Who's Benefiting from Farm Subsidies? A Primer

by Leigh Pomeroy

In the coming weeks Vox Verax and Minnesota Monitor will be looking at farm policy. We will attempt -- and this is a grand challenge -- to make this information understandable for regular folks living in the city whose knowledge of these issues extends not much further than the produce section of their local Lunds, Byerly's, Cub, Rainbow, co-op, or other grocery store.

Minnesota Monitor will be learning along the way as well, for this is an incredibly complex issue involving not just agriculture but issues of environment, energy, trade, rural economies, social responsibility, quality of life and much more. Put simply: Farms can exist without cities, but cities cannot exist without farms.

I'd like to say that we're going to approach this subject in a logical, step-by-step fashion. But since farm policy is not set up that way, to try to put it in such a neat progression is very difficult, if not pure folly.

In many ways, farm policy resembles health care policy in the United States. It is built upon a makeshift system that worked at one time but has since become obsolete. But it is embedded into the fabric of our society, and thus changing it is akin to performing surgery — a painful process even with generous amounts of anesthesia.

Is this any different from any other country in the world? No. For all countries are struggling with 19th and 20th century farm policies while facing 21st century problems and needs.

Whereas once farm policy in the U.S. affected primarily those within its borders, today U.S. farm policy impacts every corner of the globe. Thus, when we make our farm policy decisions this year and in the future, we must be cognizant of their impact on the planet for generations to come.

Americans take for granted cheap food. For example, wholesale pork and beef prices have declined over 50 percent since 1970, adjusted for inflation. Meanwhile, energy costs, which are a huge factor in food production and shipping to market, have nearly doubled.

There are several reasons for the decreasing price of food. These include new technologies, hybridization, chemical and fertilizer advancements, larger farms (creating economies of scale), lower trade barriers and farm subsidies. While many of these are advancements, they also create costs that, while not apparent in the price of food, emerge elsewhere in societal balance sheets. For example, farm chemicals and fertilizers create huge environmental costs; lower trade barriers can undermine third world country economies; and farm subsidies can create an artificial domestic economy, rewarding accounting proficiency and but also farm inefficiency.

Today we will deal with something basic to U.S. farming in the 21st century: subsidies.

Farm subsidies arose in the 1930s when farmers were truly desperate. The farm economy was collapsing along with much of the rest of the country. In order to keep the U.S. economy going, Congress and President Franklin D. Roosevelt instituted a broad spectrum of programs. These included encouraging farmers to stay on their farms.

Some 70 years later, as grist magazine has pointed out, subsidies have become a "Short-Term Solution That Stuck."

Like any welfare program, subsidies can lead to entitlement, even addiction. In Minnesota and South Dakota, for example, we recently witnessed the effrontery that agricultural interests felt when the Federal Railroad Administration turned down a proposed $2.3 billion taxpayer-subsidized loan for the DM&E railroad.

Most economists agree that in order to reach true economic balance in the world, the fewer trade barriers we have the better off we will be. Yet moving from a system that is highly impacted by government policy can be very painful for those who have done well by that system. And dismantling trade barriers does not just mean eliminating duties, taxes and allocations. It means doing away with internal economic incentives as well.

Such change cannot be achieved overnight -- nor should it be. A balancing of agricultural production and trade needs to take place over years, perhaps decades, perhaps even generations. Short-term solutions will not do.

That said, I will close with a simple table showing which congressional districts in Minnesota, North Dakota and South Dakota are receiving the most farm subsidies. Keep in mind that the current officeholders in those districts are not necessarily responsible for this largesse, as these subsidies have come about over many decades. Thus, current legislators should not be blamed for these policies; rather, they should be encouraged to explore ways to make U.S. farm policy beneficial not only to Americans but citizens worldwide.

Member	District	Total subsidies 1995-2005, in millions	Subsidies per capita (1995-2005)	Number of farms (2002)	Subsidies per farm (1995-2005)
Earl Pomeroy*	D-N.D. at-large	$7,040.0	$11,548	30,619	$229,923
Stephanie Herseth*	D-S.D. at-large	$5,560.0	$7,453	31,736	$175,195
Collin Peterson*	D-Minn. 7	$4,810.0	$8,014	32,629	$147,415
Tim Walz*	D-Minn. 1	$3,310.0	$5,473	21,384	$154,789
John Kline	R-Minn. 2	$613.0	$889	6,784	$90,360
Michele Bachmann	R-Minn. 6	$280.0	$405	6,691	$41,847
Jim Oberstar	D-Minn. 8	$244.0	$390	12,619	$19,336
Jim Ramstad	R-Minn. 3	$19.5	$31	600	$32,500
Betty McCollum	D-Minn. 4	$1.8	$3	111	$16,216
Keith Ellison	D-Minn. 5	$.7	$1	21	$33,333

*Indicates member of House Agricultural Committee. Rep. Peterson is chair of that committee. Sources: Environmental Working Group and USDA National Agricultural Statistics Service.

Coming up: Who's getting the big subsidies and how much are they investing in their congressmen and senators?