Farm Subsidies and Their Impact on Food

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Farm subsidies and their impact on food The bulk of federal farm subsidies go to the largest farms. Numerous large corporations receive farm subsidies because they are the owners of farmland. It is landowners, not tenant farmers or farm workers, who benefit from subsidies. The U.S. Department of Agriculture distributes between $10 billion and $30 billion in cash subsidies to farmers and owners of farmland each year. The particular amount depends on market prices for crops, the level of disaster payments, and other factors. More than 90 percent of agriculture subsidies go to farmers of five crops: wheat, corn, soybeans, rice, and cotton. More than 800,000 farmers and landowners receive subsidies, but the payments are heavily tilted toward the largest producers. In addition to routine cash subsidies, the USDA provides subsidized crop insurance, marketing support and other services to farm businesses. The USDA also performs extensive agricultural research and collects statistical data for the industry. There are eight types of Farm Subsidies: Direct Payments: are cash subsidies for producers of 10 crops: wheat, corn, sorghum, barley, oats, cotton, rice, soybeans, minor oilseeds, and peanuts. Direct payments are based on a historical measure of a farm’s acres used for production. Marketing Loans: provides large subsidies by paying guaranteed minimum prices for crops. The marketing loan program encourages overproduction by setting a floor on crop prices and by reducing the price variability that would otherwise face producers in open markets. Under the program, farmers take “nonrecourse” loans from the USDA using their crops as collateral, which allows farmers to default on the loans without penalty. Countercyclical Payments. The countercyclical program provides larger subsidies when market prices are lower. It also stimulates excess farm production, as
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