WHO IS REALLY GETTING WELFARE FROM THE FARM BILL?

By Juan Montoya
It's always enlightening to read comments to this blog complaining of food stamp use as a prime example of government welfare at its worse.
Still, in the bigger scope of things, it's really not the food stamp recipients who are making a dent in the federal budget as much as have been the large-scale farmers and agribusiness who have been tapping into the public treasury. In every Farm Bill passed in recent history, it has been crammed full of goodies for farmers from subsidized price-support systems for growers of everything from sugar, dairy products, corn, etc.
With budget deficits soaring, Congress is looking to reduce unnecessary spending in the farm bill. The Congressional Budget Office estimates that direct spending under the Senate and House 2013 farm bills
would be $955 billion and $940 billion for the 2014-2023 period, respectively.

One of the most expensive programs in the bill is crop insurance, where costs are skyrocketing. From 2000-2006, the average annual cost to taxpayers for subsidizing crop insurance was $3.1 billion. That cost is expected to grow to $8.9 billion from 2013-2022.
Under another plan – the direct payment program – farmers are paid regardless of whether they grow crops. According to a 2012 Government Accountability Office report, from 2003 to 2011, $10.6 billion (about 25 percent of all direct payments) went to farmers who did not grow any of the crops for which they were being allocated money in a given year.
And across the Midwest and along the southern states, a small group of large farmers and sugar cooperatives have been cleaning up on the artificially-high set price of sugar that results when the government restricts the imports of sugar from Central and South America to protect sugar beet and sugar cane growers.
In other words, there is plenty of cheap sugar on the world market and only government intervention to limit its entry into this country is keeping this needless industry alive at the expensentries as a result of government “protections” for the sugar industry, including quotas and tariffs.
The farm bill set a minimum price for sugar, mainly US-grown sugar from beet of U.S. consumers.
Americans pay two to four times higher prices for sugar than consumers in other cous and sugar cane leading to criticism that the country is fueling "Big Sugar" through loans to farmers and import restrictions from cane-sugar-producing countries like Central America and the Caribbean.
Consumers pay hundreds of millions of dollars more for milk, butter, cheese, and a variety of other dairy products because of government-imposed artificial limits on dairy production.
Biomass subsidies to promote “renewable” fuels divert corn supplies from food manufacturing to ethanol production and displace soybeans and other crops, thereby propelling food prices upwards.
The increases in food prices fall most heavily on the poor.
Conservatives are apparently annoyed that Americans are using more food stamps. Food stamp usage has grown by at least 70 percent since the financial crisis in 2008, with a record 47.8 million people relying on food stamps in order to afford their weekly grocery bills. This is costing the government $74.6 billion. Yet, this money ends up quickly in the cash registers of supermarkets and grocery stores all across the county and supports millions of jobs across the United States.
Members of Congress – whose average pay is $174,000 a year are outraged by this. As they enjoy over $4.6 billion in subsidized healthcare, travel and other government perks subsidized by taxpayers, these lawmakers bemoan the waste of government spending on the poor. 

They pledge fiscal discipline – pinching every taxpayer penny – on the backs of the people living below the poverty level, as the lawmakers themselves count on up to $1.2 billion in retirement benefits.

In fact, the rise in food stamp use is neither anomalous nor abusive. It makes perfect sense. Poverty goes up in recessions and in weak recoveries like this one. About 12 million people are out of work. Only about 58 percent of the population is employed, which is around the lows of the early 1980s recession, which has not changed for around three years.
Long-term unemployment is a persistent problem, with 40 percent of all unemployed people out of work for six months or longer. Poverty has risen steadily since 2008 – just like the use of food stamps.
So, surrounded by a $6 billion bubble of government-subsidized comfort, our congress people have succeeded in cutting food stamp help to the poor by about $20.5 billion in this farm bill. They've also planned to eliminate food stamps – for life – for anyone who was ever convicted of a crime, which will disproportionately hurt the urban poor.
Fran Smith of the Competitive Enterprise Institute, a conservative organization dedicated to free enterprise, said the sugar subsidy has an effect on nearly every processed food, including canned products and baked goods. She estimates the sugar subsidy costs consumers $3.5 billion a year, primarily in higher food costs. “It’s really kind of a regressive tax, almost,” she said.
Smith said a proposal pending in the House would eliminate what she calls one of the most “ egregious” parts of the sugar program. It mandates that when there’s a surplus of sugar, the U.S. Department of Agriculture buys that sugar and sells it at a loss to ethanol producers. The amendment also scales back the level of some subsidies for sugar producers.

