NCPA - National Center for Policy Analysis


December 22, 2006

The very policies touted by Congress as a way to save small family farms are instead helping to accelerate their demise, economists, analysts and farmers say.  That's because owners of large farms receive the largest share of government subsidies.  They often use the money to acquire more land, pushing aside small and medium-size farms as well as young farmers starting out.

  • Large family farms, defined as those with revenue of more than $250,000, account for nearly 60 percent of all agricultural production but just 7 percent of all farms.
  • They receive more than 54 percent of government subsidies and their share of federal payments is growing -- more than doubling over the past decade for the biggest farms.

In a late-October speech in Indianapolis, Agriculture Secretary Mike Johanns said that, in the face of higher energy prices and natural disasters, "our farmers' resiliency is evident": Agricultural exports are at a record $68 billion; farm equity has swelled to $1.6 trillion, another record; and farmers' debt-to-assets ratio is at a 45-year low.

"Today, producers grow more crops and handle more livestock more efficiently than at any time in the history of mankind," Johanns said.

  • Nevertheless, just last year the government paid out about $15 billion in income support or price guarantees, which increasingly are going to the largest farms -- those with annual sales of $500,000 or more.
  • Between 1989 and 2003, the share of federal payments for those farms jumped from 13 percent to 32 percent while the share going to small and medium-size farms -- those with $250,000 or less in sales -- dropped from 63 percent to 43 percent.
  • In 2003, the owners of the biggest family farms reported an average household income of $214,200, more than three times that of U.S. households on average. "Farm households are not, in general, poor," government researchers concluded.

Source: Gilbert M. Gaul, Sarah Cohen and Dan Morgan, "Federal Subsidies Turn Farms Into Big Business," Washington Post, December 21, 2006.

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