June 11, 2012

The History of Farm Bill Spending

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The farm bill comes up for renewal every five years, and its specific provisions determine whether major farm programs administered by the U.S. Department of Agriculture (USDA) will continue. As Congress considers reauthorization of the farm bill this year, it is important to put the history of farm bill spending in proper context.

The USDA distributes farm support through major programs, such as commodity payments, crop insurance, marketing support, farm conservation, and agricultural research. According to the White House budget, the historical trend of federal spending (adjusted for inflation) on farm programs averaged roughly $28 billion per year for the 1996 farm bill and $27 billion per year for the 2002 farm bill. The five-year cost of farm programs in the 1996 farm bill was $141 billion, while the 2002 farm bill was $125 billion.

According to the Congressional Research Service (CRS), when the 2008 farm bill was enacted, the five-year cost (FY2008-2012) of major farm support programs was projected at $83 billion, an average of $16 billion per year. CRS updated estimates in 2010 showed a higher five-year cost of $87 billion, an average of $17 billion per year. The White House budget, however, shows that spending for farm subsidies during this most recent period is closer to $104 billion, an average of $21 billion per year. 

Such sizable spending surely attracts attention: More available money creates more opportunities for special interest groups and lobbying. In 2010, 10 percent of farms received 74 percent of all subsidies. Moreover, with farm household incomes 25 percent higher than the average U.S. household income, farm subsidies amount to corporate welfare for the relatively well off.  As such, Congress must put an end to farm subsidies and to other preferential treatments that farmers have received for decades.

Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University.