US sugar is expensive – 50 percent higher than sugar on the world market from 2008 to 2012, according to price data from ICE Futures U.S. obtained by the Wall Street Journal. That's because the USA sets a minimum price for sugar. According to the Wall Street Journal, the USDA may have to buy 400,000 tons of sugar at an estimated loss of $80 million in taxpayer dollars just to keep the price of U.S. sugar artificially inflated.
 Naturally companies that make sweet products, including Hershey's and Coca-Cola, oppose this.
Since sugar is in nearly everything, many supermarket products will cost more when sugar prices rise. And, as long as sugar prices are high, food companies will continue to favor chemical sugar substitutes and products like high-fructose corn syrup, which is derived from heavily subsidized corn instead. Health advocates have have criticized high-fructose corn syrup as a potentially harmful contributor to the obesity crisis.

The sugar program has led to American sugar prices being two to four times greater than world sugar prices.
Sens. Jeanne Shaheen (D-N.H.), Pat Toomey (R-Pa.) and Mark Kirk (R-Ill.) introduced an amendment that would reform subsidies for sugar farmers.
"It's time to end the government's wasteful sugar program,” Toomey said. “This flawed policy is corporate welfare at its worst and hurts not only candy companies and food manufacturers, but also the families who end up paying higher costs for food made with sugar.”

The effect of these policies, he says, is that U.S. sugar prices normally remain artificially high. (Last year, the price of sugar around the world averaged 26.5 cents per pound, compared with 43.4 cents in the U.S.) That hurts food companies and leads to higher prices at the grocery store.

The current farm bill that passed by the Senate on June 10 and the defeated House bill would have expanded the taxpayer-subsidized crop insurance system, end a $5 billion-a-year “direct payment subsidy” to growers and streamline soil conservation programs.The Senate bill would save $23 billion over 10 years, the bulk of it from crop subsidies. The House bill would cut $40 billion, half of it from food stamps for the poor.
That bill failed by 39 votes, 234-195, as 62 Tea Party-influenced Republicans joined 172 Democratic defenders of food stamps in voting against the bill.

Conservative Republicans wanted deeper cuts in farm programs and food stamps. Democrats said the bill’s $20.5 billion in food stamp cuts were unacceptably large.
Almost 50 million Americans — 43 percent of whom are children — receive nutrition assistance from the government, and the dollars that needy recipients spend cycle through the economy quickly.
On the other hand, most of the agricultural entitlements included in the bill directly benefit large agribusinesses. In 2010, 10 percent of farmers received 75 percent of the money allocated to the agricultural sector, often in the form of direct payments that have little relation to the productivity or sustainability of farming practices.
Programs designed to help individual farmers who work their own land — such as insurance programs that provide a safety net in case of drought — in practice tend to favor large-scale farm corporations as well. Last year, the smallest 80 percent of farmers only received an average $5,000 of government aid, compared to the millions received by larger ones.
The federal government spends approximately $100 billion per year on farm bill programs. Of this, $23 billion—nearly 20 percent—goes to farm subsidy programs, including:
*$17.5 billion to the largest 15–20 percent of farm operations; of this, $14 billion is paid to the largest 10 percent.
*$2.5 billion to private agricultural insurance companies.
American taxpayers currently spend more than $20 billion per year on farm subsidies, The vast majority of farm subsidies flow to the largest and wealthiest farming operations.
In a new study from the Mercatus Center at George Mason University, Vincent Smith, a professor of economics at Montana State University, analyzes current farm bill proposals by the House and Senate Agriculture Committees. The study examines how reducing farm subsidies by various levels would affect the structure of US agricultural policy. The study concludes that farm subsidies could be reduced by at least $9–10 billion per year—about 10 percent of current farm bill spending—without any measurable effect on agricultural production.
The House-passed budget for FY 2014 established a goal of cutting $3.4 billion per year from the farm bill, all from farm subsidies. While the House Agriculture Committee subsequently approved $3.8 billion in cuts in H.R. 1947, it reduced subsidies by only $1.8 billion; the remainder of the cuts came from nutrition programs.
So who is really abusing the welfare system? Is it the unemployed and their children? Or is it the large agricultural interests who get paid millions not to plant crops or those who grow useless crops such as sugar can and sugar beets and continue raking in the sweet bucks while we criticize the poor?