NCPA - National Center for Policy Analysis


August 13, 2004

Farm subsidies are being granted to farmers who don't need them -- due to vague laws and poorly trained federal employees, according to a report by the General Accounting Office

The GAO's report revealed:

  • Some 30 percent of the approximately 1,000 applications reviewed for subsidies each year are going to those who are technically ineligible.
  • Subsidies cost taxpayers $114 billion between 1995 and 2002, and President Bush increased subsidies to $190 billion over the next 10 years.
  • Environmental conservation subsidies -- which pay farmers not to cultivate land -- cost taxpayers $14 billion and result in higher food prices.

Hence, the lack of oversight is wasting taxpayer money.

Two myths lie behind farm subsidies: first, they supposedly benefit consumers by lowering food prices, but in reality, consumers pay for the subsidies in higher taxes. Second, farm subsidies allegedly make American food exports cheaper for foreigners to buy, but they merely transfer wealth to foreign consumers and often violate global trade rules.

A 2004 poll revealed that 77 percent of Americans favor giving subsidies to farmers, ostensibly out of concern for the struggling family farm, but a watchdog group reveals that 71 percent of subsidies go to the top 10 percent of subsidy recipients, which are typically large farms.

Politicians are reluctant to end farm subsidies; according to the Center for Responsive Politics, rich farm corporations gave $11.5 million in campaign donations during the last election.

Source: Nicolas Heidorn, "The Real Farm Subsidy Scandal," The Independent Institute, August 9, 2004; and United States General Accounting Office, "Farm Program Payments," GAO-04-407, April 2004.

For GAO report


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