NCPA - National Center for Policy Analysis


July 19, 2007

If U.S. farm subsidies were really about alleviating farmer poverty, then lawmakers could guarantee every full-time farmer an income of 185 percent of the federal level for under $5 billion annually -- one-fifth the current cost of farm subsidies, says Brian Riedl, Grover M. Hermann Fellow at the Heritage Foundation.

Instead, small farmers are largely excluded from farm subsidies:

  • Farm subsidy payments are based on acreage, so by definition, the largest agribusinesses get the largest subsidies.
  • Consequently, commercial farmers -- who report an average income of $200,000 and net worth of nearly $2 million -- now collect the majority of farm subsidies; in other words, most farm subsidy dollars go to millionaires.


  • Farm subsidies have been distributed to Fortune 500 companies such as John Hancock Life Insurance ($2,849,799) and Westvaco ($534,210), as well as celebrity hobby farmers like David Rockefeller ($553,782) and Ted Turner ($206,948).
  • Even Members of Congress who vote on farm legislation have received subsidies, such as Sen. Charles Grassley (R-Iowa, $225,041) and Rep. John Salazar (D-Colo., $161,084).

As a result, small farmers are harmed the most by farm subsidies.  Excluded from most of them, they must endure the lower crop prices, higher farmland costs and industry consolidation that result from subsidies to agribusiness.  A commonsense reform to this problem would replace farm subsidies with tax-free farmer savings accounts and even provide a limited government match:

  • Farmers could pay in during the boom years, and draw out in the down years, with crop insurance covering potential catastrophic losses.
  • This could be targeted to family farmers (and regardless of the crop grown), who would own their accounts.
  • It would save taxpayers billions, promote open trade, and even be more environmentally friendly than current subsidies.

Source: Brian Riedl, "Farm Subsidies for Millionaires,", July 16, 2007.


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