Farming for dollars

An enduring myth about U.S. farm subsidies is that they go to needy family farms. But in reality, price supports have accelerated the demise of small farms because the benefits go to the most profitable growers, says the Wall Street Journal.

According to Citizens Against Government Waste:

Three-quarters of the payments under the 2002 farm bill have gone to the richest 10 per cent of farmers.

More than half of the $1.9 billion sugar programme lines the pockets of the wealthiest 1 per cent of plantation owners.

In 2003 the biggest single recipient of farm aid was Riceland Foods in Arkansas, which bagged $69 million.

Other "farmers" collecting payments include ExxonMobil, Chevron, International Paper and Caterpillar.

In response, an ambitious effort is being pushed by an unlikely pair of House Members, Ron Kind (D-Wis.) and Jeff Flake (R-Ariz.), to phase out most direct cash subsidies to farmers and reroute funds into "risk management accounts."

Under their plan:

Farmers would receive insurance policies they could draw upon in years when their incomes fall unexpectedly.

Some of the money for the funds would come from the government, in lieu of subsidies, and some would come from the farmers themselves.

Farmers could put up to $8,000 a year tax-free into the accounts, similar to a contribution to an IRA.

After 2014 the accounts would become self-financed by the farmers and government payments would eventually cease.

Further, The Kind-Flake bill would steer tax dollars away from the wealthiest agribusinesses, while funding a safety net for moderate-income farmers facing real financial strain due to bad weather, low prices, or crop failure. Only farmers with gross incomes of less than $200,000 would be eligible for aid.

Source: Editorial, Farming for Dollars, Wall Street Journal, July 6, 2007.

For text: http://online.wsj.com/article/SB118368767866758822.html

For more on Federal Spending & Budget Issues: http://www.ncpa.org/sub/dpd/index.php?Article_Category=25

FMF Policy Bulletin/ 10 July 2007