Move farms off the dole

Subsidies are going to large, wealthy farms and distorting global markets. Congress can change that.

from the April 16, 2007 edition

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Every five years, Congress must reconsider billions of dollars in farm subsidies. This is one of those years. Perhaps this time, though, it will realize that what began as a New Deal program has since become an old deal that needs an overhaul.

Originally, federal payments were meant to protect millions of small, poor farms from sudden economic ruin. Today, they go disproportionately to large farms and wealthy farmers. Just five crops (corn, cotton, rice, soybeans, and wheat) receive 93 percent of payments for commodities, which have averaged about $20 billion a year.

The subsidies have encouraged farm consolidation. That has its benefits (especially technological ones) – when determined by market forces. This artificial "gigantification," though, has encouraged dependency, pushed out small farmers, and raised land prices such that new farmers are finding it hard to get started.

The subsidies also distort global agricultural markets, putting the US at odds with its trading partners and hurting poor farmers abroad.

Certain farm interests in a few states have traditionally held great sway over key lawmakers in Congress, blocking attempts at reform. But several forces are now converging that could change that.

For starters, farm wealth has increased substantially since the 2002 farm bill was being debated. In the years preceding that bill, US net farm income (minus government payments) averaged just over $30 billion. Last year, it was twice as high.

The income picture looks good for the near term, too. Climate change and energy security concerns have sparked a demand for biofuels (helped by government support for ethanol). As a result, corn prices are as high as an elephant's eye, and profitability in corn and other commodities has surged.

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