Because of an increase in crop prices, Midwestern farmers may not qualify for the primary form of farm subsidy for years to come. As The Wall Street Journal’s Scott Kilman points out, the market has done what decades of political wrangling couldn’t: slash farm subsidies.
According to The Environmental Working Group, a Washington activist organization, 10% of farms receive 74% of the federal money.
Other types of subsidies not linked to market prices will continue, but even support for those are waning as restraining federal spending to curb the federal debt becomes center stage with both Congress and the White House.
America’s main farm-subsidy program began in the 1930s Depression-era when 25 percent of Americans lived on farms.
Kilman notes that today, less than 1% of the population is in farming. And because the advances in farm equipment, farmers are able to work farms with much larger total acreage now than in decades past.
Kilman explains the original Depression-era subsidy program allowed Congress to establish a target price for certain crops, and when market prices dropped below that price, the government sent growers a check for the difference.
But current target prices are based on crop markets from the late 1970s until 2005, when corn averaged roughly $2 a bushel, and soybeans around $6.
Commodity prices are far too high now to qualify for payouts under the federal program’s price support formula. Corn sells for about $7 a bushel, and Soybeans get $13 a bushel, both far above the subsidy program’s target price, negating the price-support checks.
“We don’t envision farmers here ever seeing a price-support check again,” said Darrel Good, a University of Illinois economist. “It’s the end of an era.”
Kilman claims the USDA still ships billions of dollars annually to farmers for various other programs, such as payments for keeping highly erodible land in grass rather than row crops.
“It’s pure profit to me, but I can’t defend it when we’re doing so well,” said Tim Lenz, a farmer in Strasburg, Illinois, who is willing to forgo the $38,000 in fixed-price subsidies he receives annually for his 2,600 acre farm. Lenz just built a $200,000 sheet-metal “machine shed” last year that houses his tractors, two grain combines, and other equipment.
Instead of the federal government subsidizing large, corporate owned commodity producers receiving billions in taxpayer handouts, why not subsidize farmers’ markets, and local organic growers so taxpaying citizens can purchase all or most of their food locally, and benefit from the Farm-to-Table Movement.