Direct Farm Subsidy Programs in the 2023 Farm Bill: What Farm and Other Interest Groups Want

Key Points

• The farm bill is scheduled for reauthorization in 2023, and, in response, farm interest groups are urging Congress to maintain or expand agricultural subsidy programs.
• Over the past 40 years, farm bills have provided an ever-broadening array of benefits for a similarly ever-expanding array of farm and other interest groups, including nutrition programs and conservation and climate change initiatives that pay farmers to reduce soil erosion and other forms of pollution.
• Unlike the farm bill’s nutrition provisions, which provide crucial assistance to over 40 million low-income individuals, the majority of agricultural subsidy dollars have gone to fewer than 200,000 of the largest and wealthiest farms, which face little risk of bankruptcy or other financial forms of business failure.

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For over seven decades, many of the programs authorized by successive farm bills have been subject to sunset mandates, including in the current farm bill, the 2018 Agriculture Improvement Act, whose key provisions are set to expire on September 30, 2023. In response, a wide range of interest groups have already expended a fair amount of energy in lobbying Congress to maintain existing programs and introduce new provisions that will serve their interests in the next farm bill.

Those groups include long-standing farm organizations such as the American Farm Bureau Federation and its state-based affiliates and crop-specific organizations such as the National Corn Growers Association and the National Association of Wheat Growers. The major purpose of many of those organizations has been to maintain support for their constituents, at the expense of either taxpayers or consumers through regulations that generate higher prices for commodities such as sugar and dairy products, even though most of the benefits generally accrue to the largest farms.¹

The steady and increasingly loud drumbeat from those groups is that existing subsidy programs should be continued, their scope expanded, and federal spending increased. In several cases, the justification being used is that higher energy, fertilizer, and other input costs over the past 18 months have placed a severe strain on the agricultural sector’s financial viability and that the government needs to compensate farmers for those higher costs. The facts, omitted in many of the claims for more subsidies, are that commodity prices for many crops have also been exceptionally high over the same period and the sector is forecasted to enjoy well above average incomes in 2022 and over the next two or three years.²

Newer farm interest groups that serve producers of specialty and small-acre crops (for example, organic crop growers and pea and lentil producers)³ have also entered the national farm policy arena over the past two decades. Many of these groups were originally focused on establishing regulations that would create quality standards for their crops. Understandably, some of those groups have subsequently morphed toward seeking benefits from other programs, especially crop insurance.

But farm groups are not the only players in the agricultural policy game. Beginning in the 1970s, subsequent to the establishment of the Environmental Protection Agency in 1970, environmental and conservation organizations such as the Sierra Club and the World Wildlife Fund became more heavily engaged in agricultural policy, with a focus on soil quality (a long-standing farm bill concern), agricultural chemical pollution, wildlife habitat, and endangered-species protection. Other organizations such as the Environmental Working Group (founded in 1993) have also became actively engaged in farm bill debates.

Over the past three decades, arguably beginning in 1985 with the Conservation Reserve Program, an initiative under which the federal government pays farmers to take “fragile” lands out of production, the environmental groups have generally coalesced around policies oriented toward paying farmers to adopt conservation and pollution-mitigation practices. The “pay us to pollute less” approach is now widely applauded by farm interest organizations and reflected in a wide variety of programs. It also explains farm groups’ otherwise somewhat paradoxical enthusiasm for the current Biden administration’s focus on adopting production practices that might reduce greenhouse gas emissions, which, as what is now a matter of course, will also involve taxpayer-funded subsidies.

In contrast, industries that are either upstream or downstream from farmers in the agricultural supply chain have generally been anxious to support federal programs that increase agricultural output. Agricultural chemical, seed, animal health, farm equipment, and other input providers have a vested interest in seeing crop and livestock production expand, while processors of agricultural commodities (for example, flour mills, meat-packers, and dairy processors) and farther downstream retail outlets such as supermarkets prefer more plentiful supplies and lower wholesale commodity and processed food prices.

Further, the “you scratch my back and I’ll scratch yours” political practice called logrolling has led to groups with apparently disparate or conflicting interests working together to benefit both parties. A classic example involves including the Supplemental Nutrition Assistance Program (SNAP), also known as food stamps, and other nutrition programs under the farm bill umbrella. As a result, bipartisan coalitions of members with urban and rural constituencies tend to protect funding for both farm subsidy and nutrition assistance programs. A less widely recognized issue concerns the coalition between private insurance companies and farmers to maximize benefits for both groups from the federal crop insurance program.⁴

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Notes

1. See the recent study by Anton Bekkerman, Eric J. Belasco, and Vincent H. Smith, “Does Farm Size Matter? Distribution of Crop Insurance Subsidies and Government Program Payments Across U.S. Farms,” Applied Economics Policy and Perspectives 41, no. 3 (September 2019): 498–518, https://onlinelibrary.wiley.com/doi/abs/10.1093/aepp/ppy024.
2. The current robust state of the US agricultural sector is described in Eric J. Belasco and Joseph W. Glauber, “The Financial Health of the US Farm Sector,” American Enterprise Institute, October 4, 2022, https://www.aei.org/research-products/report/the-financial-health-of-the-us-farm-sector.
3. For example, the major goal of the Organic Farmers Association, founded in 2016, is “to provide a strong and unified national voice for domestic certified organic producers” on policy issues. Organic Farmers Association, website, https://organicfarmersassociation.org.
4. A third of all federal crop insurance program subsides end up in the hands of private companies selling and servicing the crop and revenue insurance policies subsidized by taxpayers, and much of that flows to foreign reinsurance companies that also discretely lobby to keep the program in place.