Barry Goodwin, an agricultural and resource economics professor, is familiar with the new Farm Bill. He said the bill isn’t as helpful or beneficial as people may think.
“If you listen to political rhetoric, [the bill’s purpose] is to ensure a safe and reliable supply of food and fiber for the United States,” Goodwin said.“This is a sort of ‘national defense’ argument. This assumes that without massive subsidies, we would not have said safe and reliable food supply. There is no reason to believe this assertion. In reality, the Farm Bill is a mechanism that representatives from farm states use to garner political support.”
According to Goodwin, one of the reasons food stamps were even included in the new Farm Bill was because something must be given to the urban portion of Congress or else the law would not be passed.
“The rural segment of the United States is slipping in its political power, and I believe the debate over farm policy may finally be showing some cracks in what has been political support,” Goodwin said. “You also hear a lot of nonsense about ‘Farm Aid’ and saving the family farm. The bill has little to do with this and, in fact, United States farms are currently enjoying record income, even with a big drought in 2012. Net farm income profits have doubled since 2009.”
Goodwin revealed those who would be most impacted by the bill were typically the same as they have been in the past. He explained that generally wealthy farmers will receive the most from the program’s subsidies.
“Landowners will become wealthier as asset values continue to increase,” Goodwin said. “Note that about 40% of farmland is operated by a tenant — landowners and farmers are often two distinct groups.”
Goodwin said certain political interests would reap the benefits.
“For example, much of the spending on subsidies in the Farm Bill is now going toward crop insurance,” Goodwin said. “The taxpayer spends about $10 billion each year on this program and the private companies that sell and service crop insurance face little risk and receive significant windfalls.”
Goodwin explained the likeliness of the United States being accused of unfair trade practices in the World Trade Organization.
“This has already happened,” Goodwin said. “Subsistence farmers are most certainly damaged by United States subsidies. There are also many questions about how the subsidies distort production and marketing decisions. If I subsidize risk, farmers will assume more risk. They may plant on land that would not be planted without the policies. Higher asset values make it harder to enter agriculture.”
Ultimately, Goodwin said taxpayers won’t benefit from the bill and won’t receive anything from the subsidies.
“Like most all federal entitlement programs, spending is out of control and involves taking tax revenues and funneling the benefits to a politically-favored group — farmers,” Goodwin said. “United States farmers are simply phenomenal in terms of what they accomplish. I am a huge fan. However, cutting food stamps to preserve subsidies paid to a segment of society that is wealthier and has higher incomes is simply bad public policy.”
