Herland Report: Food Subsidies: Farm subsidies are perhaps the ultimate, but secret, third rail of American politics.
While entitlements are discussed out in the open, farm subsidies are rarely talked about – even though they are the most expensive subsidy Washington doles out.
All told, the U.S. government spends $20 billion annually on farm subsidies, with approximately 39 percent of all farms receiving some sort of subsidy.
For comparison, the oil industry gets about $4.6 billion annually and annual housing subsidies total another $15 billion. A significant portion of this $20 billion goes not to your local family farm, but to Big Aggie, writes Sam Jacobs, the lead writer and chief historian with Ammo.com, and the driving intellectual force behind the content in the Resistance Library. He is proud to see his work name-checked in places like Bloomberg, USA Today and National Review, but he is far more proud to see his work republished on websites like ZeroHedge, Lew Rockwell and Sons of Liberty Media.
Food Subsidies: Note that this $20 billion annual farm subsidy figure doesn’t take into account the 30+ years of ethanol subsidies to the corn industry nor export subsidies to U.S. farmers issued by the USDA.
The government never properly explains why this is. Certainly small farmers are growing their crops at enormous risk. However, it’s not clear that agriculture is any different than other high-risk industries – especially because the United States is blessed with some of the most fertile farmland in the world, and a highly skilled labor force.
Subsidies don’t just cost taxpayers, an expense that might properly be justified by showing a return on investment. Subsidies also provide powerful disincentives against innovation, as well as cost effectiveness and diversification of land use.
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There is also a strong case to be made that farm subsidies are a major driver of the obesity and cancer epidemic in the United States. Every time Washington interferes in the private sector, they are picking winners and losers. The winners chosen are companies producing food that’s high in calories and low in nutritional density – and that helps make Americans sick and fat, because it distorts what food is available at what price.
While President Trump has sometimes discussed reducing farm subsidies, the solution to the problem is much more radical – the total elimination of all farm subsidies from the federal budget.
Food Subsidies in the United States
Food Subsidies: There have long been federal programs in the United States propping up the agricultural sector. For example, the Morrill Act of 1862 established land-grant universities with a focus on agricultural education. The Smith-Lever Act of 1914 similarly provided funding for agricultural education.
The first program similar to the farm subsidies of today was the Federal Farm Loan Act of 1916. This still exists in the form of the Farm Credit System, which currently holds $280 billion in assets. This Act came out of a study done by progressive Republican President Theodore Roosevelt. At this time, rural Americans made up the bulk of the United States’ population.
The Act allowed farmers to borrow 50 percent of the value of their land and 20 percent of the value of their improvements. Loans were available between $100 and $10,000 and amortized between five and 40 years. It was intended to provide poor farmers with an alternative source of credit from large banks. The successor of this Act, the Farm Credit System, currently provides approximately a third of the credit in rural America.
The Great Depression, the New Deal and Farm Subsidies
Food Subsidies: As with many other aspects of American economic life, farming changed with the advent of the Great Depression and the New Deal, which, at least it was argued, sought to minimize the impact of the worst parts of the Depression.
The Agricultural Marketing Act of 1929 was passed on the watch of Republican President Herbert Hoover, widely blamed for the Depression and maligned as having “done nothing” to protect Americans from it. This Act created the Federal Farm Board, which was itself a modification of the Federal Farm Loan Board.
Hoover believed that he could halt the collapse of agricultural prices by buying, selling and storing surplus grains. Another method to prevent the collapse was to lend to farmers on generous terms. Farmers used the loans to purchase seed and feed. This was particularly important in the South, where farmers were just getting over a drought.
This had a very predictable effect: Farmers began raising more crops than they knew they could sell. They knew the government would buy whatever they produced, and the bill contained no production limit. Deflation was not countered and the Depression worsened for American farmers. The federal government spent $500 million before the program was abolished in 1933.
The real expansion of federal subsidies for the American farmer began under President Franklin Delano Roosevelt. Programs enacted under FDR’s New Deal included price supports for commodities, regulations on the supply of farm commodities, barriers to prevent importation of farm commodities, and crop insurance programs. These programs, while modified and greatly expanded, form the basis of current federal farm policy. There is no other way to describe this than central planning.
The first major program passed by FDR as part of the New Deal was the Agricultural Adjustment Act of 1933. This was the somewhat infamous program that had the government paying farmers to not plant crops, to dump out milk and the like when people were going hungry in the streets. Not only did it look bad, it was also declared unconstitutional in 1936, in the United States v. Butler case, on the grounds that the Constitution made agricultural regulations a state matter. This was in the ancient days, when the Supreme Court declared acts unconstitutional when the Constitution did not authorize them to do so.
The first replacement was the Soil Conservation and Domestic Allotment Act of 1936. This paid farmers to plant fewer crops on the basis that it was preventing topsoil erosion. A more straightforward replacement, the Agricultural Adjustment Act of 1938, preserved many of the earlier provisions of its 1933 cousin, and was passed at a time when the Supreme Court was more amenable to the wishes of President Roosevelt following his proposed threat to pack the court with up to 15 judges.
