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ABOUT KEN

Ken Cook is president of Environmental Working Group, a public interest research and advocacy organization known for its Farm Subsidy Database. The author of dozens of articles, opinion pieces and reports on agricultural, public health and environmental topics, "[Cook's] fingerprints can be found on nearly two decades of U.S. farm law" (Omaha World Herald). Read more about the authors.

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« Don't Just Sit There | << Back to main page | B-O-O H-O-O »

Farm Subsidies: Just Passing Through?

Farmers across the political spectrum who happen to collect subsidies from taxpayers commonly unpack a familiar talking point to blunt criticism of the payments, and we'll hear it again when we roll out our dramatic new database June 12. "We don't keep the money, it's not 'profit'," they'll say. "We just turn right around and pay it out to cover our expenses." Which expenses, they seem to believe, are higher than the urban majority (who "don't know where their food comes from") could possibly comprehend.

I've often wondered why so many farmers seem to think a New Yorker paying $2,300 a month for an efficiency, or a suburbanite buying a four dollar latte for the cup holder of her $40,000 SUV, will register shocked sympathy upon hearing that a combine (whatever that is) costs $180,000--when you couldn't touch a 1 BDR condo for that price on either coast. Someone's out of touch here, and I'm not sure its all of us who supposedly don't know milk doesn't come in a carton. My experience is just the opposite. I've seen many a farmer's eyes widen at the prices on a DC menu (though it must be said they invariably fight you for the check), and many a Beltway denizen drool over small-town real estate prices.

Nonetheless, this particular circling of the subsidy wagons amounts to saying that farm payments don't benefit the people or businesses who actually collect them from the taxpayer. The real beneficiaries, the argument goes, are the businesses farmers buy their inputs from, the banks that lend them money to own and operate their farms, the feedlots and grain conglomerates that buy the "cheap food" (or cotton) the subsidies pay farmers to grow in excess.

Translated to those of us in the paved world, this tortured defense amounts to saying that your salary isn't really paid to you, but to the bank that holds the note on your car or the mortgage on your home, or to the landlord who owns that $2,300-a-month efficiency you're renting. Will he ever fix the dishwasher? You're just the middleman, the pass through. After all, is it really your paycheck if most of it flies out the window to pay the cell phone, restaurant and dry cleaning bills, buy health insurance, keep your kid in college, or cover that vacation to Cancun?

No one knows how farmers who receive subsidies spend them, of course. No government rules stipulate how farmers must use their payments, any more than regulations out of Washington prescribe how seniors must spend their Social Security checks. Farm subsidies can be plowed into the farm or into a vacation home. It's no one's business but theirs.

Given the meager amount most recipients collect--a few hundred bucks a year--subsidies can't possibly make most farmers rich (two-thirds of farmers collect no farm bill subsidies at all). Then again, some recipients are significantly enriched by subsidies, particularly if they are landowners whose investments are both secured and inflated in value by a steady stream of taxpayer support. USDA studies (like this one) routinely show that the biggest recipients have net worths far in excess of most Americans.

...slightly over one percent of farm households received about 25% of total government payments to farm households, and about one-fifth of one percent of farm households received almost 9% of all payments. Moreover, households in the highest payment category (more than $150,000 of government payments) averaged more than $2.1 million dollars of net worth. By these tenancy-adjusted measures of well-being, a disproportionate share of government payments went to well-off farmers in 1999.

Which is to say that wealth and income status officially have almost nothing to do with qualifying for farm subsidies. A person of very considerable means, with an adjusted gross income of up to $2.5 million per year under federal rules, can legally collect farm subsidies that range from trivial amounts to seven figures. Taxpayers are well within their rights to take offense, or at least raise an eyebrow, all along that wasteful continuum. And big farmers (earning 75 percent of that $2.5 million AGI from agriculture) are exempt from even this laughable eligibility "limit".

It's also no doubt the case that some of the very largest recipients of federal farm subsidies, far from being enriched by the taxpayers' money, would not have been able to survive at all, much less expand their operations, without a constant infusion of big government checks.

But what is to be said about a government policy that obligates taxpayers to provide hundreds of thousands of dollars in unencumbered aid every year, for years on end and with no end in sight, just to keep one business and its owners on the brink of insolvency? Isn't that policy just as bad, in its way, as a subsidy that makes the wealthy wealthier? And why do we do so much for farm businesses and by comparison so little for factory workers laid off by foreign competition, or small businesses that struggle year after year?

