Farm Subsidies


The Policy Implications of United States Farm Subsidies

Prepared for the 2008 National Debate Topic Selection Committee National Federation of State High School Associations

Zane Schwarzlose and Russell Kirkscey Blanco High School Blanco, Texas

U.S. Farm Subsidies The Policy Implications of United States Farm Subsidies Pollan (2007) observes: To speak of the farm bill's influence on the American food system does


not begin to describe its full impact—on the environment, on global poverty, even on immigration. By making it possible for American farmers to sell their crops abroad for considerably less than it costs to grow them, the farm bill helps determine the price of corn in Mexico and the price of cotton in Nigeria and therefore whether farmers in those places will survive or be forced off the land, to migrate to the cities—or to the United States…. And though we don't ordinarily think of the farm bill in these terms, few pieces of legislation have as profound an impact on the American landscape and environment. Americans may tell themselves they don't have a national land-use policy, that the market by and large decides what happens on private property in America, but that's not exactly true…. The health of the American soil, the purity of its water, the biodiversity and the very look of its landscape owe in no small part to impenetrable titles, programs and formulae buried deep in the farm bill. Given all this, you would think the farm-bill debate would engage the nation's political passions every five years, but that hasn't been the case. If the quintennial antidrama of the ''farm bill debate'' holds true to form this year, a handful of farm-state legislators will thrash out the mind-numbing details behind closed doors, with virtually nobody else, either in Congress or in the media, paying much attention…. This leaves our own representatives free to ignore the farm bill, to treat it as a parochial piece of legislation affecting a handful of their

U.S. Farm Subsidies Midwestern colleagues. Since we aren't paying attention, they pay no political price for trading, or even selling, their farm-bill votes…. But there are signs this year will be different. The public-health community has come to recognize it can't hope to address obesity and diabetes without addressing the farm bill. The environmental community recognizes that as long as we have a farm bill that promotes chemical and feedlot agriculture,


clean water will remain a pipe dream. The development community has woken up to the fact that global poverty can't be fought without confronting the ways the farm bill depresses world crop prices. To change that, people will have to wade into the muddy political waters of agricultural policy…. (p. 15) Introduction The debate over United States agricultural policy is one of the most important issues that Americans know nothing about. Every time citizens consume food or wear clothes, they are affected by American farm policy. Although the U.S. has historically enjoyed a thriving food and fiber industry, the dynamic processes of industrialization and globalization have shrunk the once-wide world of agriculture. The emblem of American farm policy is its agricultural subsidies. Currently covering anything from direct payments for corn growers to renewable energy research grants for ethanol engineers, agricultural subsidies place a dollar value on our determined farm policies. However, these methods of assistance are a double-edged sword: subsidies protect industries and develop new markets but also harm other producers and place a burden on taxpayers. Central to the debate on farm subsidies is the role the government should play in controlling (or manipulating) the free market economy. Deciding agricultural policy is

U.S. Farm Subsidies


oftentimes a balancing act between whether to protect the producers or consumers of agriculture. Evaluating these issues would serve as a valuable educational experience in any high school debate round. History and Background of Agricultural Subsidies U.S. farm policy has transformed due to changes in economic conditions and political goals. From the public-lands policy of many American Indian tribes to World Treaty Organization (WTO) compliance of cotton subsidies, U.S. agricultural policy has come a long way. Knutson, et al (2007) delineate the following eras: Settlement Period (1776-1929) During this period, the agriculture industry made a monolithic impact on the formation of the United States. The Revolutionary War was sparked by a variety of factors including a tax on tea—an agricultural product—and the refusal of the Crown to allow colonists to settle past the Appalachians. After the Revolution, the Homestead Act allowed settlers ownership rights to Western lands in exchange for farming it. The United States Department of Agriculture (USDA) was created in 1889 to foster and sustain this vital industry. Land-grant universities were authorized in 1862 under the Morrill Act to allow rural youth a chance to attend college. New Deal (1929-1954) After the Great Depression, the Roosevelt Administration established large government programs to bend the market and secure farmers’ income. In 1933, a “Farm Bill” created price supports to subsidize farmers at the previous market rates. The bill was later found to be unconstitutional and a new Farm Bill was passed in 1938 to meet the requirements of the Supreme Court. Every Farm Bill since that year is technically an extension of that legislation. Flexible Price Supports (1954-1970)

