Cutting Corporate Subsidies

Date: 20 Nov 2008 | posted in: agriculture | 0 Facebooktwitterredditmail

In recent years, the largest 7 percent of U.S. farms received approximately three quarters of the market value of all agriculture products sold. About 75 percent of U.S. farms now share a mere 7 percent of the market value. Yet when agricultural payments are distributed, they are blind to the scale of farms. Consequently a small number of concentrated farms receive the lion’s share of subsidies.

Payments to farmers under federal farm programs have reached an historic high – over $20 billion in fiscal year 2000. Nearly one-half of U.S. farms are receiving payments for income or price support purposes and/or for engaging in activities such as land conservation. These payments, in total, made up almost one-half of net farm income in fiscal year 2000. Although the payments averaged about $17,000 for the farms receiving them in 1999, the level of assistance can range from a few dollars up to tens of thousands of dollars. Despite this annual influx of billions of federal dollars to the farm sector, the U.S. Department of Agriculture (USDA) reports that the number of farms has been declining about 1 percent per year. According to the census of agriculture, which is conducted every 5 years, the nation had about 1.9 million farms in 1997, down from 2.1 million farms in 1987. This decline, which has occurred partly as a result of consolidation, is most pronounced among small family farms. Moreover, the average age of farm operators continues to increase. For example, the share of farmers under age 35 decreased from 15 percent in 1954 to 8 percent in 1997, while the share of farmers age 55 or older increased from 37 percent to 61 percent.

According to a 2001 report from the U.S. General Accounting Office, in recent years over 80 percent of farm payments have been made to large- and medium-size farms, while small farms have received less than 20 percent of the payments. For example, in 1999 (the latest year for which data were available), large farms – the 7 percent of farms nationwide with gross agricultural sales of $250,000 or more – received about 45 percent of the payments. The 17 percent of farms that are medium-sized (gross sales between $50,000 and $249,999) received 41 percent of the payments. The remaining 14 percent of the payments was shared by the 76 percent of farms that are small (gross sales under $50,000). Small farms substantially outnumber medium and large farms, but because payments are generally based on volume of production, the average payment of small farms that received payments was much less. In 1999, these small farms, on average, received payments of about $4,141. In contrast, large farms received payments averaging about $64,737, while medium-sized farms received average payments of about $21,943.

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Lisa Gonzalez

Lisa Gonzalez researches and reports on telecommunications and municipal networks' impact on life at the local level. Lisa also writes for and produces ILSR's Broadband Bits podcast.