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The Farm Program Fiasco


All government programs are sacred cows. Once taxpayers fund anything, a vocal constituency develops to assert that the nation could not survive another day without the program. This is one reason why the 1990 deficit-reduction package did not cut one program or one bureaucrat or even one penny from total federal spending.

Perhaps the most absurd example of this self-perpetuating nonsense is the U.S. farm program. Begun on a modest scale by the Republicans in 1929 and expanded greatly under the New Deal in the 1930s, farm price supports administered out of Washington now cost the American people a whopping $30 billion each year.

Relatively poor American taxpayers pay relatively rich American farmers billions of dollars each year not to grow food. The bulk of the subsidy payments go to 320,000 large commercial farmers who in 1988 had an average annual income of $168,000. (Average non-farm family income in 1988 was just $38,600.) The average net worth of the large commercial farmer averages more than $1,000,000, 15 times that of the average taxpayer-family. No wonder “farmers” continue to support the farm-welfare program.

Many agricultural products (i.e., poultry) are not price supported, and these markets work efficiently for consumers. But for more than fifty years, misguided governmental policy has created strong incentives for regulated rice, wheat peanut, and tobacco farmers to reduce output and raise prices. Sugar subsidies and output regulations make U.S. sugar prices twice the world price. American consumers pay a twenty percent premium for peanut butter because of peanut subsidies. Overall food prices would fall twelve percent in the absence of farm price supports.

Actually, prices would fall even further if the entire Department of Agriculture were abolished. This is because its farm program requires farmers to idle massive amounts of farm acreage in order to qualify for our tax money. Currently, an incredible sixty million acres of cropland in the United States is idled by governmental regulation in order to “restrain production.” The wheat set-aside alone idles acreage equal to roughly the entire area planted in Western Europe!

It takes no special expertise to understand that the farm program offends both morality and efficiency. It requires massive tax theft to keep the subsidies flowing; it results in higher prices, which are a regressive tax on consumption; it idles farmland and discourages efficient crop rotation. And its subsidy benefits are irrelevant for most small, part-time farmers — in whose interests the program was allegedly intended.

Yet come budget-cutting time, our elected representatives are never able to discover any spending programs to abolish or even reduce! Of course not. They are always blinded in their search by special-interest pleading and by political action committee (PAC) money. Beneficiaries of governmental programs (like sugar producers) will always send through various PACs enough tax money back to incumbents to keep the programs fully funded for the next fiscal year. In short taxpayers end up paying for their own fleecing.

The farm program is taxpayer and consumer theft on a grand scale and has no place in a free society. The only “program” that farmers (or teachers or manufacturers or any other group) deserve from government is the protection of private property and peaceful trade. We will begin to solve the budget crisis in Washington when we begin to repeal all governmental programs that interfere with liberty. And in the case of the Department of Agriculture, the better.

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    Dr. Armentano is professor of economics at the University of Hartford, the author of "Antitrust and Monopoly" (Holmes and Meier, 1990), and a former member of the board of trustees of The Future of Freedom Foundation.