Return to TFB Main Page
Return to Texas Agriculture Archive

September 21, 2001

AP stories blast farm programs

Just as the Congress was scheduled to reconvene to consider farm bill legislation, a number of articles by the Associated Press hit newspapers charging that government farm assistance payments often go to those who need it the least, including universities and large farms, instead of small farmers who most need the help.

According to the American Farm Bureau Federation, the AP gleaned statistics for the story by analyzing "more than 22 million checks sent by the Agriculture Department in fiscal year 2000." AP reported that "63 percent of the money went to the top 10 percent of recipients, including many who don't fit the image of the struggling family farmer." The story also stated that "of the 1.6 million farm aid recipients last year, the average recipient got about $16,000. About 57,500 recipients got more than $100,000, and at least 154 got more than $1 million."

After listing "wealthy" recipients of farm program payments, the story went on to state that the House Agriculture Committee's farm bill proposal (H.R. 2646), which has been endorsed by the AFBF, "funnels more money into the existing system and adds some new subsidies, but critics say it does not curb payments to mega-farms or the rich."

In response, AFBF called the articles "one-sided," and said the stories completely disregarded the vital emergency relief those payments delivered farm and ranch families during a prolonged period of economic disaster. The organization said without the payments, most farmers would not have survived the period of poor market conditions and low prices that have persisted since 1998.

Also, AFBF felt the articles failed to differentiate between the four federal programs—Agriculture Marketing Transition Act (AMTA), Market Loss Assistance, Marketing Loans, and Conservation Reserve Program (CRP)—each of which have a very different purpose. Had they done so, it would explain why and to whom the checks were distributed, AFBF suggested.

Moreover, each of these programs has a cap—or a maximum payment rate—of its own. But added together, over a period of years, amounts to one individual or organization can be very large, as shown in the recent report.

The organization further pointed out that many payments are received by both the farm operator and the landowner. Some are based on production and price. As a result, if a real estate developer or a state agency owns the land, these non-farmers will receive payments by virtue of ownership.

Also, large operators and large landowners receive larger payments because many programs are based on production or acreage. AFBF said larger and fewer farms are a worldwide trend, not "caused by" U.S. farm programs, although the rate of this trend may be affected.

Another point noted by AFBF is that prices for program crops have dropped to historically low levels, which are reflected in the payments. Input costs for farmers have also risen sharply in recent years.

Too, farm program payments are made on the basis of acreage, so it is not surprising to see some large recipients of farm program payments. With larger-sized operations there is greater risk and capital investment.

AFBF also pointed out that farm program payments scrutinized by the AP were authorized by Congress. Congress has provisions to help the nation's farmers when crop prices unexpectedly drop to severe levels due to factors beyond the control of farmers. The recently approved $5.5 billion in farm aid was subjected to the same bipartisan debate as past farm program allocations.

AFBF stressed that America's farmers prefer to earn their income from the marketplace, but in the past few years, farm income and farm expenses have been going in opposite directions.

The farm organization said it’s too early to draw conclusions about farm program payments and increases in projected net farm income for 2001 because the farm slump is not over. This year’s fall harvest is not in.

AFBF also said past attempts to “target” or “means test” payments have largely failed because of the complexity of farm operations and ownership structures. Also, targeting benefits can disrupt the intended purpose of a program. For example, it is not wise to deny CRP benefits to a non-farm corporation that owns fragile land by a stream if enrollment in that program would reduce severe erosion.

Despite big non-farm payments highlighted in the AP report, AFBF insisted that the vast majority of payments went to family farm operations. In addition to paying for machinery, seed, and fertilizer, some of this money went to pay household bills, interest on farm loans, and college tuition for children. The money was circulated through the economy. The impact of farm program payments on overall personal income in some rural counties has been significant.

AFBF noted that farm program payments in the past five years have prevented a fall in farmland prices and a decline in farmer assets like the collapse that led to farm foreclosures and agribusiness failures in the 1980s. Payments have stabilized balance sheets for the average farm and maintained other farm-dependent businesses.

Finally—but perhaps most importantly to consumers—Farm Bureau emphasized that farm program payments are a public investment in the nation’s food, environmental, and economic security. They help provide some measure of stability to the volatile business of food production, keeping Americans supplied with the safest and most affordable food in the world.