U.S. Farm Subsidies Near Record Highs In 2014 Despite New Rules


A new report from Reuters suggests that U.S. farm subsidies could reach $10 billion in 2014 despite record corn and soybean crops. Although the final farm subsidy figures cannot be determined until farmers across the country choose a subsidy program and complete the application process, new programs and recent price drops in agricultural commodities virtually assure near-record subsidy payouts this year.

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The goal of the new farm subsidy programs was to reduce the around $5 billion paid out annually in farm subsidies, but like many things in Washington DC, it isn’t quite working out as planned.

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“It’s going to be expensive”

Chris Hurt, professor of agricultural economics at Purdue University and a recognized expert on the subject of subsidies, projects that payments to the average Indiana farm using the new farm bill’s formula and an average 2014 corn price of $3.40 bushel would come to around $70 an acre under the federal ARC program.

“It’s going to be expensive,” Hurt noted, continuing to say that Indiana should be typical across the American farmbelt where 85 million acres of corn have been planted. “That’s $6 billion for corn for 2014 alone. Maybe $8 billion to $10 billion is likely in the first year when you consider other crops,” he said.

Patrick Westhoff, director of the Food and Agriculture Policy Institute, has publicly commented that he has calculated that subsidy payments could top $8 billion for the 2014 crop for ARC and PLC. Of note, the institute was established by Congress to generate forecasts for the agriculture sector.

Compromise on farm subsidies reached in last year’s farm bill clearly a failure

“The (farm) bill actually did little to rein in costs,” noted Republican Representative Tom Petri of Wisconsin, in an emailed comment to Reuters. “What we’re seeing is a program that still costs far more than it should and fails to include reforms that actually save taxpayer dollars.”

Ironically, the farm bill’s new programs were meant to cost the taxpayer less by replacing the old plan of direct cash payments to farmers, which totaled around $5 billion a year, and were paid out to farmers regardless of profits or losses that year. It now appears the payouts for 2014 will be far greater than $5 billion.

Analyst Craig Cox of The Environmental Working Group, a non-profit, non-partisan body that researches environmental health, food and agriculture, explains the problem. “Crop insurance has drifted away from that basic safety net concept and the farm bill has taken it even farther away.”

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