This new version of the Agricultural Adjustment Act mandated price supports for broad sections of American agriculture. When challenged in court, the Supreme Court ultimately upheld it under (what else) the commerce clause.
Commodity price and income supports are now a staple in the federal budget. But what does the money go toward?
Where Do Farm Subsidies Go?
Food Subsidies: Farm subsidies are often painted as the last refuge of the American small farmer. But even a close examination of where farm subsidies go reveals that nothing could be further from the truth.
The 10 largest recipients of aid receive between $14 million and $23.7 million, averaging $18.2 million, or approximately $1.8 million per year for what are giant agricultural combines. Part of this is a deliberate result of United States agricultural policy – after the Second World War, farmers were told to “get big or get out.”
Let’s look at some startling facts about U.S. farm subsidies:
- Over 6,000 farming companies and combines received more than $1 million federal aid in the years between 2008 and 2018.
- This constituted a total of over $11 billion in this 10-year period.
- 18 different farming entities received over $10 million.
- Over $626 million went to urban areas – i.e., places with over 250,000 residents and precisely zero farms.
- The five most populated cities in America (New York, Los Angeles, Chicago, Houston and Philadelphia) received a collective $18 million in farm subsidies. 25 percent of all subsidies went to someone receiving over $250,000 in subsidies.
- The 150 most affluent zip codes in America received $5 million in subsidies in 2017 alone.
- What’s more, the government is still paying farmers to not farm.
- 12 members of Congress received as much as $637,059 in farm subsidies in 2017.
All of this adds up to underscore the true nature of America’s food subsidy system: It’s a massive welfare program directed at the rich and affluent, which artificially distorts food prices for everyone.
Perhaps worst of all, the massive farm subsidies aren’t keeping people out of debt. American farmer debt currently stands at $409 billion. Wheat is receiving $45.9 billion in subsidies while corn is getting $112 billion.
Farmers received $12 billion in aid from the Trump Administration to help hedge against potential losses from the trade war with China. While it’s difficult to say to what extent any of this is vote-buying, it is worth noting that Iowa is the second-largest recipient of USDA subsidies, only slightly behind Texas.
But if the story here were simply one of government largesse, this would be a very short article, indeed. The story is much deeper, and goes to the heart of health and wellness in the United States.
The Coming Tax on Meat
Food Subsidies: Meat, in particular red meat, has long been maligned as a source of unhealthy calories. However, the paleo movement, the low-carb movement, and the extreme carnivore diet movement have all championed meat, in particular red meat, as the healthiest thing you can possibly eat.
Most health conscious people these days are, at the very least, avoiding simple sugars and opting for healthy complex carbohydrates in their diet, if not drastically reducing the number of calories they get from carbs.
Whether or not carbs are good for you or not is a source of continued debate, and largely centers around which carbs and how much of them. Likewise, dairy is enjoying a renaissance among people who tout the health benefits of whole milk and raw milk.
Taxing meat in the manner of cigarettes and sugar, however, is becoming an increasingly mainstream idea. The proposal is linked not just to a desire to exert even more control over what Americans eat, but also with (of course) carbon emissions and saving the environment.
Beyond the simple fact that a tax on meat would be yet another example of government overreach, there are other problems with a meat tax. It is also based on a subjective and dubious interpretation of the effects of meat on both the environment and on personal health. Such a tax would, like existing taxes on sugar and tobacco products, disproportionately impact the poorest Americans.
Given the poor job that the United States Department of Agriculture has done with attempting to dictate what people eat with the Food Pyramid, it’s unlikely that they’re going to hit paydirt with a meat tax.
Subsidies Cause Cancer
Food Subsidies: The consequences of subsidies are far reaching when one considers the correlation with obesity. While tobacco use is responsible for one-third of all cancer cases, obesity is considered responsible for another third. Put more directly, there is a health epidemic in the United States similar to tobacco, but rather than a public campaign against it, it’s subsidized by the federal government.
This is what led a presidential report commission on cancer to attack food subsidies in much the same way that it did tobacco.
There is another aspect to subsidizing unhealthy food, which will become increasingly expensive: healthcare. As the federal government creeps more into healthcare, the more you and other taxpayers will be subsidizing (again) by paying for treatments for those who are clinically obese, diabetic, or otherwise unhealthy from the nutrient-poor foods promoted by the United States government through its subsidies.
This creates a maniac cycle, whereby the federal government subsidizes foods that make people sick and fat, then subsidizes the healthcare of sick and fat people. In all likelihood, this will all be paid for disproportionately by people who are neither sick nor fat.
It’s important to point out that more government intervention, in the form of taxation or subsidizing “healthy” (according to some) foods, is not the answer – it’s the problem. Subsidies and other government handouts are invariably shaped by those with the most political influence. The ultimate programs always bear little resemblance to how they are touting through what are effectively PR campaigns in the nominally independent media.
In the age of digital media, it has never been easier for the average person to learn what they need to know about feeding themselves and their family in the most healthy way possible. Government subsidies are not required for this and, as we have shown, have very much the opposite impact on public health. It is time for a revolution in the world of food subsidies – one of drastic reduction and ultimately the elimination of these wasteful and counterproductive programs. Read the full article here.