U.S. Farm Subsidies The aforementioned price supports incentivized the agriculture industry to produce more food, which helped combat the increased demand during the World War II. After the war, mechanization helped to increase production even further. The previous price supports were decreased to help the global marketability of U.S. farm products. These price supports were


termed “flexible” because they were meant change each year to serve as a price floor if the world market turned sour. Direct Payments (1970-Present) In the early 1970s instead of purchasing food stocks to increase the market price, the U.S. government began to allow market prices to fluctuate and offer “direct payments” to farmers as a way to prevent foreign sellers from benefiting from American farm subsidies. This policy greatly depressed food prices and made the U.S. a major player in the world market. In 1996 payments were decoupled from production meaning that farmers could grow whatever crops they pleased and apply for another crop’s subsidy based on what was historically grown on the land. Today, farming is being shaped by a variety of factors. The U.S.’s entrance into the WTO has hindered its ability to provide domestic subsidies. Mega farms and mechanization have resulted in subsidizing more dollars to fewer people since current programs are tied to production rather than the number of workers or other quantitative measurements. Gaul, Cohen, and Morgan (2006) note some of these trends: Today, most of the nation's food is produced by modern family farms that are large operations using state-of-the-art computers, marketing consultants and technologies that cut labor, time and costs. The owners are frequently college graduates who are as comfortable with a spreadsheet as with a tractor. They cover more acres and produce more crops with fewer workers than ever before. The very policies touted by Congress as

U.S. Farm Subsidies a way to save small family farms are instead helping to accelerate their demise, economists, analysts and farmers say. That's because owners of large farms receive the largest share of government subsidies. They often use the money to acquire more land, pushing aside small and medium-size farms as well as young farmers starting out…. Large family farms, defined as those with revenue of more than $250,000, account for nearly 60 percent of all agricultural production but just 7 percent of all farms. They receive more than 54 percent of government subsidies. And their share of federal


payments is growing—more than doubling over the past decade for the biggest farms. (p. A01) Current State of U.S. Agricultural Subsidies Due to America’s diverse agricultural background, its subsidies are equally as diverse. Current U.S. agricultural subsidies attempt to accomplish a variety of economic goals. These programs may be subdivided in three main categories. Subsidies that Recognize Agriculture as an Industry Uniquely Requiring Aid The first justification of some farm subsidies is that the food and fiber industry is uniquely situated to require federal aid. This reason is admittedly rather weak given that the median farm income is about double the median income of all families in the United States. However, the high price of capital and high risk of doing business makes this a more defensible argument. Farming is a high-cost business and a significant percentage of these costs must be invested up-front as a new producer is getting started. Land values and rental rates in the major program crop regions have significantly increased. National average farmland values have increased 65 percent in the past five years, from $1,150 per acre in 2001 to

U.S. Farm Subsidies $1,900 per acre in 2006. Average cropland rental rates increased from $71 per acre in 2001 to $79 per acre in 2006, or 11 percent over the same period. The amount and cost of equipment, including planting, cultivation and harvest machinery, exemplifies the financial barriers to entering production agriculture. The price of a representative frontwheel-assist 250 horsepower tractor ranges from $180,000 to $200,000. Harvest equipment may be even more expensive, with a standard combine often costing more than $200,000. Lease costs are substantial as well. (USDA, 2007a) Subsidies that Attempt to Regulate the Quality or Quantity of Commodities for Other Motives


Another argument proposes that the U.S. should subsidize its agriculture industry to meet quality and quantity goals. Food safety is a growing concern in America, spurred by the threat of highly-infectious diseases. In addition, direct payments and other commodity programs incentivize producers to charge lower prices to decrease poverty and hunger. Unfortunately, these measures price out imports from cash-strapped low-income countries. The cheapened prices also decrease world trade on balance. Subsidies that Attempt to Remedy Market Externalities A final interesting argument for agricultural subsidies is the remediation of market externalities. Externalities are the effects of an action that are for some reason excluded from the free market. In agriculture, the use and abuse of natural resources is a prime example. In the free market, farmers do not have to pay a fee to farm environmentally-sensitive land. Subsidies such as the Conservation Reserve Program attempt to decrease poor planting practices. Nevertheless, even these programs can be mismanaged, and the number of acres to be conserved can be estimated incorrectly. Range and Scope

