Policy: Are US Farm Subsidies Hurting Us?

The unintended consequences of US farm subsidies.

Policy: Are US Farm Subsidies Hurting Us?

By now we are all aware of the enormous influence agribusiness has on the way our food is grown.  What most people don’t know is that our government is using our tax dollars to fund the system that encourages farmers to put profit ahead of people and the planet through our agricultural subsidy program . What started out as government safeguarding farmers and average Americans is now hurting the people it was meant to protect by perpetuating climate change, stifling competition and contributing to chronic health problems.  Knowing how the system is structured is key to knowing how to change it.

Subsidies started during the Great Depression to protect farmers from the risk of natural disasters like storms, floods, droughts, and disease and to keep food prices affordable.  Today, federal farm subsidies are distributed in many complex ways but the majority of the money goes to subsidizing insurance premiums for six specific “covered” crops: corn, cotton, wheat, rice, soybeans and peanuts. (1)  This means that if the price of one of these crops dips below a certain amount or if a natural disaster were to destroy them, taxpayer funded insurance plans cover the financial loss of the crop.  On top of that, federal subsidies pay 62% of the insurance premiums. (2) For the farmers who are growing covered crops, it is a win- win situation.  They make money even if they have no product to sell.

This has given rise to the “commodity” farmer vs the “specialty” farmer who might grow a mix of things like fruits, vegetables and maintain livestock.  Commodity farmers grow one of the six covered crops and that’s it.  Why? Because from 1996 -2017 out of the $16 billion per year we spent on farm safety net programs, $12.3 billion went to commodity-specific programs including revenue support programs and crop insurance premium subsidies and 94% of the money went to farmers growing one of the six covered crops.  The most (46%) went to corn, 16% went to wheat and 15% to soy. (3)

The financial incentive to grow covered crops is so great that of the more than 300 million acres of food crops in the US, half are devoted to corn and soy. Less than 5% of that acreage is devoted to fruits and vegetables. (4) Since 2017, farm safety net payments have only expanded. As of Sept 2020, government payments in 2020 were expected to be $37.2 billion, constituting 36.2 percent of net farm income. (5)

Why do we invest so much in these covered crops?  Because they are flexible or flex crops meaning they have multiple uses. Beyond being a food source, they feed livestock and can be used as biofuels like ethanol in the case of corn and sugar.  Plus, they can be stored for long periods of time making them easy to export and prime for trading as international commodities unlike other crops that are merely edible or have short shelf lives like fruits and vegetables.

What the federal subsidy system overlooks are the negative social and environmental impacts.

With so much land devoted to growing so few species of crops or what we call monocropping, we are depleting the groundwater, polluting the ground and water supply and preventing the soil from sequestering carbon which is adding to climate change.

With monoculture crops there is no crop rotation.  The same crop is planted in the same spot season after season causing the soil to be stripped of the minerals and nutrients that keep it healthy.  To compensate farmers have to rely on external inputs like fertilizers, pesticides and other chemicals like glyphosate to maintain their yield and use more water.  This has the compound effect of polluting the ground while depleting the resources and raising costs for the farmers. Sugar cane production, for example, has expanded in Florida because of the federal sugar program but the phosphorus in fertilizers used by the growers causes damage to the Everglades not to mention that the subsidies go to one family who are worth billions.

The current subsidy system also contributes to climate change because it rewards overproduction. The more you produce, the more subsidies you get which, in turn, encourages farmers to use more and more land for production. Areas that might have been used for parks, forests, grasslands, and wetlands get locked into agricultural use and lands that would have been used for pasture or grazing have been shifted into crop production.  Even land that is of poor quality or erodible gets used because their risk is so low.

You would think that because monocropping allows farmers to be more efficient by specializing in one one crop it would make them more successful but the fact is that the need or more chemicals, fertilizers and water to maintain their yield has left a lot of farmers around the world in debt.  In the past month, farmers in India have been protesting Prime Minister Modi’s new laws that encourage private investment in agriculture and scale back federal support.  Farmers say the new legislation would add insult to the already dire situation.  Farmers there have been drowning in debt from the cost of buying pesticides and fertilizers required to grow mono crops and committing suicide in disturbing numbers because they can’t afford to keep working.

Photo from India Today. Source: PTI

In India, more than 60 percent of India’s 1.3 billion people still depend primarily on agriculture for their livelihood (6) and 86 percent are small farmers. (7) Farmers there rely on the government to a minimum support price (MSP) for essential crops like here in the US but in reality only 6 percent of farmers succeed in selling their crops at the MSP.   They fear that the new laws fail to protect the price of sales to private parties who could further take advantage of small farmers.

