NCPA - National Center for Policy Analysis

The Case for Eliminating Farm Subsidies

May 7, 2013

With the federal government struggling to remain solvent after accumulating more than $5 trillion in deficits over the last four years, it would seem that cutting waste would be a high priority. While more than $7 trillion in budget deficits are projected over the next 10 years, the sequester's small 2.3 percent budget cut prompted cries about the poor who could be affected. Instead of outrage about people who aren't even affected by the sequester cuts, Congress should address another large welfare program, agricultural subsidies, says Doug Bandow, a senior fellow at the Cato Institute.

  • Unlike any other profession in the United States, farmers have their own welfare program and Cabinet department.
  • The profession of farming has been romanticized by the iconic image of the rugged individualist on the frontier building a life from the raw resources of Mother Nature.
  • While farming is tough, subject to unpredictable weather and fluctuating prices, many Americans work just as hard as farmers without the benefit of receiving tax dollars to support their livelihood.

Most agricultural subsidies do not go to trailblazing frontiers-people with small farms, the number of which has dropped 70 percent since agricultural subsidies began, but to large corporations who control a majority of modern-day farming.

  • More than 66 percent of U.S. farm production is not subsidized and those farmers make a healthy living.
  • For those farmers and communities receiving subsidies, Uncle Sam intervenes in the free market, artificially keeping prices high, driving prices down, generating massive surpluses and creating terrible shortages.
  • The agricultural subsidy system is so strange that it pays some farmers not to produce crops while it pays others to plant more crops, which creates more product. This, in turn, lowers the price and creates calls for more subsidies to compensate for the lower price.

In 2009, the average net worth of a farmer was nearly $1 million, twice the national average, and average household income for farms was more than $84,000 in 2010.

  • The agricultural subsidies will continue in 2013 by the billions despite the Agriculture Department forecasting record profits and land prices skyrocketing in the Midwest.
  • Eliminating the subsidies would force farmers to quit living comfortably on government funds and instead enter free market competition, which would drive innovation and productivity.

Source: Doug Bandow, "Why Is There a Dole for Farmers?" Foundation for Economic Education, April 26, 2013.


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