NCPA - National Center for Policy Analysis


June 14, 2004

America's farm subsidies, originally intended as a safety net for small farms, have been transformed into America's largest corporate welfare program, says a report by the Brian Riedl of the Heritage Foundation, a Washington-based think-thank.

According to a recent U.S. Department of Agriculture report, farm households -- the recipients of 2002's $180 billion farm bill -- have higher incomes, greater wealth and lower consumption expenditures than all U.S. households. Worse still, eligibility for farm subsidies is determined not by income or poverty standards, but by the type and size of the crop.

Other findings:

  • Growers of corn, wheat, cotton, soybeans and rice receive more than 90 percent of all farm subsidies.
  • The top 10 percent of recipients receive 65 percent of farm subsidy benefits, while the bottom 80 percent receive 19 percent.
  • Since 1991, subsidies for large farms has nearly tripled while subsidies for small farms has not changed -- much of this new revenue stream has been used to buy out smaller competitors and consolidate the industry.
  • In 2002, 12 Fortune 500 companies received farm subsidies that were, on average, 70 times larger than those granted to the median farmer.

Riedl advises that for the benefit of consumers and of small farms, all subsidies should be phased out and replaced with a crop insurance program. This way, farmers will be protected from short-term risks of farming such as bad weather -- the prime motivation for government aid in the first place.

Source: Brian M. Riedl, "Another Year at the Federal Trough: Farm Subsidies for the Rich, Famous, and Elected Jumped Again in 2002," Heritage Foundation, Backgrounder No. 1763, May 24, 2004.


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