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Farm Bill: Money for Nothin'… I Want My Subsidy

Posted By Daren Bakst On December 5, 2013 @ 7:44 pm In Capitol Hill,Economics,Front Page | Comments Disabled

The four principal farm bill negotiators have tentatively agreed on a framework for a new farm bill. A central aspect of this framework would be hilarious if it weren’t so sad.

The House and Senate farm bills both eliminate a program called direct payments because it pays farmers who don’t even plant a single seed. In other words, farmers can get money for nothing.

Now, the negotiators are replacing the direct payments program with new programs that would also pay some farmers for doing nothing.

This is how it works: Under direct payments, farmers don’t get paid for what they actually plant, but instead get paid for what are called “base acres.” As the Government Accountability Office (GAO) explains [1], “base acres” are:

a measure of a farm’s crop production history based on the number of acres planted on the farm during certain past years. The term base acres refers to a farm’s average planted acreage of specific crops during those years; the term does not refer to specific physical acres on that farm.

Payment is therefore based on the historical production of a crop, not on what is actually planted. This has led to serious waste. According to GAO [1]:

Cumulatively, almost one-fourth of the total value of direct payments made during this period [2003-2011] went to producers who did not, in a given year, grow any of the crop associated with their base acres—as they are allowed to do.

The payments may have been easy money for some farmers, but nothing is free: A total of $10.6 billion in taxpayer dollars, from 2003-2011, was doled out to farmers who didn’t grow any of the crop for which they received subsidies. There were even some recipients who received direct payments even though their land was “fallow” (i.e. they had not grown any crops on their land for the most recent five years).

To come back with new programs using this same base acre approach is absurd and an insult to taxpayers. We can look forward to some farmers continuing to get paid for nothing.

Representative Collin Peterson (D-MN), one of the four principal negotiators, isn’t happy about this approach. According to Politico Pro:

Peterson said he has resigned himself to the fact that the subsidies will be paid out on base acre calculations, but he expressed concern over the language because it means farmers could continue getting subsidies for crops they did not plant on any given year…

“I think it’s a really bad idea because we’re paying people that aren’t doing anything,” he said. He added: “It is what it is. You can only fight so many fights.”

Presumably, proponents will claim that the alternative is to base subsidies on actual planting decisions, not historical averages. Such a practice is more likely to distort planting decisions. This may be true, but it only shows that both approaches are flawed.

As is usual, Congress presumes that getting rid of one program means another program has to take its place. Farmers have far too many subsidies as it is. Direct payments shouldn’t be replaced, and Americans shouldn’t be forced to hand over money for nothing.


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2013/12/05/farm-bill-money-nothin-want-subsidy/

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[1] explains: http://www.gao.gov/products/GAO-12-640

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