The Environmental Working Group (EWG) recently released its farm subsidy database. It breaks down how each Congressional district benefits from farm subsidies. The total comes adds up to $245 billion in federal farm subsidies distributed from 1995 -2009.
The EWG also put together a great farm subsidy primer and crop insurance primer.
Top Tens below the fold...
1 At Large District of North Dakota (Rep. Earl Pomeroy) $8,849,864,752
2 1st district of Kansas (Rep. Jerry Moran) $8,847,026,727
3 3rd district of Nebraska (Rep. Adrian Smith) $8,255,691,540
4 At Large District of South Dakota (Rep. Stephanie Herseth) $6,950,809,576
5 1st district of Arkansas (Rep. Marion Berry) $5,991,340,760
6 7th district of Minnesota (Rep. Collin C. Peterson) $5,956,529,110
7 19th district of Texas (Rep. Randy Neugebauer) $5,898,958,550
8 4th district of Iowa (Rep. Tom Latham) $5,791,043,906
9 5th district of Iowa (Rep. Steve King) $5,493,074,262
10 At Large District of Montana (Rep. Dennis R. Rehberg) $4,807,833,708
from the EWG website 2005 - 2009
1 Riceland Foods Inc
Stuttgart, AR 72160 $554,343,039
2 Producers Rice Mill Inc
Wynne, AR 72396 $314,028,012
3 Farmers Rice Cooperative
Sacramento, CA 95851 $146,174,314
4 Harvest States Cooperatives
Saint Paul, MN 55164 $49,489,434
5 Dnrc Trust Land Management - Exem
Helena, MT 59620 $47,207,258
6 Tyler Farms
Helena, AR 72342 $37,009,744
7 Ducks Unlimited
Ann Arbor, MI 48103 $33,271,517
NOTE: Over 80 percent of the payments listed for Ducks Unlimited are 'cost share' reimbursements for
technical assistance to restore wetlands at many locations on private lands not owned by D.U. The technical assistance is provided to private landowners under contractual arrangement through USDA's Natural Resources Conservation Service.
8 SD Building Authority
Sioux Falls, SD 57117 $31,110,468
9 Pilgrim's Pride Corporation
Broadway, VA 22815 $26,461,206
10 Missouri Delta Farms
Sikeston, MO 63801 $25,280,578
corn field
from the farm subsidy primer
Despite the rhetoric of "preserving the family farm," the vast majority of farmers do not benefit from federal farm subsidy programs. Small commodity farmers qualify for a mere pittance, while producers of meat, fuits, and vegetables are almost completely left out of the subsidy game (i.e. they can sign up for subsidized crop insurance and often receive federal disaster payments).
Farm subsidies, begun in the 1930s, are provided by the federal government as a safety net. They are intended smooth the yearly variations in production and profitability due to changes in weather, water supply, market prices, and other factors. Farm subsidies were intended to ensure a stable food supply for the country. Subsidies are heavily skewed towards corn, soybeans, wheat, cotton, and rice. Some other crops qualify for subsidies such as peanuts and sorghum although the subsidies are much smaller. Dairy and sugar producers qualify under different price and market controls.
soybean field
The primary subsidy system consists of six elements:
1) Direct payments at a set rate every year regardless of conditions
2) Counter-cyclical payments that kick in when market prices fall below set levels
3) Revenue assurance program provides for overall profitability for each crop
4) Marketing loans that include Loan Deficiency Payments (LDP) and commodity certificates
5) Disaster payments which include subsidized crop insurance programs
6) Crop insurance
wheat field
DIRECT PAYMENTS
The 1996 Federal Agriculture Improvement and Reform Act, also known as the "Freedom to Farm Act", was supposed to move the country away from subsidized farming. The bill set up a direct payment program as a bridge to a free market principles. Payments were based the production of a farm in 1986 and are made to the landowner each year. Unfortunately, 1996 was a year of near-record commodity prices which fell precipitously in 1997. Subsides since 1996 total $92 billion, triple the sum authorized in 1996 to ease the transition to the free market.
Since enactment of Freedom to Farm, subsides have provided $92 billion which is triple the amount authorized in 1996. Currently these subsidies account for 32% of farmers' income. Payments are usually included in land value estimate, driving up land prices and rents and making it harder for small farmers to expand and new farmers to enter the business.
