NCPA - National Center for Policy Analysis

Effects On Pollution

September 8, 1995

The U.S. Department of Agriculture may actually be promoting pollution through its farm subsidy programs.

Here's how it works:

  • Deficiency payments' reimburse farmers for the difference between the market price and the guaranteed price (always higher) per bushel of a subsidized crop.
  • Farmers have an economic incentive to produce more in order to increase their subsidies.
  • To counter the effects of its own interference, the government requires farmers who participate in the subsidy program to set aside acreage not to be cultivated.
  • The USDA pays rent to farmers who set aside acreage (currently some 36.4 million acres of land).
  • Economically encouraged to maximize yields on fewer acres, farmers increase the use of fertilizers and pesticides which run off the lands and eventually find their way into rivers.

The farm programs cost taxpayers $10 billion a year. Farmers dump 40 billion pounds of fertilizer and 500 million pounds of pesticides on fields every year. Then the government spends $1.4 billion a year to control pesticide pollution and $600 million to control agricultural runoff.

It is estimated that eliminating farm subsidies could result in a 35% reduction in chemical usage and a 29% reduction in fertilizer use per acre.

Source: Jonathan Tolman (Competitive Enterprise Institute), "Poisonous Runoff From Farm Subsidies," Wall Street Journal, September 8, 1995.


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