USA - Do Farm Subsidies Reduce Rural Poverty?

24.01.2017 500 views
Rural voters played an important role in the last election. As the Senate considers a new Secretary of Agriculture and Congress begins work on a new Farm Bill, it’s important to consider the effect that food and farm policy has on rural communities, especially those that are impoverished. Farm lobbyists frequently insist that farm subsidies are critically important to supporting the rural economy. “It's not so much a safety net for farmers as it keeps rural America alive,” said one proponent of corn subsidies. “Agriculture forms the lifeblood of many rural communities,” according to an advocate for cotton farmers. So, according to the logic of these farm lobbyists, farm subsidies are “crucial to the economic security of rural America.” Even modest cuts to subsidies for “Cadillac” crop insurance policies would “[hit] rural America where it hurts most,” according to Senate Agriculture Committee Chairman Pat Roberts. The truth is that farm subsidies play little role in reducing rural poverty. That’s according to a paper by three leading agriculture economists commissioned by the American Enterprise Institute, or AEI. It confirms the findings of a 2013 paper by other leading economists. Here’s why. Farm subsidies overwhelmingly flow to the largest producers of bulk commodities, so “these benefits are mainly distributed to large commercial-sized farms,” wrote the authors the of AEI-sponsored paper. According to EWG’s Farm Subsidy Database, 77 percent of farm subsidies paid between 1995 and 2014 flowed to the largest 10 percent of subsidy recipients. The top 1 percent of subsidy recipients received 26 percent of all payments. As a result, roughly 30,000 very large farm businesses have received more than $46 billion in subsidy payments – or $1.57 million per farm – over the last two decades. While some very large operations receive more than $1 million annually in subsidies, the bottom 80 percent of subsidy recipients annually collect less than $10,000. “While farm subsidies transfer income from taxpayers to farm owners, most of the direct beneficiaries are relatively wealthy,” the economists concluded. The median wealth of the nation’s 50,000 largest commercial farms is $6.9 million, according to the USDA’s Economic Research Service. What’s more, many subsidies also flow to urban residents, not farmers – including the Trump administration’s nominee for Secretary of Agriculture, former Georgia Gov. Sonny Perdue. According to EWG’s Farm Subsidy Database, between 1995 and 2004 Purdue collected $278,000 in farm subsidies, even though he is not a farmer. Purdue owns farms – which he leases to farmers – and ran businesses that sell fertilizer and store grain. But EWG could find no evidence that Purdue has been a farmer since he left his family’s farm for college more than 50 years ago. Thousands of city slickers like Purdue continue to collect farm subsidies. But these are not the only reasons why subsidies do not reduce rural poverty. Farming accounts for only 6 percent of employment in non-metropolitan counties – employing far fewer people than transportation, utilities, manufacturing and services. “Farm income and employment are small shares of the rural economy almost everywhere in the United States,” according to the AEI experts. “Even with multiplier impacts that affect nonfarm employment and income opportunities, farm subsidies do little for rural poverty.” Farm workers, rural residents, and others in farm-related occupations receive little additional income from farm programs, the experts wrote. Despite warnings of a “farm crisis,” farm household income is still growing – even as the price of some bulk commodities return to normal. The USDA projects that median farm household income is $20,000 higher than that of non-farm households. Large and very large commercial farms reported median household incomes of $340,000 and $1.1 million, respectively, in 2015. Most farm households do not face the risk of poverty, according to the new AEI paper: “If the goal is to reduce poverty in the United States, focusing on farm operator households is unlikely to have much impact.” Many of the counties that receive the most subsidies are also among the counties with the nation’s highest levels of poverty and diet-related disease. Moreover, farm workers, who earn about $9 an hour, tend to pick fruit and vegetable crops that do not benefit from the lion’s share of farm subsidies. So do farm subsidies reduce rural poverty? According to the experts, the USDA does “many things to promote rural development,” such as offer loans to upgrade wastewater utilities, “but the agriculture subsidy programs are not central to that effort.” The reason why is clear: Most subsidies flow to the largest and most successful farm businesses, and have little impact on the rest of the rural economy. Source - http://www.ewg.org
07.07.2026

Ukraine - Cold spring delayed soybean development and increased harvest loss risk

The cold spring and low temperatures at the beginning of sowing had a negative impact on the development of soybeans in Ukraine. 

07.07.2026

Severe storms drench China, leading to deaths and crop damage

China’s central and southern regions have been lashed by heavy rain that’s led to deaths and crop damage, with more extreme weather expected later this week from a strong typhoon heading toward the country’s east.

07.07.2026

Severe storms flooded roads and battered vineyards in northeastern Italy

Large hail and strong winds hit towns in Veneto and Friuli, raising fears of crop damage in a key wine-growing region.

07.07.2026

Australia - Bird flu compensation leaves business interruption insurance gap

The spread of H5 bird flu to a third Australian state has focused industry attention on a structural feature of the country’s animal-disease risk model that matters to underwriters and brokers: government compensation for avian influenza reimburses culled birds but excludes the business-interruption losses that often exceed them, leaving a coverage gap that the private market fills only partially and, brokers say, on tightening terms.

07.07.2026

Livestock insurance offers hope to drought-hit Somalia pastoralists

A record drought wiped out nearly half of Iido Abdikarin Abdille's herd in northern Somalia, but a livestock insurance programme is helping to ease the financial burden on pastoralists like her.

07.07.2026

Spain - The Board will sign an agreement with Enesa to share data in the management and control of aid for agricultural insurance

The Governing Council of the Junta de Extremadura has given the green light to the subscription of an administrative cooperation agreement between the regional administration and the State Agricultural Insurance Entity (Enesa), with the aim of facilitating the exchange of information for the management and supervision of subsidies for agricultural insurance contracts.

06.07.2026

Canada - Prairie Storms Expected to Generate Significant Crop Hail Claims

Golf-ball-sized hail reported in parts of Saskatchewan and Manitoba.

06.07.2026

Bangladesh - Flood forecasting technology key to reducing crop losses: IEB president

Engineers and academics on Monday stressed the need for technology-driven flood forecasting and early warning systems to strengthen Bangladesh's resilience against floods and minimise damage to lives, livelihoods and agriculture.