NCPA - National Center for Policy Analysis

Policies that Fail Farmers and Eco-Entrepreneurs

January 17, 2003

In "Farming for the Future: Agriculture's Next Generation," author J. Bishop Grewell describes how a new generation of ecological entrepreneurs is correcting the shortcomings of the past. Unfortunately, he says, there are policies such as the estate tax and agricultural subsidies which are hindering effective land use and innovation.

Grewell notes that estate taxes are particularly hard on farmers because:

  • They are 15 times more likely to be subject to these taxes than other Americans.
  • Oftentimes, in order to pay the taxes, they must sell items essential to the agricultural operation's survival (tractors, balers, corrals, barns and land.)

Environmentalists also worry about this division of farmland, because America's farmers, perhaps inadvertently, are also environmental managers.

  • More than half of the land in the United States is used for farming and has a substantial impact on wildlife habitats, water quality and viewsheds.
  • About 78 percent of endangered species in the United States rely on private land for some or all of their habitat.

On the subject of agricultural subsides, Grewell says they aggravate the impact farming has on the environment because they encourage cultivation of unneeded marginal land. Additionally, subsidies cause the overuse of scarce environmental resources and increase the release of chemicals into the natural ecosystem. Subsidies also lead to increased use of chemical inputs.

  • In one study of six farming states, an observer found that eliminating subsidies would reduce fertilizer use by 29 percent.
  • In the North Carolina coastal plain, researchers estimated that elimination of subsidies could reduce water pollution from nitrogen leaching out of fertilizer by 46 percent.

Source: J. Bishop Grewell, "Farming for the Future: Agriculture's Next Generation," PERC Policy Series, Issue Number PS-26, October 2002.

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