U.S. Farm Subsidies Senator Tom Harkin (2006) remarks: There are 2.2 million farms in the United States on 933 million acres of farm and ranch


lands. Approximately 50 million Americans—17 percent of the population—live in rural America, and 2 million people, or 1.4 percent of the nation's work force, are directly involved in farming and ranching. Another 22 million, or 15 percent, are involved in the production, manufacturing, transport and marketing of the nation's food and fiber. Last year, the agricultural sector added almost $145 billion to the U.S. economy. Another $1.1 trillion is added to the U.S. economy by the manufacturing, transport and marketing segments. The Department of Agriculture estimates that net farm income in 2006 will be approximately $55 billion. U.S. agriculture is one of the few sectors that exports more than it imports, resulting in a trade surplus of $4.8 billion in 2005. And if anyone doubts the impact that U.S. agricultural policy has on their households, consider this: U.S. families spend 8 percent of disposable income on their household food budget, lower than any other nation…. Others spend one-third to one-half to three-fourths of their income. U.S. farm policy costs pennies per meal and accounts for little more than one-half of 1 percent of the U.S. budget. The U.S. farm policy is a remarkably low-ticket item in terms of the entire federal budget. These dollars help decrease the cost of living and provide jobs for millions of Americans. However, jobs subsidized to be fulfilled in America deprive foreign laborers of similar work. The game of trade is not an easy one to play. General Harms Scenarios Even though we suggest a “domestic” limitation to the resolution, the impacts of American farm policy are felt both at home and abroad. Domestically, farm programs draw

U.S. Farm Subsidies illegal immigrants and foreign workers under the H-2 visa program. The bountiful harvest of


U.S. farms has also been suggested to be the root cause of the obesity epidemic. In addition, the high cost of entry caused by subsidies makes young workers unlikely to begin farming. Finally, U.S. farm programs facilitate the formation of mega farms that are displacing the mythical family farm. These farms are also painfully effective at consuming vast amounts of natural resources and producing extensive pollution. Admittedly, some of the most compelling harms scenarios occur outside the United States. First, inexpensive food in America does not equate to inexpensive food abroad. The U.S. is such a willing trade partner that smaller and poorer countries will alter their planting decisions to suit the needs of America rather than their own people. This is a quick and easy recipe for nation-wide starvation. Agricultural subsidies have also constrained the United States’ bargaining abilities in the Doha Round of the WTO trade negotiations. The loss of international credibility could arguably create an increased necessity for American military presence. Finally, the industrialization of farming has opened the door for unintended environmental harm and predicted climate change. Stiglitz (2006) maintains: Americans like to think that if poor countries simply open up their markets, greater prosperity will follow. Unfortunately, where agriculture is concerned, this is mere rhetoric. The US pays only lip service to free-market principles, favouring Washington lobbyists and campaign contributors who demand just the opposite. Indeed, it is America's own agricultural subsidies that helped kill, at least for now, the so-called Doha development round of trade negotiations that were supposed to give poor countries new chances to enhance their growth. Subsidies hurt developing country farmers because they lead to higher output—and lower global prices. The Bush administration -

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supposedly committed to free markets around the world—has actually almost doubled the level of agricultural subsidies in the US. Cotton illustrates the problem. Without subsidies, it would not pay for Americans to produce much cotton; with them, the US is the world's largest cotton exporter. Some 25,000 rich American cotton farmers divide $3bn to $4bn in subsidies among themselves—with most of the money going to a small fraction of the recipients. The increased supply depresses cotton prices, hurting some 10million farmers in sub-Saharan Africa alone. Seldom have so few done so much damage to so many. (p. 13) Topicality It is our intent that few topicality arguments will emerge in the resolution. Only two terms should come under discussion: “domestic” and “agriculture subsidies.” “Domestic” is a straightforward term, especially since only 2% of the USDA budget is used in foreign markets. “Agriculture subsidies” is a more elusive term. All of our definitional research indicates that monetary benefit must be for the purpose of helping agricultural production. Under this definition, many facets of the current Farm Bill are excluded, such as Food Assistance, Rural Development, and many Conservation and Forestry Programs. In many cases the federal government and other actors will use “farm” and “agriculture” interchangeably when referencing subsidies. Although the terms are almost never delineated, in cases where a distinction is made “farm” is described as a subset of “agriculture.” The word “farm” could also be used to exclude ranching and fiber production. Making this exclusion is not our intent. The Farm Bill Proposal (USDA, 2007a) exhibits that far less than half of its entitlement funding would be debatable under our resolution. Specifically, the 26 percent of subsidies

