Farm Subsidies Will Cost Taxpayers Some Serious Cheese

Friday, August 26, 2016

You may have thought that the $20 million “cheese bailout” was the biggest news in farm policy this week, but you’d be wrong.

The real headline of the week came when the Congressional Budget Office released its new government spending estimates, which show that farm program spending will increase from $13 billion in 2015 to $14 billion in 2016, and then up to $19 billion in both 2017 and 2018.

Now that’s some serious cheese!

While the CBO's forecast does not go into great detail, these new projections are likely the result of higher-than-expected spending on farm subsidies, which flow to the largest, most successful farm businesses and not small family farms.

This would be in keeping with two alarming trends that EWG has documented recently. First,  the new farm subsidy programs created in the last farm bill are more expensive than the direct payments they replaced. And second, these new subsidies are going to cost 70 percent more than was originally projected when Congress passed the farm bill in 2014.

According to estimates released earlier this year by the U.S. Department of Agriculture, about a  quarter of net farm income this year will come from federal payments. If this happens, it would be the biggest payout since 2006.

The leading reason for these payouts is the fact that our farm subsidy system is backward.

Over 60 percent of farmers do not benefit from any farm subsidy programs, according to the USDA. And yet, according to EWG’s Farm Subsidy Database, the top 1 percent of farm subsidy recipients received 26 percent of subsidy payments between 1995 and 2014.

This means that just under 30,000 farmers received over $46 billion in subsidy payments in that time period. The top 20 percent of subsidy recipients received 91 percent of all subsidy payments, while the bottom 80 percent received just 9 percent of subsidy payments at an average of $7,100.

If past is prologue, proponents of expanding farm subsidies in the next farm bill will leverage the fact that commodity prices have leveled off to historic averages. But Congress would be wise to recognize that an increase in payments would come at an ever-growing expense to most farmers and the environment, and would, of course, cost taxpayers a lot of cheese.

 

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