Farm subsidies need big changes
Anyone who follows the current political or financial scene is painfully aware of the financial crisis that our government is in. The Joint Super Committee on Deficit Reduction was a flop and unable to agree on the cost-saving measures that our government desperately needs. This month we are revisiting the updated numbers for farm subsidies, and after reviewing the data it is easy to see why we are in need of dramatic changes to the farm subsidy program.
The website http://farm.ewg.org has farm subsidy data from 1995 to 2010. The alarming point of the data is that this program that was started to help small, struggling farmers is now used to supplement the budgets of large farming operations. As we take a look at the top ten programs in Iowa receiving subsidies from 1995 to 2010, it is no surprise that corn and soybean subsidies are the top two programs for the state of Iowa. But I believe that the disturbing fact is that the conservation reserve program is third and has paid out over $3 billion over the same time period.
We can see this huge imbalance of the large farmer versus the small farmer. We see that 80 percent of the commodity payments went to the top 20 percent of recipients. The top 20 percent had an average payment per recipient of $325,382 over the 1995 to 2010 time frame, whereas the remaining 80 percent of recipients received 20 percent of payments. The larger you are, the better the government takes care of you—not that you are more efficient or more productive, just better taken care of. So this really means that the small farms that are surviving without all the government funding are doing something right.
All of sudden you should be thinking that the federal government is picking winners and losers based on this system and not encouraging the free market to work, which is what we all should want. But as long as the government is involved in the farming program, the free-market cannot work. According to the United States Department of Agricultural data collected in the 2007 USDA Census of Agriculture, 80.7 percent of farms in Iowa collected subsidy payments. We are hurting the Iowa economy by being so reliant on government funding coming into our state.
The creation of the farm subsidy program was in the 1930s, with the thought that it would provide some security for production of wheat and cotton. It has expanded in roles that were never thought about in the 1930s. That is the problem with entitlement programs: they grow like an evil serpent until they are so out of control no one knows what to do with them. This is why there are proposals in both the U.S. House of Representatives and the U.S. Senate that are an attempt to cut the head off this out-of-control serpent.
House Budget Chairman Paul Ryan (R-WI) has proposed a reduction of the direct payments subsidies and reforms to control the soaring cost of the federally subsidized crop insurance. These reforms will be able to save taxpayers about $30 billion over the next decade. Senator Chuck Grassley (R-IA) and other U.S. Senators have introduced legislation that would set a hard cap of $250,000 in farm subsidies per married couple.
The proposals we have so far are a good start, but that is all they are, a start. The government has to be forced to get out of business sectors. We have had much advancement in the area of agriculture over the time frame from the 1930s to the present, and we need to allow the farmer to excel and show the true entrepreneur spirit that they have.
The views expressed in this column are those of the author Jennifer L. Crull, IT specialist with the Public Interest Institute, and not necessarily those of the Public Interest Institute in Mount Pleasant.