U.S. Farm Subsidies labeled “Farm and Commodity Programs” in the chart below will provide the most topical debates:


USDA Budget
FY 2006 Budget Outlays
International 2% Farm and Commodity Programs 26%

Rural Development 3%

Conservation and Forestry 11%

Research, Inspection and Administration 4% Food Assistance 54%


Affirmative Case Areas In many ways, commodities epitomize the arguments for and against farm subsidies and are thus central to the topic area. Commodities such as corn and soybeans are subsidized in an effort to promote production and counter rapid price fluctuations. Notably, sugar and milk are subsidized at a high rate while livestock and specialty crops such as fruits and vegetables currently exist without much government aid. (The 2007 Farm Bill includes provisions for aiding specialty crop growers, but this aid would be in the form of foreign marketing assistance.) The system of farm payments is Byzantine. The current payment system generally operates under a direct payment system. Congress legislates a target price, and if the market

U.S. Farm Subsidies price is lower, farmers are paid the difference. Driven by pressure from the WTO, these payments have become gradually more decoupled, mitigating some market-distorting effects. Closing Loopholes in the Status Quo Today many proposals from Congress and lobby groups have yet to be implemented.


Proponents of the free market support “Program Buyouts” similar to the termination of tobacco subsidies. Pertinent case areas could also switch payments to a lump sum rather than a production-based measure of support. Cases could also close many of the loopholes inevitably found in federal legislation. The 2002 farm bill set loan rates at fixed levels significantly above market prices year after year for many crops. Some claim that these high loan rates encourage farmers to plant more of these crops - further increasing supply and thus decreasing prices. These payments can also encourage attempts to produce crops in environmentally-sensitive, drought-prone lands. Furthermore, farmers can take advantage of short-term market events (such as an export terminal closing due to a hurricane) to lock-in artificially high loan deficiency payments, while actually selling the commodity later at prices well above the loan rate. This allows the market price received, combined with the loan deficiency payment, to far exceed the intended loan rate protection. (USDA, 2007b) Crop Insurance Cases Another viable case area attempts to solve the problems inherent to crop insurance programs. Currently, farmers do not have to purchase federally subsidized crop insurance. In the event of a major catastrophe, Congress often appropriates disaster aid to all farmers in an area, not just the insured. This leaves farmers who purchase insurance wondering why insurance is even necessary. There is a growing movement to require crop insurance to be mandatory.

U.S. Farm Subsidies


Farmers from many Midwestern states consider this a ridiculous idea because of the static nature of their climate and other growing conditions. The Federal crop insurance program has been amended over the years to help farmers deal more effectively with the effects of natural disasters and to reduce the need for ad hoc disaster assistance. While program participation and coverage levels purchased by farmers have increased, Congress has still provided ad hoc disaster assistance. Since 2000, over $10 billion has been provided in ad hoc disaster assistance, indicating further program changes are needed to obviate the need for such assistance. As Gene from Nebraska suggested, “Require nationwide participation by all ag producers in the crop insurance program. The goal here is to eliminate all crop disaster programs….” In addition, the government subsidizes about 60 percent of producer premiums. These large and growing costs have raised concerns about the high level of program costs per dollar of assistance provided to producers. (USDA, 2007b). Environmental Cases Affirmatives will also be able to access cases with a more environmental focus. The federal government currently subsidizes farmers for not growing on environmentally sensitive lands. Even though crops cannot be grown on enrolled acres, naturally occurring biomass is still collected for the purpose of energy production. General CRP sign-ups would continue to give priority to environmentally sensitive land. However, USDA would also prioritize farmland planted in a biomass reserve of perennial crops used for cellulosic energy production. Currently, over 27 million acres of Conservation Reserve Program (CRP) contracts are on farmland capability classes I to IV, lands that are suited for growing crops. These lands could continue to provide various

