. The farm subsidy system is supposed to save family farms. Instead, it's destroying them."

And the two bills now headed for a conference committee-the House-passed Farm Security Act of 2001 and the Senate's Agriculture Conservation and Rural Enhancement Act-promise to make things worse, Riedl says.

The bills' defenders call them, in the words of Sen. Tom Harkin, D-Iowa, chairman of the Agriculture, Nutrition and Forestry Committee, a "safety net" for poor family farmers. Yet Washington bestows two-thirds of its subsidy dollars on farms whose income falls in the top 10 percent, Riedl says, and completely shuts out 60 percent of farmers from its subsidy programs. The government also pays based on the amount and type of crops grown rather than on need.

If it did pay on need, taxpayers would save billions, Riedl says. According to the Agriculture Department, a real "safety net" farm policy-one that ensured the income of every full-time farmer in America was at 185 percent of the federal poverty line ($32,652 for a family of four)-would have cost just $4 billion in 1997 and only slightly more now. Yet, farm subsidies reached nearly $30 billion per year in 2000, and even now, Congress proposes to raise the limits on subsidies for wealthy recipients such as David Rockefeller and Ted Turner and corporations such as Westvaco, Chevron and John Hancock Mutual Life Insurance Co.

In addition, Congress has left loopholes in the law that large farms use to pad their subsidies, Riedl says. For example, subsidy limits apply to people, rather than farms. This means that large farms and agribusinesses can simply sign up each of their employees for a subsidy. Farmers in some cases can sign up their spouses and children to maximize the total subsidy to a given farm.

Others divide one farm into several separate ones and have workers collect a separate subsidy for each farm. Tyler Farms in Arkansas collected $23.8 million between 1996 and 2000 (the largest amount granted to any farm in America) by dividing itself into 66 legally separate "corporations" to maximize its farm subsidies.

"At a time when the war on terrorism is costing about $70 billion per year, Congress should be looking even harder than usual for ways to reduce wasteful spending," Riedl says. "If the farm subsidy program doesn't qualify, what does?"

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