Tuesday, March 08, 2011

Do Farm Subsidies Benefit the Largest Farms the Most?

Most people contend that farm subsidies should be eliminated because they benefit mostly larger farms vs. saving the family farm. It's true that many subsidies are tied to commodity production. As a result, those that grow more commodities (i.e. larger farms) will get more money from the government. As a result larger producers take in a larger share of all subsidies (especially those related to commodities). However, subsidies account for a much smaller percentage of income for large producers, and make up a much larger percentage of total income for medium or small producers.

                                                  Definitions:        Commercial farms:  >=  $250,000
                                                                             Farms with sales < $250,000 include
                                                                                 1) Intermediate farms: full time operators
                                                                                 2) Rural residence farms

As the chart above (from the USDA) shows, in 2008 farms earning less than $250,000 /yr recieved a much greater percentage of their income in the form of government payments, while subsidies only accounted for 4% of income for producers with the largest incomes. The chart below indicates that this relationship seems to hold across years for the last decade.

USDA Report- Government Payments and the Farm Sector: Who Benefits and How Much?

USDA Report-Farm Income and Costs: Farms Receiving Government Payments

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