U.S. Farm Subsidies


environmental benefits while being used for biomass production. These lands would also retain the ability to fulfill wildlife habitat needs. The program would establish clear requirements that biomass could only be harvested after nesting season. (USDA, 2007b) Commodity Cases Specific commodities would also supply a bounty of cases to affirmative teams. For example, sugar subsidies allow producers to receive nearly double the market price. The 2007 Farm Bill proposes to partially relax the subsidies but many argue that the industry needs no such protection. In addition, the U.S. cotton subsidies were ruled in violation of WTO trade sanctions and need to be reduced. Affirmatives will be able to choose from a plethora of specific payment and commodity types. The Economist (2006) provides an example: Even some of the biggest recipients of federal cash say today's system won’t do. The Iowa Corn Growers Association, for instance, recently voted against extending the 2002 farm bill. It claims to want a safety net for farmers that is more "trade compatible" and "market-oriented". Given that corn farmers got 46% of the subsidies under the farm bill, and that Iowa farmers, thanks to the state's early presidential caucus, wield disproportionate political clout, this sounds too good to be true. It is. America's farmers have not been seized by sudden guilt. Instead, they are pre-empting pressure to change a system that is increasingly viewed as unfair, expensive and against the rules of the World Trade Organisation (WTO). The federal government spent over $20 billion on farm subsidies last year: much less than the European Union lavishes on its mollycoddled farmers, but more than Washington spent on foreign aid and almost twice what it spends on subsidising college for poor children. (p. 35)

U.S. Farm Subsidies Largely Non-Topical Case Areas We do specifically think some case areas are blatantly non-topical. First, international trade doubtlessly affects any decision made in agricultural policy. However, direct action with the WTO, NAFTA, or CAFTA would violate the “domestic” portion of the resolution and capture negative counterplan ground. Moreover, we believe that food and nutrition programs such as WIC and bioterrorism protection would be mostly nontopical since they exist to aid an


entity other than agricultural producers. There are also cases that could be topical based on plan text. Crop insurance and disaster payments arguably subsidize a cost of doing business for producers. Research and extension activities provide financial aid to farmers, but whether this is a subsidy in the truest sense of the word is open to interpretation. Negative Ground Case Arguments Negative teams may use a variety of case-based arguments. While the most effective positions will be specific to each case, good generic case arguments do exist. For example, market capitalization states that decreasing subsidies would merely drop the price of farmland making farming exactly as profitable as before the affirmative plan. USDA enforcement arguments are also viable given the bureaucratic nature of the organization. Finally, negative teams can mitigate solvency by arguing that farmers will merely change their planting decisions and switch to a similarly profitable crop. Disadvantages Disadvantages to decreasing farm subsidies will provide negative teams with a variety of offensive arguments. Interestingly, the topic lends itself to a rarely-found coherent internal link scenario for political arguments. The agriculture industry is a large receiver of pork barrel

U.S. Farm Subsidies funding and politicians are at times overeager to trade votes in exchange for helping their constituents. The interaction between politics and the power of lobbyists and special interest


groups offer another link scenario. Finally, “Fast Track” or the Trade Promotion Authority that allows the President to quickly bargain with foreign entities without congressional approval has been extensively used in bilateral negotiations of subsidy cessation. Schatz (2007) suggests: Emergency spending bills are called ''Christmas trees,'' for the unrelated ''ornaments'' that are added by members of Congress. (They are exempt from budget rules and are almost never vetoed, making them magnets for pork.) The nickname is usually not literal, but the Senate's version of the fiscal 2007 supplemental appropriations bill that passed yesterday includes, among scores of other nonessential items, money for Christmas-tree growers. Behind all their lofty rhetoric about the Iraq war and bringing home the troops, members of the House and Senate were busy tacking on $20 billion and $18.5 billion respectively in unrelated spending to President Bush's $103 billion request. (He intends to veto the bill.) Despite their campaign talk about earmark reform last fall, the new Democratic leadership shamelessly used pork to buy votes—before the vote, Representatives Collin Peterson of Minnesota and Peter DeFazio of Oregon acknowledged that add-ons for their districts would influence their decisions. The heavyweights also led by example: the Senate majority leader, Harry Reid of Nevada, added $20 million to eradicate Mormon crickets, and David Obey of Wisconsin, the House Appropriations Committee chairman, came away with $283 million for the Milk Income Loss Contract Program. (p. A 27) Disadvantages may also arise from the fact that agriculture is the only major economic sector to export more than it imports. Cutting subsidies would further weaken the U.S. dollar and make the investment in foreign countries more appealing.

