The History of Farm Bill Spending

June 29, 2012

The farm bill comes up for renewal every five years, and its specific provisions determine whether major farm programs administered by the U.S. Department of Agriculture (USDA) will continue. Recently, the Senate passed a bill with provisions that will be included in the next farm bill.  The bill must now go through the House, says Veronique de Rugy, a senior research fellow at the Mercatus Center.

Looking to the recent history of farm bills in the United States, the immediate question becomes why they are necessary at all. In the end, recent farm bills have amounted simply to an enormous amount of spending on an area that requires little support.

  • The USDA distributes farm support through major programs, such as commodity payments, crop insurance, marketing support, farm conservation and agricultural research.
  • According to the White House budget, the historical trend of federal spending (adjusted for inflation) on farm programs averaged roughly $28 billion per year for the 1996 farm bill and $27 billion per year for the 2002 farm bill.
  • The five-year cost of farm programs in the 1996 farm bill was $141 billion, while the 2002 farm bill was $125 billion.

The most recent farm bill enacted in 2008, according to the Congressional Research Service (CRS), should have been significantly smaller than its predecessors. However, projections underestimated its true cost and the 2008 farm bill became yet another opportunity for rent-seeking special interests to receive unneeded financial support.

  • When the 2008 farm bill was enacted, the five-year cost (FY2008-2012) of major farm support programs was projected at $83 billion, an average of $16 billion per year.
  • CRS then updated estimates in 2010 to show a higher five-year cost of $87 billion, an average of $17 billion per year.
  • The White House budget, however, shows that spending for farm subsidies during this most recent period is closer to $104 billion, an average of $21 billion per year.

Furthermore, the availability of these funds creates more opportunities for special interest groups and lobbying. In 2010, 10 percent of farms received 74 percent of all subsidies. Moreover, with farm household incomes 25 percent higher than the average U.S. household income, farm subsidies amount to corporate welfare for the relatively well off.

Source: Veronique de Rugy, "The History of Farm Bill Spending," Mercatus Center, June 11, 2012.

For text:

http://mercatus.org/publication/history-farm-bill-spending

 

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