May 25, 2004

May 25, 2004 | News Releases on Federal Budget

Analyst: Farm Subsidies Still A Cash Crop For The Rich and Famous

WASHINGTON, MAY 25, 2004-Farm subsidies have long favored agri-business giants and multi-millionaire "gentleman farmers" over the modest family farmer, but the problem is getting worse, says a new paper from The Heritage Foundation.

Over the last few years, David Rockefeller, whose name is synonymous with wealth in America, raked in 99 times more in payments than the median farmer did, according to Brian Riedl, Heritage's Grover Hermann fellow in federal budgetary affairs and author of the paper. Basketball star Scottie Pippen collected 39 times more; Ted Turner, the 25th richest man in America, harvested 38 times more; and Ken Lay, ousted Enron CEO and multimillionaire, received three times more.

Corporate farms collected even more. In 2002, a record 78 farms received subsidies of more than $1 million, up 13 percent from the previous mark. One company, Riceland Foods of Arkansas, received $110 million that year-more than all the farmers in Nevada, West Virginia, Vermont, Maine, Delaware, New Jersey, Massachusetts, Connecticut, New Hampshire, Alaska, Hawaii and Rhode Island combined.

Moreover, because subsidies are determined by crop-not by income or poverty standards-and because subsidies increase as farmers plant more, the top 10 percent of recipients received nearly two-thirds of all subsidies in 2002, Riedl says. The bottom 80 percent, which includes virtually all of the family farmers the subsidy programs were established to help, claim just 19 percent of all subsidies.

The result, Riedl says, is a "plantation effect" on American agriculture. Subsidies for large farms have tripled since 1991, but those for small farms haven't increased. Large farms use these extra dollars to buy smaller farms, making them even larger and better positioned to take advantage of economies of scale and making them eligible for still more subsidies.

"Not all family farmers who sell to corporate farms do so reluctantly, and consolidation, per se, is not necessarily bad," Riedl says. "The concern is whether the federal government should continue to subsidize these purchases through farm subsidies and whether multimillion-dollar agricultural corporations should continue to receive welfare payments."

Given that average farm households have thrived in recent years-earning 17 percent more than non-farm households in 1999, enjoying an average net worth more than six times the national average and paying costs about a third lower than non-farm households-Riedl says it's time for a new approach. He says the government should phase out its present subsidy program, urge other countries to do the same, and replace subsidies with crop insurance to protect family farmers from short-term risks such as bad weather.

"Lawmakers serious about fiscal restraint should consider farm subsidies one of the most justifiable places to find savings," Riedl says. "These corporate welfare programs enrich agri-business and other non-farmers at the expense of family farmers, the farm economy and taxpayers. We can't afford to pay subsidies to the rich and famous."

Riedl's paper is available at heritage.org. More Heritage research on budget issues can be found online at heritage.org/research/budget/issues2004.cfm.

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