The following commentary does not necessarily reflect the views of AgWeb or Farm Journal Media. The opinions expressed below are the author's own.
Matt's primary interest is in the biotech industry and ag policy.
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
If government payments are such an insignificant part of the largest farms income, let's eliminate those payments!! I'm a small farmer, but with $7.00 corn and $14.00 beans I don't think any of us should receive direct payments. But, let anyone talk about reducing subsidies, and the mega-farmers would scream the loudest. Just like in the hog lot, the fattest hogs are the first ones to the trough.
This is an excellent article. My question for Matt is why do you continue the perception that size has determines what a farm is a family business. My reading of the family business literature has not found that the size of a business determines whether it is a family business. My definition of a family business using this literature is: A business where the family (or small number of families) owning and operating the business has complete control over the vision, mission, values, and strategy of the business. A family farm is than a family business that produces and markets agricultural products.
Hi Bob. You are 100% absolutely correct. It was not my intention to give that impression. I totally agree. I should also note that in my first graph, I dont like the terminology USDA uses. The three groups are really just income (low, medium &high). Unfortunately the 'commercial' category might give the impression that those are not family farms, but its just an income /total sales category. Thanks for bringing this to my attention.