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Farm Subsidies for the Rich: Corporate Welfare

by July 13, 2007 blog

The Farm Bill provides subsidies. These subsidy programs tax all of us, working Americans, to award millions to millionaires and provide profitable corporate farms with money that has been used to buy out family farms.

For decades, American taxpayers have provided tens of billions of dollars in federal farm subsidies to some of the largest and wealthiest farm businesses in the nation. But thousands of people who benefited from the subsidy flow were shielded from public view behind layers of partnerships, joint ventures, limited liability corporations, cooperatives, and other business structures that obscured their personal subsidy claims.

Eligibility for farm subsidies is determined not by income or poverty standards but by the crop that is grown.

Growers of corn, wheat, cotton, soybeans, and rice receive more than 90 percent of all farm subsidies, while growers of most of the 400 other domestic crops are completely shut out of farm subsidy programs. While the farm bill is a big bonanza for large producers of favored crops such as corn, soybeans, and cotton, small family farms are shortchanged. It is no exaggeration to say the new farm bill gives away the farm.

Further skewing these awards, the amounts of subsidies increase as a farmer plants more crops.

Thus, large farms and agribusinesses–which not only have the most acres of land, but also, because of their economies of scale, happen to be the nation’s most profitable farms–receive the largest subsidies. Meanwhile, family farmers with few acres receive little or nothing in subsidies. In other words, far from serving as a safety net for poor farmers, farm subsidies comprise America’s largest corporate welfare program.

“While two-thirds of U.S. farmers receive no farm subsidy payments, American taxpayers have been writing farm subsidy checks to wealthy absentee land owners, state prison systems, universities, public corporations, and very large, well-heeled farm business operations without the government so much as asking the beneficiaries if they need our money,” says Ken Cook, president of the¬†Environmental Working Group.

“Even if you live smack in the middle of a big city, type in a ZIP code and you’ll find farm subsidy recipients. Surely we can come up with a smarter investment portfolio for agriculture and rural America than the list of 1.5 million subsidy beneficiaries we are publishing today,” Cook said. “America’s farm subsidy system is broken. It’s time for change.”

Most small farmers do not receive subsidies or payments.

Most farmers and ranchers do not benefit from federal farm programs, as they are written now. Only 30% of farmers and ranchers qualify for subsidies tied to commodities such as rice, corn, wheat and soybeans.

Of this group, 10% (of the 30%) receive nearly 70% of all subsidy payments. Fruit and vegetable growers and livestock producers do not receive any subsidies. 75% percent of farmers and ranchers who want to participate in conservation programs are turned away due to lack of funding.

In the U.S., a comparison between the 1930s and today tells a similar grim tale. Then, 25 percent of the population lived on the nation’s 6 million farms; today, 2 million farms are home to 2 percent of the population. Small family farms have been overwhelmingly replaced by large commercial farms, with 8 percent of farms accounting for 72 percent of sales.

Subsidies to the rich have had everything to do with this sea change.

However, cutting subsidies is not the answer.

What we need is to stop the corporate welfare and look out for the family farmer. Subsidy payments to corporate farmers have accelerated the loss of family farms in the last decade.

Unfortunately, cutting out subsidies would have the same effect. Medium to small farms that rely on subsidies would probably go bankrupt or be bought out by larger farms and the families forced into tenancy or unemployment.

Corporate farms would be undaunted. With a cut in subsidies, the larger or corporate farms will simply buy greater shares in the transnational food chain that’s not integrated into to it already. The corporate farms are in a better position to ride out the ups and downs of the market. In turn, all farmer regions will be effected as farms are consolidated, fewer people have a means of making a living, and the overall ripple effect of that makes it felt in the local and regional economies of the nation.

We need to rethink who gets subsidies.

Does anyone in Congress care about the small farmer anymore? Why should they?

Corporate control of agriculture extends far beyond ownership of the land, food production and livestock on America’s farms.

In the quest to eliminate competition and increase their ability to dictate farm prices, corporations in many farm sectors have been buying railroads, shipping lines, packing facilities, and even supermarkets at staggering rates. The corporations that own farms are also entering into contracts with food retailers that serve to block smaller producers from access to the mainstream retail market. Controlling the market at all levels, a strategy called “vertical integration,” gives large corporations the ability to control food production, quality, and prices from the farm all the way to your dinner table.

Why should we care about the demise of small family farms? Why should we try to protect them? Small family farms contribute to the livelihood of towns and local economies, rather than to the world market.

There are many additional factors that make small farms the optimal sustainable agriculture model. Small farms are multi-functional, which means that they not only produce quality food, but that they also contribute to a community’s overall economic and social development.

As locally-based businesses, they generate wealth in rural areas that leads to better housing, health services, education, thriving local businesses, and the overall infrastructure and economic development of rural areas.

This support of the rural economy dissolves when a small farm is replaced with a large farm. Research shows that large farms cause economic problems for small communities, including decreasing the number of quality jobs in a community, diverting farm income from the community, and limiting the potential for diversified local economic growth.

One recent study on the impact of small versus large farms on local economies found that small producers create 10 percent more permanent jobs, a 20 percent larger increase in retail sales, and a 37 percent larger increase in local per capita income.

According to current law, the subsidies are given based on farm size – the larger your farm, the more money you receive. As a result, rural communities and small, sustainable farms have been stripped of their economic lifelines.

Clearly, our food must not be left to the agribusiness and corporate farms. Why? Since these huge corporations are now globalized, we will continue, as citizens, to have less and less confidence in the healthiness of our food. These multinational corporations can buy tainted products from China or overuse pesticides and hormones in Mexico and provide our local grocery stores with inferior products – without any competition from domestically grown, more highly inspected and more healthful food products.

Saving the small farmer is not about nostalgia.

Our food chain is at risk.

It depends on whether this Congress recognizes that farming is too important to leave to the whims of the market and the power of agribusiness and the control of globalization.