CAP REPORT: America Can’t Afford $5 Billion in Ineffective Agricultural Subsidies

Washington, D.C.–(ENEWSPF)–May 4, 2011. Billions of dollars in agricultural subsidies would be better spent on deficit reduction while also investing in a clean energy future in our rural communities, argues a new paper out today from the Center for American Progress’s Jake Caldwell. The report, “Bad Seeds: A Plan to Phase out the $5 Billion in ‘Direct Payment’ Agricultural Subsidies,” details how the current automatic subsidy payment program is outdated and tends to favor wealthier, larger landowners at the expense of smaller farmers and taxpayers. “Poorly designed and ineffective agricultural subsidy programs weaken the competitiveness of our nation’s farmers and rural communities, drain taxpayer resources, and should be reformed,” says Caldwell. “Direct payment agricultural subsidies are harmful to the majority of U.S. farmers, artificially inflate land values, create barriers for young people pursuing farming as a career, offer minimal protection against the real risks facing the agriculture sector, and are overdue for revision in next year’s farm bill.”

Direct payments are made every year whether the landowner farms or not. Payments have continued year in and year out, making the deficit worse as the farm economy remains relatively healthy, commodity prices are high, and net farm income grew by 27 percent in 2010. Caldwell recommends Congress allocate the funds more wisely to save taxpayers more than $35 billion by 2020, reduce the deficit, and reinvest in our nation’s farmers and rural communities.

The study shows that two-thirds of direct payments go to the largest 12 percent of farms. Recipients were “more than twice as likely to have higher incomes as other tax filers,” according to the General Accountability Office.

Nearly two dozen current members of Congress took home a combined $6 million in these and other agricultural subsidies in recent years, according to an independent analysis. The funding could be better used, argues Caldwell, by phasing out these subsidies and using the savings to reduce the deficit. Among the major recommendations in the paper are lowering the eligibility caps, so that people earning less than $250,000 in farm income benefit from the subsidies, and then redirecting more than $4.2 billion in savings to deficit reduction.

By putting the remaining $650 million in savings toward farm-based clean energy projects, rural home weatherization, advanced biofuel crop cultivation, and agricultural exports, the United States can better serve American farming families. Investing in on-the-farm renewable energy will generate new income streams, cut energy costs, and lessen our nation’s dependence on fossil fuels, while opening markets for U.S. agricultural goods and strengthening the competitiveness of U.S. farmers in a global economy.

To download a copy of this report, click here.