It takes some doing to design a government program that harms the environment, fleeces taxpayers and consumers, and shovels money to some of the nation’s wealthiest families and corporations.
The nearly $1 trillion farm bill — yes, trillion — that has passed the U.S. Senate and is headed to a possible vote next week in the House of Representatives does all this.
First, there’s environmental harm. This results from the outrageous crop insurance program, which most people outside agriculture probably believe pays for crop damage from hailstorms and other natural disasters. Crop insurance has instead become a revenue-protection program. The so-called Agriculture Risk Coverage provision works with crop insurance to guarantee farmers nearly 90 percent of their average revenue over the last five years. Prices the past few years have been at record highs, so if prices fall to more normal levels or crop yields drop, the declines in revenue will be covered.
In addition, the federal government provides huge subsidies — more than half of crop insurance premiums — for farmers to buy coverage, and further backstops the reinsurance of private companies that sell the insurance. Farmers armed with this cheap insurance take big risks, planting on marginal soils prone to erosion, flooding, or other problems, knowing if their gambles turn out bad, their losses will be covered. Such lands would be better left unplowed, reducing erosion and providing natural flood protection and habitat for plants and animals.
Second, the bill would fleece taxpayers and consumers. Those crop insurance subsidies and claims payments come courtesy of taxpayers. Americans also pay higher prices on food than they should. This happens in many ways. Here are just two examples:
1.) The U.S. has some of the highest sugar prices in the world because the farm program shuts out foreign competition. Thousands of jobs in the chocolate and candy industries have been moved overseas, where sugar prices are one-half or less what they are here.
2.) The farm bill would extend a program that keeps milk prices artificially high by ordering production cuts when the government decides there’s too much milk on the market.
Third, the bill shovels money to wealthy families and corporations. Farmers with incomes above $250,000 make up about 10 percent of subsidy recipients yet receive one-third of the crop insurance money.
They don’t need this taxpayer support. Earlier this year the Agriculture Department’s Economic Research Service reported, “After adjusting for inflation, 2013’s net farm income, forecast at $128.2 billion, is expected to be the highest since 1973.” In that same announcement, the ERS reported, “Projected median total farm household income is expected to increase by 1.2 percent in 2012, to $57,723, and by an additional 1.9 percent in 2013, to $58,845.”
By comparison, “Real median household income in the United States fell between the 2010 American Community Survey (ACS) and the 2011 ACS, decreasing by 1.3 percent from $51,144 to $50,502,” according to the Census Bureau. The 2012 numbers are scheduled to be released in September.
These farmers include many members of Congress, such as Rep. Doug LaMalfa (R-Calif.), whose business has received more than $5 million in crop subsidies. There’s also Rep. Stephen Fincher (R-Tenn.), who has received nearly $3.5 million in subsidies.
The Heritage Foundation recently published an entertaining rundown, “The Rich and Famous at the Farm Bill Trough.” Consider this: “There are no farms in Manhattan, but residents there have collected subsidies totaling nearly $9 million in the past seven years. Recipients also include Mark F. Rockefeller ($356,018) and David Rockefeller ($591,057). Yes, the Rockefeller family (Standard Oil, Chase Manhattan Bank, etc.),” the report notes.
There’s more: “Over on the West Coast, in Beverly Hills 90210, the estate of comedian Jack Benny has collected $18,120 for a farm in Madera County, California, while $142,933 was paid to Mary Ann Mobley (Miss America of 1959) for a farm in Madison County, Mississippi.”
This money for the rich is the rule, not the exception, the report notes: “The USDA’s Economic Research Service reports that two-thirds of the farms with income exceeding $1 million annually received government payments averaging $54,745 in 2011. Meanwhile, just 27 percent of farms with income of less than $100,000 received payments — averaging just $4,420 in 2011.”
Of course, most of the so-called farm bill is really a food and welfare bill, as it funds food stamps and other nutrition programs. It includes measures to address fraud problems in those programs, and it does away with direct payments to farmers, but the games being played with crop insurance and other programs could more than make up for that revenue stream going away.
The farm bill caters to the wealthy and politically well connected. Sadly, this is in keeping with the tenor of the times.
Steve Stanek (email@example.com) is a research fellow at The Heartland Institute.