Agriculture subsidies jump 59%: New report on the farm bill

 
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Every five years or so, Congress passes a giant spending bill that covers almost every aspect of what we eat – and much more. Known as the “farm bill,” it costs about $100 billion per year these days (more than five times NASA’s budget). Most of that is spent on food stamps, but it also funds payments to farmers hurt by fluctuations in market prices, conservation efforts, crop insurance and more. It is, of course, not without controversy.

A recent paper from the Congressional Research Service (CRS) analyzes the current farm bill – the $489-billion Agricultural Act of 2014 – which is slated to fund programs through 2018. In its paper, CRS analyzes how different aspects of spending have risen and some have fallen due to shifts in the overall economy since the bill was passed. Though increases are offset by savings elsewhere, one of the attention-grabbing figures is a 59 percent jump in controversial subsidy payments to farmers.

Current projections:

Actual spending depends on the state of the economy and other changing factors. Fiscal years 2014 through 2016 are over, so the report is able to offer more accurate projections for the last two years of the bill.

Spending on food stamps is now expected to fall 7 percent, by $26 billion over the life of the bill (the stronger economy means fewer people need the help, known these days as SNAP, the Supplemental Nutrition Assistance Program). Crop insurance programs are expected to cost $11 billion (26 percent) less over the five years and conservation programs $4 billion (13 percent) less. But disaster payments and farm subsidies – government payments to farmers to offset lower market prices, like when the value of corn, wheat or cotton falls – have jumped by $14 billion, or 59 percent. (Farm subsidies are known as “farm commodity support” in government argot.)

Who’s behind the farm bill:

Congress passed the first farm bill in 1933 during the Great Depression. It included subsidies to protect farmers from the wild price swings toppling markets at the time. Through the decades, and the sixteen subsequent farm bills, lawmakers have added different programs. Managed by the Department of Agriculture (USDA), the current farm bill includes not just SNAP, subsidies and insurance, but programs like broadband in rural areas, distance learning, research grants, forestry, the promotion of corn-based biofuels, organic certification, and technical assistance for military veteran farmers.

With so much money on the table, lobbyists representing these causes are well organized. Moreover, as The Economist pointed out in 2015, “Few politicians are inclined to vote against farm subsidies: though farmers make up only a small number of voters, even in agricultural states, they are loud and organized enough to punish lawmakers who vote against a farm bill. Opposition to spending is muted; few voters realize how much of their money is given to farmers.”

President Trump’s proposed budget would gut the subsidies – a position that conservative groups like the Heritage Foundation and liberals like the Environmental Working Group have advocated for years.

What’s in it:

A farm bill is known as an “omnibus bill” because it includes many measures, but Congress votes on it just once. Omnibus bills are often criticized for being long and impervious. Four “titles” account for 99 percent of the spending in the current farm bill.

  • SNAP: When the 2014 farm bill was approved, SNAP accounted for 80 percent of forecast spending. That was a higher percentage than projected when the previous farm bill, in 2008, was drafted. But since 2014, the rate has fallen as the economy has improved and fewer people need food stamp benefits.
  • Commodity support (subsidies) and disaster programs: These programs help farmers weather fluctuations in the markets and the seasons. They pay farmers when prices for commodities (like corn, soybeans and cotton) fall. In previous farm bills, the subsidies were based on the number of acres a farmer owned. That was politically unpopular. But with prices currently low, some believe the new program is more expensive to taxpayers than the old. The disaster assistance helps farmers who lose livestock or trees. “Farm commodity and disaster program payments are projected to be nearly $14 billion higher than was expected at enactment (+59 percent) due to lower commodity market prices … and higher livestock payments due to disasters.”
  • Crop insurance: This program is separate from commodity support. It “makes available subsidized crop insurance … to protect against losses in yield, crop revenue, or whole farm revenue. More than 100 crops are insurable.” The cost of the program has increased as the number of covered commodities has expanded, CRS says. Moreover, “crop insurance costs have overtaken the traditional farm commodity programs in total costs.”
  • Conservation: Today this is largely programs that protect and restore wetlands and that prevent productive farmland from being put to non-agricultural use.

Other resources:

The Environmental Working Group has some of the most extensive data on subsidies available in one place. But researchers may wish to know that EWG has an agenda: It advocates for reductions in subsidies for commodities alongside increased spending on nutrition and organic products.

The Physicians Committee for Responsible Medicine, a watchdog, has highlighted “conflicts between what the U.S. government recommends people eat and what foods are boosted by federal dollars in the form of agricultural subsidies.” PCRM has singled out subsidized high-fructose corn syrup, which contributes to obesity and diabetes, and corn-fed beef, which requires more antibiotics and tends to be fattier.

The USDA has extensive information on the SNAP program and subsidies. And CRS has written on crop insurance, how trade rules are impacted by crop subsidies, and, in 2014, compared the last two farm bills.

Other research:

Check out our literature review on biofuels, energy security and the environment and our review of a 2016 paper on food stamp use by Mexican immigrant families.

A 2015 paper in the American Journal of Agricultural Economics discusses the political economy of the farm bill.

A 2017 paper in Nature looks at how solar brightening, a factor of climate change, is increasing American corn yields.

Last updated: June 2, 2017

 

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Citation: Johnson, Renée; Monke, Jim. “What Is the Farm Bill?” Congressional Research Service, 2017.