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“Someday” is Now: Direct Farm Payments and the President’s Plan for Economic Growth and Deficit Reduction

As part of the President’s Plan for Economic Growth and Deficit Reduction, President Obama announces his proposal to terminate direct farm subsidies.

For nearly two decades, I have served in agriculture policy capacities for the federal government – most of those years with the United States Department Agriculture.  Today, I am reminded of a quote by Will Rogers.  The outspoken Oklahoman once remarked, “An onion can make people cry, but there has never been a vegetable invented to make them laugh.”  Instead, Rogers made so many Americans laugh during some of the most difficult times in the history of rural America, sometimes pointing out irony in the activities of government.

Today marks a truly historic action, as President Obama proposes dramatic, yet common sense reform to what has become over the years, a product of conventional politics and longstanding irony in the landscape of government.  As part of the President’s Plan for Economic Growth and Deficit Reduction announced today, President Obama is proposing to terminate direct farm subsidies.  At nearly $5 billion in funding per year, the Direct Payments program is certainly no laughing matter.  And if a vegetable were ever developed per the Rogers quote above, it wouldn’t qualify for direct payments, because vegetables are not deemed to be “program crops”. (more on that in a moment)  

As the lead advisor on rural issues for the President’s Domestic Policy Council, some will ask me “why advocate for the reduction of an agriculture program?”  In short, I believe the President’s proposal seeks to establish new policy that has been long overdue, and takes action that conventional thinking would regard as either too difficult, or too controversial.

As the proposal goes forward, it is important to consider the following characteristics of direct farm payments:

  • The federal government pays owners of cropland $4.9 billion in “direct payment” subsidies each year.  These payments are not tied to the actual production of crops, but rather are based upon historic crop acres and yields on farms.
  • Many recipients of Direct Farm subsidies are located in large metropolitan areas, far from agricultural production.
  • Direct payments are distributed by the federal government every year despite rising federal deficits and a healthy farm economy that saw net farm income grow by 28 percent in 2010.
  • A small share of commodities—corn, sorghum, barley, oats, cotton, wheat, rice, soybeans, and peanuts, received 72 percent, or $160 billion, of all U.S. farm payments and nearly 100 percent of direct payments since 1996. Even among this small group of commodities there are widespread disparities.
  • Livestock producers, fruit and vegetable growers, and the majority of other agricultural producers in the United States receive minimal direct subsidies.
  • Direct payments are linked to the amount of acreage historically under production, thus the program benefits larger farm operations with more acreage. Direct payments also inflate land values making it more difficult for new and beginning farmers to expand and succeed.
  • The Department of Agriculture found that 62 percent of farm payments, including direct payments, went to the largest 12 percent of farms in 2008.
  • The Government Accountability Office found that 305 farm operations received $200,000 or more in direct payments.
  • The GAO found that recipients of direct payments and other farm program payments in 2008 were more than “twice as likely to have higher incomes as other tax filers.”
  • President Obama has worked aggressively to reform direct payment subsidies.  Early in this Administration, the President recommended that non-farmers with an Adjusted Gross Income greater than $250,000, or farmers with an AGI greater than $500,000 be ineligible for direct farm payments.

The points outlined above demonstrate the need for a new approach. The President’s plan will make a massive, but necessary change in the framework through which we work on agriculture and farm programs.  As we have heard so often, most recently on the President’s Midwest Rural Tour, there are many young Americans who want to get into farming, or want to work and raise families in rural places.   The President’s proposal will reshape the discussion on farm policy, and help focus attention and resources on how to support rural areas and better build capacity of those areas for future economic growth and development. That is the kind of approach to rural areas that will truly benefit everyone and provide contributions back to the economy and the nation. 

Will Rogers also said, “Even if you're on the right track, you'll get run over if you just sit there.”  It is time for all of us to work to get this done.  President Obama has set the policy and dialogue on the right track for the future of agriculture and rural resources.  Now it is time for us to move on this and build a better rural America for tomorrow.

“Someday” is now.

 Doug McKalip is Senior Policy Advisor for Rural Affairs in the White House Domestic Policy Council.