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U.S. farm welfare subsidizes the rich

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In addition to a great football game, this year’s Super Bowl audience witnessed a memorable paean to the hardworking American farmer: a Dodge commercial featuring the recorded gravelly tones of Paul Harvey, the late "Rest of The Story" broadcaster. Farm-state politicians were quick to exploit it: Sen. Charles E. Grassley, R-Iowa, told reporters he "hope[s] the people of America will wake up and appreciate the family farmers of America."

Actually, farming no longer resembles the hardscrabble family enterprise of so much mawkish marketing. Much of it is dominated by large operators supplying not only U.S. dinner tables but also far-flung export markets. Notwithstanding a major drought, net farm income for 2012 reached $112.8 billion, according to the U.S. Agriculture Department, down only slightly from the previous year’s record of $117.9 billion in 2011. USDA expects farm income to hit a post-1973 high of $128.2 billion in 2013.

The department also forecasts that 2013 net equity in the farm sector will exceed $2 trillion (in constant 2005 dollars). Land prices are booming because of strong crop prices and the Federal Reserve’s low-interest-rate policy. Large agriculture-related companies are swarming Midwest campuses, snapping up agricultural science students: The Wall Street Journal reports that ag students enjoy the third-lowest unemployment rate of any undergraduate major.

Farmers are wealthy, the U.S. food supply is not remotely at risk — and yet the government still piles on the subsidies. They totaled an annual average of $11.5 billion over the past four years, according to USDA. Farmers get direct payments for growing certain commodities, deeply subsidized crop insurance, cash rewards for practicing soil conservation — you name it. The programs distort markets and shift resources to agriculture that might find more efficient use elsewhere. Sorry, ag science grads: That includes your labour.

Congress failed to produce a new five-year version of the farm bill last year, a turn of events many bemoaned as the latest manifestation of Washington gridlock. It was lamentable, in that nutrition aid for the poor got caught up in the fight. But as for the farm subsidies themselves, there was no need to rush. The bill contained "reforms" that would have ended the most egregious direct payments to major commodity producers — and replaced them with an enhanced "crop insurance" program that’s arguably just as lush.

Amid this milieu, Mr. Grassley is a relatively reform-minded figure. Last week, he and a bipartisan group of three other senators offered a bill that would cap subsidies at $125,000 per farmer or $250,000 for a married couple. It’s a reprise of legislation he’s offered in the past — and it’s certainly a step in the right direction. But limiting agricultural corporate welfare to a quarter-million dollars per couple is a far cry from a total rethink of farm policy, which might start with this question: Perhaps God made the farmer, as Paul Harvey says. But does the federal taxpayer have to make him rich?

 

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