USDA: Most Direct Payments Go to Larger Farmers

April 4, 2012 07:44 AM

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 this state of affairs.

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 at least $250,000 but less than $1 million in sales received an average payment of $72,477, while farms with sales between $10,000 and $249,999 got an average payment of $17,900.

Government payments were exceptionally high in 2005 and direct payments accounted for less than half of total government payments.

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

"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," USDA notes.

For example, in 1991, half of commodity payments went to households with incomes of more than $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).

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