Agricultural Subsidies Research Paper

Effects of American Agricultural Subsidies

Even through the economic crisis of the 1890s, Americans held to their beliefs of maintaining a free market, free from governmental influence in the agricultural fields. Farm policy remained nonexistent for 40 more years, until Herbert Hoover came into office in 1928, bringing with him heavy support for federal agricultural intervention. In 1929 he signed legislation to create the Federal Farm Board, a program intended to stabilize the income of farmers and equalize it to that of other professions—no doubt, this was in theory a logical idea, but this program paved the way for nonsensical programs to rule the agricultural sector for, thus far, the rest of our nation’s history. The Farm Board introduced

Farmers who grew different crops were drawn towards the wheat and cotton markets because of the stable incomes they promised, both causing a shortage of other crops and putting pressure on the government to accommodate the farmers. The federal government ended up forced to buy 250 million bushels of wheat and 10 million bales of cotton, all of which was given away or sold on world markets for massive losses. Despite the failure of Hoover’s program, the idea of governmental intervention didn’t die out. As a reaction to the Great Depression, Franklin Delano Roosevelt introduced the Agricultural Adjustment Act in 1933, a slightly less nonsensical attempt to regulate agriculture. Instead of paying farmers for surplus, the act paid farmers not to produce, financed by processors of the crops, leading to an increase in market prices. In addition, the AAA introduced the concept of parity, or pegging prices to those of successful past years without consideration to changes that may affect efficiency or success of certain crops. While this program was only intended to keeps farmers afloat during the Depression, farmers clung to these payments, now seeing them as an entitlement that should not be left

E Much of it is given away to large corporations who, through the numerous loopholes left in agricultural policy legislature, find ways to collect as much cash as possible. Firstly, before direct payments were eliminated, they applied to people and not farms, meaning that every employee of a huge agribusiness could receive the maximum payment of $40,000 annually if the company was eligible, leading to automatic immense profits. In addition, each person could receive an additional $20,000 for every property the farm is spread out over, allowing corporations to split up business into legally separate entities to receive payments. An example of this loophole in action was Tyler Farms, an agribusiness in Arkansas, which split into 66 properties, providing for $23.8 million in extra subsidies from the years 1996 to 2000 (Riedl). Because Congress does nothing to enforce payment limits or close loopholes, agricultural subsidies had become little more than corporate welfare, with two thirds of the subsidy budget going to the top ten percent of eligible recipients