Let's be clear. Farm subsidies go to, and benefit, the businesses and people who collect them, no matter what bills it helps them pay, no matter how bitterly or resentfully they pay them--with taxpayers' money. Should common sense fail to parse meaning here, it is plain enough in any dictionary you might care to consult:

...a direct pecuniary aid furnished by a government to a private industrial undertaking, a charity organization, or the like. (Random House)

Monetary assistance granted by a government to a person or group in support of an enterprise regarded as being in the public interest. (American Heritage)

...a grant paid by a government to an enterprise that benefits the public. (WordNet)

A grant made by a government to some individual or business in order to maintain an acceptable standard of living or to stimulate economic growth. (American Heritage New Dictionary of Cultural Literacy)

The important policy questions in this farm bill cycle have much less to do with what becomes of subsidy payments than with who receives them, and why. Congress has sloppily decreed through the years that you can collect farm subsidies whether you really need them or just because they're there for the collecting. You'd be stupid not to partake either way.

Which is why our original Farm Subsidy Database, and even more so its forthcoming upgrade, affords views of farm policy that alternate between high purpose and high satire.

Comments

Subsidies are not needed if the general population,landlords,bankers,equipment manufactures,ferterlizer manufactures,and factory laborers wouldn't demand so much for their goods and labors. They are the ones that have created the subsidy problem!

Enjoyed the article!!! The largest subsidy recipient in Georgia "farms" in my county (Sumter/Georgia) and has ten children on Medicaid/Wellcare; yet, they send some of their children to private school, take vacations to Florida and elswhere and live in $400,000 homes. Please continue to help stop this abuse of taxpayer dollars!

In a coincidently timed piece at In These Time, David Moberg offers what could almost be a direct response to Ken's argument above. A short excerpt follows.

Whose Subsidy Is It Anyway?
Farmers take the heat, but Big Ag reaps the farm bill benefits...

“The important thing for policymakers and the public to be clear on is that the people who get checks written for them under the farm bill are generally not the beneficiaries of those programs,” says Timothy Wise, deputy director of the Global Development and Environment Institute at Tufts University. “So the obvious question is: ‘Who benefited?’”

Consider for a moment Big Chicken—not the tacky 56-foot high tourist attraction near Marietta, Ga., but the industry that turns out more than 16 million tons of poultry each year. Once highly diversified, with nearly every farm producing chickens, the industry is now highly concentrated: The top four processors, led by giant Tyson Foods, control more than 56 percent of production.

Tyson and other giants have consolidated their power by purchasing chicken feed for, well, chicken feed. As soybean and corn prices dropped 21 percent and 32 percent, respectively, after the passage of the 1996 farm bill, the chicken industry effectively collected a subsidy of $1.25 billion a year, according to Tufts researchers Elanor Starmer, Aimee Witteman and Wise. The subsidy—worth $2.59 billion to Tyson from 1997 to 2005—represents the savings for the industry compared to paying for the full cost of producing the grain in its feed.

The cheap, subsidized grain also gave big factory farm operations an edge over diversified family farmers.

The full article is here: http://www.inthesetimes.com/article/3190/whose_subsidy_is_it_anyway/

Most farmers don't even own their own combine anyway. A good friend of mine would do custom wheat harvesting beginning in Texas and ending up in Montana because they were good at it and they didn't have much farmland of their own. Most harvesting is done by custom men and they might lease an extra comine for the harvest. If the farmer has the $180,000 machine solely for his own crop, then he's either got a very large farming operation or he's wealthy anyway. The message they conveyed is wrong. The new machines go with the custom harvest for the most part.
A couple of years ago, my dad bought a twenty year old combine for about $4500 to harvest his own wheat. My brother operates and maintains it. Just this past week, my brother has been using vacation time from his job to harvest the wheat for the neighbors with smaller acreages. The custom men with the expensive machines can't spend time on the small fields. My dad said this was the toughest he can remember about how the neighbors with 100 acres or less couldn't find a combine crew to harvest thier fields before the weeds take take over(then the sheep should become the harvesting machine).

There are lots of things you seem to have overlooked in your comments. One is that farmer's and rancher's are also taxpayers. A person buying a $200K condo is a personal preference and does not make them a living. Hopeful the government isn't helping to pay for it.
For one of your next targets lets try the billions we taxpayer's shell out to the illegal aliens in this county.

May I have permission, please, to respond to Mr. Cooks opinions about farm bill?

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