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The 2012 farm bill: A wolf in sheep’s clothing

The American Boondoggle website exists for one reason — to let Americans know how their tax dollars are being used to prop up the well-off rather than support the needy.

You wouldn’t know that by listening to the agriculture-industrial complex lobbying for the farm bills. They’ll tell you that most farms are family-owned, that farming is “different” from other businesses and that government support keeps cheap food flowing to the world.

This might have been true in the 1930s, when farmers were poorer than most Americans and 20 percent of our grandfathers worked on farms. But it is not true today.

Consider these facts:

  • The median farm household earns 10 percent more than the median U.S. household-and in 2010 averaged over seven times the median U.S. household net worth;
  • As of 2006, only 3.5 percent of farms went out of business each year, and since then, crop prices have increased substantially. In fact, there are 45,640 more farms today than 10 years ago.
  • Crops prices and farm incomes are at record highs, yet taxpayers still send billions of dollars each year to farmers.

This might be OK if our payments were sent to the poorest farmers to keep their families afloat. But they’re not. Eighty percent of farm subsidies are paid to the largest 15 to 20 percent of farms — farms with household incomes averaging $135,000 per year and very little debt.

How can this be?

This happens because farm subsidies have changed a lot in the past 20 years. They used to be mainly price supports, sending our taxes to farmers when prices were too low to keep them in business. Now, they take the form of payments that flow regardless of prices.

Crop insurance subsidies are now the largest subsidy in the farm bill. You’d think that farms with hundreds of thousands of dollars in revenue each year would buy their own insurance to protect them in case of bad weather. Instead, taxpayers pay an average of 60 percent of crop insurance premiums for farmers — and we also subsidize the insurance companies that sell the policies.

This boondoggle alone costs us over $6 billion a year — and the cost is going up.

The government doesn’t pay us to buy insurance to protect our home, so why does it pay wealthy farmers to buy insurance to protect their crops?

The list of boondoggles go on:

  • Taxpayers pay almost $5 billion a year  in “direct payments” to farms whether or not they grow crops;
    So-called conservation programs pay farmers billions of dollars a year to undertake practices they would have done anyway, or to remove farmland from cultivation they probably wouldn’t have farmed to begin with;
  • Dairy and sugar programs manipulate markets to drive up the cost of milk and sweeteners, making much food more expensive for all of us;
  • The Renewable Fuel Standard forces gasoline companies to buy corn ethanol to mix into our gasoline, driving up the price of corn and making food more expensive all around the world. Most environmentalists say this does nothing to help the environment, but it sends billions of dollars a year from your pockets to farm communities (as our interactive map shows).

These programs just aren’t fair. Government interference in markets is justified when it helps people on the margins of life or in difficult straits. It’s not when it helps the already successful. That’s true whether the well-off are bankers on Wall Street or farmers on Main Street.

Today’s farm bill is the proverbial wolf in sheep’s clothing. Under the cloak of compassion, it gives farmers a suit of subsidy, paid for with your money.

Regardless of whether the farm bill programs continue or not, all Americans deserve to know what their money is really being used for and who benefits from it. I hope you find this website educational and informative.

Henry Olsen is vice president and director of National Research Initiative at AEI.