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Reforming Federal Farm Policies

April 12, 2018
By Chris Edwards

The federal government spends more than $20 billion a year on agricultural subsidies with the vast majority of the handouts going to large, relatively wealthy farms producing of corn, soybeans, wheat, cotton, and rice.

The federal government spends more than $20 billion a year on agricultural subsidies with 39 percent of the nation’s 2.1 million farms receiving direct subsidies. The vast majority of the handouts go to large, relatively wealthy farms producing of corn, soybeans, wheat, cotton, and rice.

A new report by the Cato institute says, “The U.S. Department of Agriculture (USDA) runs more than 60 direct and indirect aid programs for farmers. Most of the direct aid goes to producers of a handful of field crops, not to livestock producers or fruit and vegetable growers. In the three largest farm subsidy programs—insurance, ARC, and PLC—more than 70 percent of the handouts go to farmers of just three crops—corn, soybeans, and wheat.”

The report examines eight reasons to end farm subsidies, among them: Subsidies redistribute wealth upward; subsidies harm the economy; subsidies undermine U.S. trade relations; and subsidies harm the environment.

Cato argues “[u]ltimately, Congress should end all farm subsidies. Businesses in other industries face many risks and market fluctuations, yet they prosper or fail depending on their own skill and planning without a federal subsidy cushion.”