By most reasonable measures, America’s corn farmers have had a fantastic year. Their 14-billion-bushel harvest represents the largest yearly haul of any crop by any single country in world history. Corn farmers are the last people who should need your tax money, but that’s exactly what they’re getting.
Good weather and innovative new seeds have allowed modern farmers to produce more corn per acre than ever before. In contrast to the image of the struggling family farm that prompted Willie Nelson and John Mellencamp to start Farm Aid 30 years ago, farm family incomes are actually higher than the American average, as they have been for nearly three decades.
That’s why it ought to outrage taxpayers that the government’s crop “insurance” program — originally intended as a safety net for family farms — is going to pay out $10 billion this year to these same hugely successful corn growers. Largely because of the success of the harvest, corn prices per bushel have declined, thus triggering automatic payments.
This is just one perverse outcome of America’s broken farm-subsidy system. It’s also a sign that the supposedly money-saving bipartisan farm bill President Barack Obama signed in February won’t work as advertised. American farm policy remains very far from any free-market ideal.
But all is not lost. Though debate on the next farm bill likely won’t start in earnest until sometime in 2018, there are constructive steps that both Congress and the administration could take to improve farm policy now.
The new conservative majority in the Senate could work with fiscal hawks in the House to make some tweaks. One option is a minimal transparency measure that would require the names and addresses of the crop-insurance program’s biggest beneficiaries to be published, a requirement that is already in place for other agricultural subsidies. Using the USDA’s database, the Environmental Working Group found that at least 15 members of Congress received farm subsidies in 2013, 13 of whom supported the bill. There are about 1.2 million crop insurance policies that benefit over 1 million farms, but the great bulk of subsidies go to the very biggest players. Twenty-six truly enormous farms received subsidies over $1 million each in 2011 according to an analysis conducted by the Environmental Working Group.
For its part, the Obama administration should work to implement one of the good changes in this year’s farm bill, requiring that farmers who take crop-insurance premium subsidies be accountable for their conservation practices. The 2014 bill extended and expanded a policy that President Ronald Reagan first signed into law in the 1980s, that agriculture subsidies shouldn’t pay to destroy wetlands and prairies in ways that impose hidden costs on taxpayers.
Under this program of “conservation compliance,” if farmers take subsidies and grow crops on highly erodible land, they need to have plans to prevent the loss of soil. If they destroy wetlands to begin new farming, those lands are ineligible for subsidies. Farmers who don’t like the government’s rules are free to ignore them, so long as they give up the subsidies.
This is a perfectly fair policy that makes intuitive sense. However, the administration is sure to be lobbied by some farm groups who favor weak rules that let farmers continue to do the wrong thing and collect government checks anyway. During the battle over renewal, many farm groups, indeed, tried to end conservation compliance entirely.
Over the long term, subsidizing the cultivation of wetlands and prairies isn’t just bad environmental policy; it also sets the stage for fiscal disaster. These lands are particularly sensitive to floods, droughts and other extreme weather, and subsidizing their conversion to farmland will result in big claims on the Treasury. Strong conservation compliance rules can save hundreds of millions of dollars and protect many environmentally sensitive areas.
Even though they make up a rather small share of the federal budget, farm subsidies deserve a high place on any list of the most profligate federal programs. In the long term, a system that has turned row-crop farmers into welfare recipients should be eliminated outright. Market forces, not government bureaucrats, should determine what gets grown and who grows it.
— Eli Lehrer is the president and co-founder of the R Street Institute, a free-market think tank.