From Direct Payments to (Non)Farmers to Subsidized Crop Insurance

R Street’s “Some Ag Committee members draw millions in farm subsidies,” June 13, 2016, on farm subsidies, begins:

Who benefits from farm subsidies? R Street long has been critical of our federal farm-support system, a massive boondoggle that disproportionately funnels taxpayer dollars to wealthy agribusinesses rather than family farms struggling to stay afloat. In April, we reported on an Environmental Working Group (EWG) analysis, which revealed that 50 members of the Forbes 400 list of richest Americans received at least $6.3 million in farm subsidies between 1995 and 2014.

Key paragraph for debaters: 

It’s worth noting that these members are no longer receiving subsidies in the form of direct payments, since the 2014 Farm Bill phased out the politically unpalatable direct payments program. In its place, Congress massively expanded federal support for crop insurance premiums. Our federal crop insurance program is now the primary source of government support for farmers.

And, the authors note, though direct payments can be tracked down, subsidized crop insurance is harder to trace:

Unlike the direct payments program, there are no transparency requirements for the crop insurance program’s outlays. That means we’ll never know how much these members receive in federal farm support. Unless transparency requirements are implemented, critical oversight, like EWG’s farm-subsidy database, will become impossible in the future. 

Four years ago, after the 2011 agriculture topic workshops for a homeschool group in Oregon, overheads from one presentation are here on Slideshare. The 2014 Farm Bill changed many programs, but the money keeps flowing.

This January 28, 2016 US News article,”Congress Needs to Cut Ties With the Cotton Lobby: The cotton farm profit should not be the responsibility of American taxpayers,” notes Republicans in Congress, without new legislation, are pushing higher subsidies for cotton growers:

On December 15, 2015, 100 members of the House of Representatives (80 of them Republicans) urged the Administration to increase subsidies for cotton farms above and beyond the amounts that were granted in the 2014 Farm Bill. Congress certainly has the legislative authority to amend the Farm Bill and grant more subsidies to any industry. However, even though Republicans are in the majority in both the House and the Senate, this group asked USDA to expand the cotton farmers’ access to subsidies without any new legislation.

The author, Daniel A. Sumner, is a professor of agriculture at UC Davis and his recent publications are listed here. He has also done research for the American Enterprise Institute (for the 2014 Farm Bill), and is a fellow at the Cato Institute.

U.S. agricultural programs won’t be significantly reformed because the benefits are too concentrated and the costs too diffused. 

Public Choice economics explains the dynamics or agricultural subsidies (as well as hundreds of other state and federal government programs). An introduction to Public Choice there is here. 

This post from the Concise Encyclopedia of Economics reviews: Agricultural Subsidy Programs.