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Economic Sense

RSS By: Matt Bogard,

Matt's primary interest is in the biotech industry and ag policy.

Do Large Farms Benefit the Most from Subsidies?

Jul 26, 2011

By Matt Bogard

Most people contend that farm subsidies should be eliminated because they benefit mostly larger farms vs. saving the family farm. It's true that many subsidies are tied to commodity production. As a result, those that grow more commodities (i.e. larger farms) will get more money from the government. As a result larger producers take in a larger share of all subsidies (especially those related to commodities). However, subsidies account for a much smaller percentage of income for large producers, and make up a much larger percentage of total income for medium or small producers.

As the chart above (from the USDA) shows, in 2008 farms earning less than $250,000 /yr recieved a much greater percentage of their income in the form of government payments, while subsidies only accounted for 4% of income for producers with the largest incomes. The chart below indicates that this relationship seems to hold across years for the last decade.

This big vs. small conversation may have populist appeal, but it only invokes class envy, and is not supported by the data when looking at subsidies as a share of income across all farm sizes.

USDA Report- Government Payments and the Farm Sector: Who Benefits and How Much?

USDA Report-Farm Income and Costs: Farms Receiving Government Payments



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COMMENTS (7 Comments)

Douglas - Paoli, IN
I started farming with 100 acres. I now farm 4000. I am much more efficient now which is good because I now pay 6 figure taxes each year. Farm subsidies offset a small part of my taxes which are WAY too high. We should encourage EVERYONE to raise food not just small inefficient farms.
9:41 AM Jul 31st
The question is whether the large farms benefit "the most"? Large farms around here use the subsidies to buy more land (Kansas). So-large farms do not need the subsidies. Small farms need the subsidies.

The writer (representing large farm interests) accuses anyone who disagrees with him of creating class envy. My contention is that this article itself creates class envy by finding statistics to make a larger point than they really can prove using good methodology.

Who benefits the most? Large farms, of course. They get something they do not need. We need to means test these programs if they survive.
9:37 AM Jul 30th
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