NCPA - National Center for Policy Analysis

Agricultural Policy In Tatters

October 21, 1998

Experts say the 1996 "Freedom to Farm Act" -- mistakenly touted as ending farm subsidies -- is in tatters and Congress is once again throwing subsidies at farmers. Any lingering illusion that U.S. agricultural policy has been reformed in recent years can be dismissed.

Analysts at the U.S. Department of Agriculture have decided that Freedom to Farm may hurt many farmers.

  • Most of the act's benefits go to landowners -- often pension or insurance companies -- rather than those who till the soil.
  • Landowners have responded to their new subsidies by raising the rent farmers pay -- boosting the cost of crop production and undermining American competitiveness in world markets.
  • The subsidies increase the value of farmland, making it more difficult for farmers to purchase their farms.
  • Moreover, those farmers who do receive subsidies got more than three times as much in cash handouts during 1996 and 1997 as they would have received under the previous five-year farm bill -- with wheat farmers getting 50 times more in subsidies in 1996, according to the Des Moines Register newspaper.

With farm income retreating somewhat this year, Congress has been coming forth with a variety of bailouts. In July, it voted for $500 million in "disaster payments" to farmers, and for early payment -- just before the November election -- of $5 billion in handouts originally due next year.

Then last week, House Republicans and President Clinton agreed to another $6 billion in payments. Experts say they wouldn't be surprised to see further subsidies enacted next year.

Source: James Bovard, "Farmers Harvest Bumper Crop in Beltway," Wall Street Journal, October 21, 1998.

 

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