USDA: Government Payments Shift to Larger Farms

March 22, 2012

By: Fran Howard

Direct payments have become a hot button for taxpayers and growers alike. Corn and soybean groups are already willing to forgo direct payments for other types of farm subsidy programs due to the growing controversy. USDA’s recent study Government Commodity Payments Continue To Shift ?to Larger Farms, Higher Income Households is unlikely to change that.

The report shows that the largest farms with the highest sales receive the most money from government programs. For instance, the average payment in 2005 to producers of cash grains and cotton with sales of $1 million or more was $205,024.

Farms with 250,000 or more but less than $1 million in sales received average payments of $72,477, while farms with sales ranging between $10,000 and $249,999 got average payments of $17,900. As you can see from the figure below, government payments were exceptionally high in 2005 and direct payments accounted for less than half of total government program payments.

"While commodity program payments to farmers vary considerably from one year to the next, they continue to play an important role in agricultural policy, accounting for $6 billion to $16 billion annually between 1999 and 2009," says USDA in its study. Those numbers do not include conservation program payments.

As farms have gotten larger, the share of payments they receive has also grown. In 2009, family farms with more than $500,000 in annual sales accounted for 54 percent of production of the major program crops, up from 22 percent in 1991.

"By 2009, farms with more than $500,000 in constant dollar annual sales received 46 percent of all commodity-related payments, up from 20 percent in 1991," says USDA. Over the same period, the share of commodity payments paid to smaller commercial family farms shrank from 54 percent to 27 percent.

"Since operators of larger farms tend to have higher household income, the shift of commodity-related payments to larger farms has resulted in a shift of payments to higher income households," notes USDA. "For example, in 1991, half of commodity payments went to households with incomes over $54,940 in constant 2009 dollars (50th percentile) and a quarter of commodity payments went to farm households with incomes greater than $115,000 (75th percentile).

By 2009, the distribution of payments had shifted upward considerably, with half of commodity payments going to households with incomes over $89,540 and a quarter going to farm households with incomes greater than $209,200."

View the entire report.

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COMMENTS (4 Comments)

splined
It truly is a shame if congress is allowed to continue its war against small family farmers with the highly financially discriminatory crop insurance scheme. This scheme which guarantees the greatest probability of the greatest income to the largest farmers creates impossible financial competition for most small farmers. In other words congress gives so much more to the haves that those with less are unable to have any chance of competing in the farm business. Crony capitalism is the term that describes federal crop insurance. Federal crop insurance is a government scheme that uses the taxpayers' contributions and government resources to disproportionately guarantee greater wealth to those with the greatest probability of the greatest wealth. In exchange for highly subsidized premiums the wealthiest farmers or those with the greatest probability of the greatest wealth (generally those with the most acres controlled or owned) receive nearly bullet proof investment and profit insurance worth many times what smaller farmers can obtain. (Fair market values of investment /profit guarantee received.) In short, government is guaranteeing the most to those who have the most. This granting of overwhelming prosperity in exchange for highly subsidized premiums allows the largest and already most financially competitive farm operators the ability to make sure most smaller farmers can see the lights of the uncoming train financially.

10:48 PM Apr 8th

swmnag - Marshall, MN
This is exactly why I have been trying to contact as many Senators and Representatives as possible. The public is already turning on ag, and we don't need any additional fuel to add to the fire. This report already tells us what we, as farmers, know. Large farms get a majority of the payments. I have been trying to propose to Congress that we need to eliminate DP, and limit subsidy for farms larger than 2500 acres, though that number is arbritary and fits where I live. The large farms, 4000 Acres in my opinion, should not be recieving any government subsidy period. Be it DP, or crop insurance. They can still get CRP and other conservation benefits though. Start contacting your Representatives and Senators and get them to stop feeding the "PIGS" of farming and help this country eliminate its debt and be put back on the right path.
10:00 AM Mar 22nd

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