On Friday, House Republicans failed to pass a Farm Bill reauthorization. Along with the Freedom Caucus’ refusal to cooperate until members were granted a vote on immigration reform, some Republicans objected to the Farm Bill’s continuation of subsidies for farming families who make up to $1.8 million a year.
Up to how much? The party of small government is subsidizing millionaires across the country? That’s right. And it’s been that way for a long time.
The Farm Bill made sense in 1933 — in the midst of the Depression — when it was first passed as the AAA, the Agricultural Adjustment Act. It makes no sense today. The persistence of this massive subsidy program is a classic triumph of politics over intelligent policymaking.
The goal of the AAA was summarized in the bill’s opening line: “to relieve the existing national economic emergency.” It was not intended just to make payment to farmers, but rather to provide general economic relief. Agriculture was the economic engine in rural America, so the strategy had merit at that time. However, the program has persisted for 85 years because of politics more than economic logic.
The wide dissemination of farm program benefits under the AAA and subsequent Farm Bills nurtured a political coalition that remains energetic and disciplined. Farm program payments have been large enough to keep recipients politically motivated, but not so costly as to foster substantial opposition. Whether they continue to make economic sense is another issue entirely.
When the program was initiated, commerical farms were typically small family operations. Today they may still be mostly family-run, but they are no longer small. In 2016, family farms grossing more than $350,000 annually accounted for only about 9 percent of all U.S. farm operations, but almost 70 percent of the value of farm production. Consequently, this relative handful of farms also received around 70 percent of Farm Bill payments and crop insurance premium subsidies.
As a result of consolidation, these government benefits have been concentrated in the hands of a small number of large, sophisticated farm businesses. The regressive character of this transfer of money has become extreme. The 9 percent of farms receiving the bulk of this support have an average household income two-and-a-half times greater than the average non-farm household.
Today’s pressing needs in rural America are not agricultural, by and large. Rural employment has yet to recover from the last recession, and rural job growth lags well behind the urban rate. Rural poverty rates exceed urban ones, and rural median income is well below the urban. Addiction and family breakdown have become epidemic in many of these communities.
Until relatively recently, concentrating rural relief on agriculture made sense. Not so today, when agriculture and mining account for only 5 percent of rural employment. With few of these families directly involved in farming, economic benefits accruing to that sector are simply not shared widely enough to have positive, systemic impacts. Our rural communities need a New Deal.
What would this relief look like if not the Farm Bill? Instead of targeting benefits to individual farmers, funds should go directly to rural communities to address key factors that limit growth: transportation and information infrastructure (including broadband), access to quality health care (including intervention for substance abuse and addiction), expanded educational opportunities, and economic development support to assist rural economies transitioning to technology- and service-oriented industries.
A new “Rural Community Relief” bill with these priorities would be truer to the original spirit and purpose of agricultural policy than today’s Farm Bill. After all, the goal was not to create a regressive transfer of wealth to a narrow slice of the rural population. Rather, it was to offer effective support for communities struggling to cope with a crisis. At one time, providing support to agriculture was a logical means of accomplishing this. That is no longer the case, and our policy choices should acknowledge this reality.
John Anderson is chairman of the Division of Business, Applied and Technical Science at College of the Ozarks.