CAGW Analyzes Myths and Realities of Farm Subsidies

Washington, D.C. - Citizens Against Government Waste (CAGW) today released its first 2007 Farm Bill Issue Brief, Farm Subsidies: Myth and Reality.  The report exposes some of the falsehoods that are used to perpetuate the outdated system of subsidizing farmers and sets the record straight.

“With Congress poised to reauthorize the farm bill, now is the time to examine some of the myths surrounding agriculture subsidies,” said CAGW President Tom Schatz.  “This report will give reformers the tools they need to counter the misleading claims of the powerful farm lobby.”

The issue brief explains that U.S. agricultural policy consists of an archaic system of subsidies, price and supply controls, and import restrictions, much of which has changed little in the past 70 years.  The image of the poor, struggling family farmer has been used to maintain the status quo in agriculture policy.  The reality is that only a handful of wealthy farmers benefit from a continuation of the subsidy system.  The current farm program structure helps the richest farmers get richer, but doesn’t help small farmers stay on the land.  It is also costly to taxpayers and raises prices to consumers.  By concentrating wealth in the hands of the few, it undermines the economy of rural America.  Finally, it interferes with international commerce (which impacts the entire U.S. economy) in addition to further impoverishing farmers in developing countries.

The 1996 Farm Bill moved away from these obsolete policies, particularly by eliminating many of the production and supply controls and theoretically putting subsidies on a path to be phased out. However, depressed agricultural prices in the late 1990s led to increased spending for "disaster" assistance, which increased subsidies. Then, reform took a giant step backwards when the 2002 Farm Bill codified the higher level of subsidies and introduced a new subsidy program called countercyclical payments.

“We would like to see a return to the 1996 Farm Bill’s more reform-minded policies.  Congress must reject the myths of subsidies and make agriculture reform a reality,” concluded Schatz.

The report, written by John Frydenlund, Center for International Food and Agriculture Policy for CAGW, is available at www.cagw.org.

Citizens Against Government Waste is a nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government.

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