Farm Subsidies Persist And Grow, Despite Talk Of Reform

Farm subsidies don't lack for critics. Free-market conservatives and welfare state-defending liberals alike have called for deep cuts in these payments to farmers. After all, farmers, as a group, are wealthier than the average American. Why should they get tens of billions of dollars each year in federal aid?

Two years ago, when the most recent Farm Bill emerged from Congress, the measure's authors proudly announced what sounded like bold cuts in these controversial programs. The Senate Agriculture Committee noted in a press release that the new law would eliminate one big subsidy altogether and save taxpayers a total of $23.3 billion over the following 10 years.

Those projected savings, it turns out, were a mirage. According new estimates for Farm Bill spending over the next few years released by the Congressional Budget Office, total government aid to farmers will swell to $23.9 billion in 2017.

"What happened to the savings taxpayers were promised?" says Colin O'Neil, from the Environmental Working Group, a long-time opponent of farm subsidies.

Actually, many opponents of government subsidies saw this coming. "Cynics like me fully expected this to work out the way it has," says Bruce Babcock, an agricultural economist at Iowa State University. "Farm policy isn't really about policy. It's about farmers getting their money. And the agriculture committees in Congress are there to make sure that farmers get their money."

Over the decades, Congress has periodically changed the way these programs work. This latest Farm Bill ditched a politically unpopular subsidy program that wrote checks to farmers simply based on the number of acres they owned. In its place, the law set up new programs that pay farmers when commodity prices fall. And indeed they have been falling since the last Farm Bill.

Many observers, in fact, expected corn and soybean prices to fall, because they had been extraordinarily high in recent years.

"Farmers made a gamble," says David Orden, an agricultural economist at the International Food Policy Research Institute. "They were gambling that if prices came down, they'd get more money this way." That gamble, it seems, paid off.

If prices stay low, or rebound, spending under some of these new programs should decline, but only gradually — and within a few years Congress will once again revise the Farm Bill.

Orden does believe that over the long term, there has been progress in abolishing some of the most wasteful farm subsidies. "We used to do all sorts of things to maintain high market prices for farmers," he says.

For example, the government used to buy up large amounts of agricultural commodities and either store them or export them at much lower prices. It also paid farmers to take vast amounts of land out of production. Those programs, Orden says, were probably more damaging to the overall economy than the payments and crop insurance payouts that farmers get today.