In the US, small, family owned farmers at a disadvantage as well.  Because subsidies are linked to production size, large industrial farms which are often owned by owned by corporations or high net with individuals (HNWI), receive a disproportionate share of the subsidies.  In 2017, the top 10% of farms received 78% of the subsidies. Fifty people on the Forbes 400 list of the wealthiest Americans received farm subsidies. On the other hand, 62% of U.S. farms did not receive any subsidies at all. (8)

In 1990, small and medium-sized farms accounted for nearly half of all agricultural production in the US. Now they account for less than a quarter.  Corporations have been able to capitalize by obtaining low-interest, federally guaranteed loans to buy up neighboring farms then overproduce so that prices stay low, sometimes below the cost of production. That kicks their competition out of the market so they become the only player in town. But they know the government will buy up the surplus to stabilize prices. (9)

Much of this is the result of agricultural corporations pouring millions into lobbying state and federal government. Almost $139 million dollars was spent in 2020 on lobbying for agribusiness. (10)

Some say President Barack Obama’s administration failed to deliver on promised reforms that would have benefited smaller farmers. (9) The 2014 Farm Bill did give benefits to smaller, more diverse farms but the lengthy application process made insurance providers reluctant to promote a time consuming plan that with no financial benefit.  As a result few small, multi crop farmers sign up for the additional support.

The Biden administration has outlined a plan on their website to give low cost financing to help farmers transition to modern equipment and adopt scientifically researched methods.  He promises to bolster small and medium sized farms to allow them to compete by enforcing the Sherman and Clayton Antitrust Acts and the Packers and Stockyards Act.

A more robust but trickier proposal by several NGOs including the Environmental Working Group says capping farm subsidies to $50,000 would limit the amount large farms can receive, would make the playing field more equitable and prevent farm consolidation. Decoupling the size of subsidies from farmers’ insurance-buying decisions by subsidizing all crops not specific ones would also help. (11)

The global health implication of making sugary, starchy foods affordable while doing little or nothing to subsidize healthier foods like fruits and vegetable could be linked to obesity and diabetes.

If we are to both solve the problem of climate change and feed the growing global population, federal subsidies and our agricultural systems need to be geared more toward sustainable, techniques that encourage diverse crops, reward conservation efforts and minimize water and chemical use.  Such a solution exists and it is called regenerative agriculture. Scientists say wide spread use of regenerative agriculture would improve soil conditions enough to sequester carbon from the atmosphere on a level that could reverse climate change.  Not only is it better for the environment but it has been proven to yield more when compared to mono cropping methods under extreme weather conditions like we experience with global warming.

Several nonprofits and NGOs like the Soil and Climate Alliance work to educate farmers about the advantages of regenerative agriculture.

Partnerships between brands and farmers like the one between Quinn Snacks and Tucker Farms in Western Nebraska called  Be Better Do Better Initiative is growing 85 acres of sorghum using regenerative practices to use for their pretzels.

Mad Agriculture is a non-profit organization that works to finance regenerative agriculture, provide transition plans and technical assistance, and connect regenerative farmers to buyers.

The company Nori uses blockchain technology to create a carbon marketplace where farmers get paid for capturing carbon in their soil.

Farmers are the lifeblood of society. We should be doing all we can to support support them but not at the expense of our health and the environment. All farmers should be given the opportunity to be profitable not just the ones at the top.

To better understand how GMOs and monoculture crops started watch the movie “The Man Who Tried to Feed the World” about Norman Bourlag, the man who invented them and brought the idea to India in the 1960’s.


1. https://fas.org/sgp/crs/misc/R44914.pdf

2.  https://www.nature.com/articles/s41893-020-0480-2?proof=t

3. https://fas.org/sgp/crs/misc/R44914.pdf

4. https://www.washingtonpost.com/lifestyle/food/farm-bill-why-dont-taxpayers-subsidize-the-foods-that-are-better-for-us/2014/02/14/d7642a3c-9434-11e3-84e1-27626c5ef5fb_story.html

5. https://www.taxpayer.net/agriculture/usda-farm-subsidies-at-highest-level-in-20-years/

6. https://www.nytimes.com/2021/01/27/world/asia/india-farmer-protest.html

7. https://www.indiatoday.in/india/story/explained-what-is-msp-and-why-farmers-are-protesting-over-it-1726658-2020-09-29

8. https://www.thebalance.com/farm-subsidies-4173885

9. https://www.theguardian.com/environment/2019/mar/09/american-food-giants-swallow-the-family-farms-iowa

10. https://www.opensecrets.org/federal-lobbying/sectors/summary?cycle=2020&id=A





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