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There’s a whole lot of misinformation out there about the Farm Bill, which the House of Representatives will vote on this Friday. But the truth is quite simple – this bill continues Washington’s addiction to reckless spending and is loaded with corporate welfare.
Here are three common myths about the Farm Bill, and the facts that debunk them:
Myth #1: The federal government has been cutting back on support for farmers over the years, we need to ramp up the programs that protect farmers.
In reality, government spending on farm subsidies for crop insurance, which has no payment limits for farmers, has exploded over 800 percent between 1981 and 2014, according to the USDA. This “safety net” program is precisely the kind of market-distorting policy that forces taxpayers to shoulder all of the financial risk of a farm operation. What’s worse, private crop insurance providers are also guaranteed a return by the government for issuing certain crop policies, resulting in a vicious cycle of corporate welfare paid for by the taxpayer at a loss of $8 billion annually, according to CBO. At a minimum, there needs to be a limit on the total subsidies a farm can receive, and they should be reserved for agricultural producers that have a lower AGI than current policy allows.
Myth #2: We need a big, expensive Farm Bill because it protects struggling farmers, it is a safety net for a volatile industry that is necessary to protect American agriculture.
The fact is, less than 0.3 percent of all farm businesses on average file for bankruptcy each year, and, according to the USDA, the average debt-to-asset ratio for the agricultural industry for 2018 is extraordinarily low at 12.6 percent and has been declining since its peak in 1985 (figure 3). In other words, while an otherwise unmanaged market will experience ups and downs, the agricultural sector is generally very secure and relatively low-risk. Additionally, the average farm household income has exceeded that of all average household incomes since the early 1990s (figure 7). To the point that full-time farmers are exiting the market, that may be because government subsidies overwhelmingly go to large farm operations that shut out smaller or newer farms. Farms in the top 10 percent of crop sales, for example, receive approximately 68 percent of all crop insurance subsidies (figure 1, panel A) and about 60 percent of ARC and PLC (commodity) subsidies (figure 2, panel A).
Myth #3: The most recent Farm Bill in 2014 was projected to provide taxpayer savings due to reforms to farm programs. Reforms in the current bill will do the same.
The problem is that, regardless of what CBO projects, farm bills have a tendency to be far more expensive than they first appear. The 2002 Farm Bill was projected to have a 10-year cost of $451 billion, but actually cost $561 billion. The 2008 Farm Bill was projected to have a 10-year cost of $641 billion, but wound up costing $885 billion. The 2014 Farm Bill had an estimated 10-year cost of $956 billion, and could possibly wind up costing over $1 trillion. While there are some savings on the nutrition side of this year’s bill, the fact that more has been spent on commodities programs than on the programs they replaced in the previous Farm Bill doesn’t bode well for potential savings.
Simply put, you shouldn’t believe everything you hear about the Farm Bill.
This legislation needed serious reforms in order to deliver the kind of agricultural policy that America truly needs. Earlier this week, we proposed 13 amendments to this bill, which would have moved it in the right direction.
Unfortunately, most of these amendments will not make it to the floor for a vote. In its current form, this Farm Bill is huge missed opportunity for reforms, and lawmakers should oppose it.
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