Can We Fight Big Ag Cronyism?
It seems that when most Americans think about farmers, they conjure up an image of a straw hat-clad gentleman in overalls, milking a cow or riding a tractor. He’s probably scraping by from season to season and constantly consulting an almanac.
But as Vincent H. Smith wrote on Monday for the Washington Examiner, this vision is rather skewed. It misrepresents a huge portion of farmers, who are far from “scraping by.” Indeed, many modern farmers are wealthy corporation owners—and they owe much of this wealth and security to taxpayer dollars:
For several decades, as a group, farmers have enjoyed substantially higher incomes and substantially more wealth than the average American. The largest producers, the top 15 percent of all farmers, receive about 85 percent of all farm subsidy payments. They are much richer than other farmers and enjoy incomes in the hundreds of thousands of dollars. Over the past five years, farmers have enjoyed record, or near-record, crop prices and profits. Not surprisingly, farms fail financially at a fraction of the rate of businesses in every other major sector of the economy.
Yet the 2014 farm bill contains a range of new farm subsidy programs that are likely to cost billions of dollars more than the ones they have replaced. The new programs will continue to send most of the subsidies to the largest and most successful farms that are least in need of government help.
Smith’s piece excellently pinpoints the problems with our current subsidy and crop insurance programs. Why do we continue to pay billions (“In 2015 alone, [farmers] will receive about $18 billion in the form of direct taxpayer-funded subsidies”) to successful, wealthy farmers? As I have discussed with Lori Sanders of the R Street Institute in the past, small farmers’ interests are not protected in Washington: the Farm Bureau has developed a reputation for supporting agribusiness, to the detriment of smaller family farmers. “In addition to the American Farm Bureau Federation’s twenty-two lobbyists, no fewer than 20 of the state Farm Bureaus, including Missouri, have registered lobbyists in Washington, leading the field of agribusiness lobbyists,” Ian T. Shearn wrote for The Nation in 2012. “Over the past decade, the nation’s ten largest agribusiness interests gave $35 million to Congressional candidates—led by the Farm Bureau, which gave $16 million, or 45 percent of the total.”
Smith does a good job noting that the American citizenry ultimately pays the price for these large farm subsidies: Though the odds of getting a payout from crop insurance are “massively stacked” in favor of the farmer, “agricultural insurance companies … are not really losing any money because almost all crop insurance program losses are underwritten by taxpayers.”
What Smith doesn’t describe is the toll that this unfair system takes on other farmers who aren’t within that top 15 percent. As Rep. John Duncan (R-Tenn) told Taxpayers For Common Sense when discussing his Harvest Price Subsidy Prohibition Act, “Big agro businesses and insurance corporations have a sweet deal with our crop insurance. … The largest corporate farms collect the lion’s share of the money, creating an unfair playing field for family farmers. Ninety-nine percent of the people in my district do not get subsidies from the federal government to run their businesses.” Such a system sets up large farms to keep getting larger, while putting a permanent burden on smaller, non-industrial enterprises.
Smith presents some interesting ideas for emergency aid that would assist farmers in the event of a real disaster, but he believes it “almost surely cost no more than between $4 billion and $6 billion a year.” This would “force farms to manage their everyday normal production and price risks for themselves; the risks they currently hand off to the tax payer.”
It is past time for Farm Bill reforms to happen. But the question is now, as always, whether the politicians in Washington will listen—or whether they will continue to benefit the Big Ag lobbyists and cronyist system currently in place.