By Joel Warner
By Michael Roberts
By Alan Prendergast
By Michael Roberts
By Michael Roberts
By Amber Taufen
By Patricia Calhoun
By William Breathes
The reason is consolidation. The economics of farming, in which huge quantities of production are necessary to see a decent profit, have meant that you must be huge to thrive. Today there are fewer -- but bigger -- farms than ever before. In 1935, a few years before the first subsidies began, there were 6.8 million farms in America. In 1997, there were less than 2 million. Of these, 350,000 accounted for about 90 percent of production.
The subsidies received by the largest Colorado farms can't begin to compare with those received by the huge operations of the Midwest. The nation's largest recipient, Riceland Foods of Arkansas, "earned" about $49 million in taxpayer help between 1996 and 2000. But the top money-getters here aren't juggling mere pocket cash, either.
The biggest federal checks were written to Cure Brothers, a huge operation in Burlington, Colorado. Support payments to the Kit Carson County farm family totaled about $4 million over five years. The state's top five recipients were all huge farms on the eastern plains; together they took in about $13.5 million in taxpayer help.
But they were all, without question, farmers -- living on and working off their land.
Like many big government programs, farm subsidies are simple in theory, but ridiculously complex in the details. While the basic sentiment behind them is the same -- give enough money to farmers to make it worth their while to farm -- today there are dozens of ways bureaucrats accomplish that goal.
Still, when most people think of farm subsidies, they are thinking of price supports. These go to only a handful of basic crops -- primarily wheat, corn, sorghum, barley, oats, cotton, rice and soybeans, although the government has tacked on others, depending on political pressure at any given time.
That means that many crops don't qualify for government handouts. CSU's Dana Hoag points out, for instance, that California, which accounts for about a tenth of all crop sales nationally, gets less than 2 percent of farm subsidies, because many of the state's crops are fruit and vegetables.
Most subsidy payments are based on what a farm traditionally has produced. Think of those legal disclaimers on radio advertisements that provide cover-your-ass protection for stock investors: "Past performance is not a guarantee of future results." Then think of the opposite: In farming, future subsidies are based entirely on past results.
"We know about the product capability of each farm," explains Marty Reeves, who, as the Farm Service Agency's county executive, oversees the subsidy program in Adams County. Each year, he adds, Congress sets the amount of money it thinks a bushel of wheat should sell for. Then it multiples that by the number of bushels per acre that the farm traditionally has produced -- generally calculated from twenty-year-old figures -- times the number of acres. Then, for reasons that are not entirely clear, the final number is multiplied by 85 percent. Presto! A subsidy is created.
Of course, that's only one kind of assistance. There are many others, all designed to protect farmers from the ups and downs of a market economy. Most serious farmers include the payments prominently in their budgets; the government money can even influence what a farmer will plant and harvest in a given year, a financial dance Jim Miller, policy director of the Colorado Farm Bureau, calls "the farming game." For example, the federal Marketing Assistance Loan program is sort of a stock-option plan for farmers.
Under this program, when a farmer harvests his wheat, he looks at the market price and decides if he would like to sell his crop. If the going rate is too low for his liking, under the deficiency program, he can drop it off at government-run bins (like a giant agricultural pawnshop), and the government will pay him a set amount for the wheat -- say, $2.50 a bushel.
Then the farmer waits, although not exactly with bated breath. If the price goes up, he reclaims his wheat, pays back the money with an extremely low rate of interest to the government, then sells his wheat for the better price. If the price goes low -- to $2.30 -- the farmer merely pays the government the current, lower price. Then the interest payments are forgotten about. In other words, a risk-free proposition.
Not surprisingly, such a peculiar bump on the free-market highway has caused a few accidents. For example, farming methods and technology have improved enormously since the government figured out how much an acre could produce. One result has been that, when combined with the fact that there is no free-market pressure to curb production -- the government cuts checks to a farmer the more he produces, regardless of demand -- there is a surplus of crops.
Which, in turn, has meant low prices -- and even lower profits for farmers. And even though subsidies may have kept some farmers in business, in a roundabout way, they have actually kept farmers' incomes low. Many farmers complain that their only options are to sell out to an operation huge enough to survive, or to bail out altogether.
"You can't make it out here on less than 6,000 acres," says Jennifer Reed, who owns a small farm in Kit Carson County. "So we are losing small farms. We have very few kids coming back here to take over the family farm."