April 9, 2002

April 9, 2002 | News Releases on Federal Budget

Study: Bulk of AG Aid Would Go To Conglomerates, Not Family Farms

WASHINGTON, Apr. 9, 2002-The average American household will pay nearly $4,400 in taxes and government-inflated food prices over the next decade to subsidize big agricultural business-not struggling farmers-under two farm-aid proposals being considered by Congress, a new Heritage Foundation paper says.

The two separate bills, the House's Farm Security Act and the Senate's Agriculture Conservation and Rural Enhancement Act, would increase farm subsidies to $191 billion in taxpayer money over the next 10 years, according to Brian Riedl, Heritage's Hermann fellow in federal budgetary affairs.

But instead of helping needy farmers, most of this aid goes to large farms that grow the most crops, Riedl says. The legislation would allocate two-thirds of all farm subsidies to just 10 percent of farms, most of which earn more than $250,000 annually. Meanwhile, Reidl notes, 60 percent of the nation's farmers, regardless of need, are left out of the farm subsidy system altogether.

Riedl says the bills, now being combined into a compromise bill before being sent to President Bush, are "a classic example of special-interest politics overriding taxpayer interest." Examples include:

  • Peanuts. Since 1999, the Western Peanut Growers Association and the National Peanut Growers Group have donated $250,000 to federal candidates. Both the House and the Senate voted to include $3.5 billion in peanut subsidies over the next 10 years. 
  • Sugar. Also since 1999, the sugar industry has given federal politicians $4.3 million-nearly all of which comes from farming groups that support policies that artificially raise U.S. sugar prices to three times the world price
  • Milk. Over the same period, federal candidates have received $3.3 million from the dairy industry, which continues to support a Depression-era price system based on the distance milk travels from Eau Claire, Wis. Each year, this "milk tax" costs customers about $2.7 million, Riedl says.

But these amounts, he says, are dwarfed by the nearly $70 million donated by organizations representing farmers who raise the five largest subsidized crops: wheat, corn, rice, cotton and soybeans. Several of these organizations were represented on the Commission on 21st Century Production Agriculture, whose recommendations the House farm bill adopted almost word for word.

"Those who benefit from farm subsidies may be few in number, but they've sunk a lot of money into influencing the debate on farm policy because its outcome will result in massive gains or losses for them," Riedl says. "People should keep this in mind every time they go to the supermarket and every time they pay their taxes."

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