COUNTER CYCLICAL PAYMENTS
CCPs compensate farmers for drops in market prices with targets set by Congress. When the commodity prices fall below those targets, farmers receive a payment from the government. This formula is also based on historic production.
from the primer
Because it is not tied to current production, these payments often make little sense. For instance, if a farmer's land was producing cotton at the time when the base acreage was calculated, the current owner will get a cotton CCP regardless of what he is or is not growing currently. The program is the heart of the farm safety net, but offers perverse incentives that often reduce profitability and drive up taxpayer cost, even at times when farmers don't need the help.
Because farmers usually try to maximize production and thus sales, the market is oversupplied which drives down prices. A lower price might be compensated by large volume to produce a profit. This would still make the farmer eligible a CCP if the average price in his county drops below the federally-mandated target floor.
cotton field
ACRE payments
The Average Crop Revenue Election Program was created by the 2008 Farm Bill. It computes the risks in price and yield to assure a minimum amount of total revenue. This program is similar to CCPs but does not result in unnecessary payments. It is also similar to crop insurance in that it takes into account low yields due to weather, pests, and other factors. Farmers who choose to enroll in ACRE forfeit their right to future CCPs and see a reduction of 20 percent of their direct payments and 30 percent of their Marketing loans and Loan Deficiency Programs. ACRE has seen only limited enrollment so far, with the corn and soy forming the majority.
MARKETING LOANS, LDPs, and CERTIFICATES
Marketing loan assistance is intended to moderate fluctuations in price and supply. The program allows producers to hold onto their crop and release it onto the market when supplies fall. Without such assistance, producers would most likely release their crop as soon as it is harvested. This would cause a temporary glut in supply and a drop in market prices, followed by the reverse. The loan structure was put into place by the 1986 Farm Bill. Congress sets the minimum loan rate for each qualifying commodity crop. Farmers take out loans using their crop as collateral. If the product is sold at a high price then the loan is repaid in cash. If the farmer repays the loan when market prices are below the mandated market price, the farmer can repay the loan at the value of that market price. The farmer can still hold their crop and sell when the market price rises, yielding a profit.
The current loan system was established by the 1986 Farm Bill. Congress sets the minimum loan rate for each crop that qualifies for the program. Farmers take out a marketing loan from the government using their crop as collateral. Once the product is harvested the farmer can put his product on the market whenever they choose. If the commodity is sold at a high price the loan can be repaid in cash. If the loan is repaid when the price is below the minimum level set by Congress then they can repay the loan at that market price. The farmer can still hold onto the harvest and sell it when the price rises again, thus realizing more of a profit.
The difference between the loan price and the lower market price is called a Marketing Loan Gain (MLG). The farmer could also forgo the loan payment and receive a government payment for that difference in the form of a Loan Deficiency Payment (LDP).
Then there are commodity certificates, created by the 2008 Farm Bill. Farmers with outstanding loans during a period of low prices can choose to repay the loans by purchasing generic commodity certificates for the posted market price. This is essentially the same as a MLG. Farmers get a payment if they lose money when prices fall. This is similar to CCP but without additional payments from the loophole. The CCP program is also similar to crop insurance in that low yields are insured. Farmers who enroll in ACRE lose the right to future commodity certificates.
rice field
DISASTER PAYMENTS
The government also allocates funds to farmers who lose crops due to natural disasters. The 2008 Farm Bill established the Agricultural Disaster Relief Trust Fund to make payments though the Supplemental Revenue Assistance Payments (SURE) program. SURE is intended to work with existing insurance and subsidy programs. Efforts are underway to issue additional, stand-alone disaster insurance payments. This brings the efficacy of the SURE program into question.
CROP INSURANCE
There are two types of crop insurance under the federal crop insurance program, insurance against low crop yields or insurance against a decline in revenue. The policies are sold exclusively by 16 private insurance companies. The USDA determines rates on a crop-by-crop and county-by-county basis. Two thirds of all acres enrolled in crop insurance programs consist corn, cotton, soybeans, and wheat. Taxpayers subsidize much of the cost of these policies.