Overhauling the Farm Bill: The Real Beneficiaries of Subsidies

It's one thing to support a family farmer. It's quite another to subsidize the expansion of a mega-farm that puts family farmers out of business.

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Editor's Note: The Farm Bill is the Olympics of U.S. food and agriculture policy. Every five years or so this important legislation comes up for renewal and the games begin. The federal government awards medals in the form of billion-dollar budgets that will determine what foods we eat and how we grow them. The current Farm Bill is set to expire on September 30, 2012, and the debate over who will dominate the food system is well underway. Farm Bill 101 is a three-part series adapted from the recent update of Food Fight: The Citizen's Guide to the Next Food and Farm Bill and is designed to unravel what is at stake in this vital legislation.

The news media often cite this statistic related to the Farm Bill: the "richest 10 percent" of farm subsidy recipients take in almost three-quarters of payments. While the Farm Bill subsidy system certainly suffers from rampant abuse, such numbers must be unpacked to get a more accurate assessment of the financial state of the American farm -- and to figure out the ultimate beneficiaries of farm subsidies.

To start: What's a farm and who is a farmer? The United States Department of Agriculture (USDA) definition is quite broad: "any place from which $1,000 or more of agricultural products were produced or sold, or normally would have been sold, during the census year." When the USDA calculates average farm income, it also includes "rural residence farms" -- households that may own a cow or a few sheep, but do not list their occupation as "farmer." About 31 percent of farms are producing so little that they don't even clear $1,000 a year.

Why does this matter? Well, these mini- and residential farms don't generally get subsidies, and their households rely primarily on off-farm income -- and yet they represent two-thirds of the 2.2 million "farms" surveyed by USDA. The paychecks these people get from other jobs are also taken into account when USDA tallies "average farm income." This makes it appear as if: (a) the majority of American farmers do not receive subsidies; and (b) farm households have higher than average income.

Even as commodity prices reached record highs in 2007, family farmers struggled. While corn prices increased 87 percent between 2003 and 2007, fertilizer costs jumped 67 percent.

Just a fraction -- around 15 percent -- of all farms generate most of the nation's agricultural output, primarily because they specialize in commodity crops. Family farms are a dying breed. Although the average American farm measures about 441 acres, farms that size are increasingly difficult to find. While mega-farms and so-called "hobby farms" are on the rise, it is the medium-scale operations, with acreage between 50 and 2,000 acres, that are declining.

Focus on that slice of small and mid-sized farms -- the 10 percent that gross $100,000 to $250,000 from farming and whose operators claim farming as their primary occupation -- and a far different picture develops. According to an analysis of USDA farm data by Tufts University researcher Timothy A. Wise, in 2003, these commercial family farms earned an average net income of $30,000 a year from farming -- more than half of which came from some form of government subsidy payments. In this income segment, 82 percent of farms received some sort of government payment. In other words, contrary to popular belief, a significant majority of family farmers receive benefits from Farm Bill programs and rely on them to keep their operations afloat.

Even as commodity prices reached record highs in 2007, family farmers continued to struggle. While corn prices increased 87 percent between 2003 and 2007, fertilizer costs jumped 67 percent. Fuel costs doubled. At the same time, farm safety net programs called counter-cyclical payments, which kick in when the market price of a crop falls below a target price, dropped by half for small and mid-sized farms. As a result, their net income from agriculture actually declined between 2003 and 2007, from $30,000 to $26,000. Farm households supplemented their income with an average of $31,000 from jobs off the farm during the period of Wise's study. That combined income put these households just barely above the U.S. average. Without the farm subsidies, many would border on poverty.

So it's understandable that true family farmers feel vilified by attacks on farm subsidies. But they have not been good at making their own case to the public, or Congress. Rather, they have handed over their representation to agribusiness lobbies, who use the image of family farmers to fight chiefly for the interests of commercial mega-farms.

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Daniel Imhoff is a researcher, author, and independent publisher focused on farming, the environment, and design. He is the president and co-founder of Watershed Media, a non-profit publishing house based in California.

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