U.S. Farm Subsidies Counterplans Interestingly, negative teams will be able to run counterplans that solve for the same harms scenarios as affirmatives. Much evidence exists stating that increased subsidies are necessary to solve some social ill. For example, in an effort to reduce foreign oil dependency, affirmatives could decrease corn subsidies to make farmers search for more viable sources of ethanol (e.g., switch grass and pinecones). A negative team could easily read a counterplan


doubling the amount of corn subsidies stating that energy stability is more important than overall efficiency. Negative teams also have a choice of other-actor counterplans. Perhaps the most viable is enforcement through the Environmental Protection Agency (EPA.) This agency has a history of enforcing programs that increase farmers’ costs of doing business. Nongovernmental agencies and foreign actors such as the WTO could also work to decrease U.S. subsidies. Kritiks Even though the world of agriculture may not seem to be the best environment for critical arguments, the topic does lend itself to many reasonable kritiks. Deep Ecology, eco-feminist, and anthropocentric positions will work well. Particularly, teams will be well-suited running updated Maoist, Marxist, or other anticapitalist arguments based on the affirmative burden to, at some level, support landed wealth and the free market. Affirmatives could counter with neoJeffersonian arguments that agriculture is necessary for a sustainable democratic society. Chairman Mao Tse Tung (1972) asserts: Those peasants who lose their land and those who remain in poverty will complain that we are doing nothing to save them from ruin or to help them overcome their difficulties. Nor will the well-to-do middle peasants who are heading in the capitalist direction be

U.S. Farm Subsidies pleased with us, for we shall never be able to satisfy their demands unless we intend to


take the capitalist road. Can the worker-peasant alliance continue to stand harm in these circumstances? Obviously not. There is no solution to this problem except on a new basis. And that means to bring about, step by step, the socialist transformation of the whole of agriculture simultaneously with the gradual realization of socialist industrialization and the socialist transformation of handicrafts and capitalist industry and commerce; in other words, it means to carry out co-operation and eliminate the richpeasant economy and the individual economy in the countryside so that all the rural people will become increasingly well off together. We maintain that this is the only way to consolidate the worker-peasant alliance. (pp. 26-27) Another kritikal ground area is race relations. U.S. farms are also almost exclusively owned by white males: Minorities represent around 5.1 percent of all farmers and ranchers in the United States. They operate almost 80 million acres, 8.4 percent of U.S. farmland, which is an 8 million acre increase from 1997 to 2002. The 1992 farm bill took the important step of establishing the Office of the Assistant Secretary for Civil Rights. This new office has worked with all USDA mission areas to help make tremendous strides in reaching out to help SDA farmers. But more can be done. Extensive outreach and targeted assistance are appropriate to ensure these producers are aware of and participate in these programs. As Catherine from Mississippi said, ‘Previous farm policies have forced many minority producers to sell their land only to [be] taken in by large corporations.’ (USDA, 2007a)

U.S. Farm Subsidies Possible Resolutions 1. Resolved: That the United States Federal Government should substantially decrease its domestic agricultural subsidies. 2. Resolved: That the United States should substantially decrease its domestic farm subsidies. 3. Resolved: That the United States Federal Government should substantially change its domestic agricultural subsidies. 4. Resolved: That the United States Federal Government should substantially change its domestic farm subsidies.


U.S. Farm Subsidies Appendix: Definitions


agricultural subsidies. (2004). In The Columbia Encyclopedia. Retrieved March 06, 2007, from http://www.xreferplus.com.libproxy.txstate.edu/entry/4256966agricultural subsidies. Financial assistance to farmers through government-sponsored price-support programs. Beginning in the 1930s most industrialized countries developed agricultural price-support policies to reduce the volatility of prices for farm products and to increase, or at least stabilize, farm income. In food-exporting countries, such as the United States and France, agricultural subsidies have been designed primarily to increase farm income, either by raising the long-term level of prices above free-market levels or by providing direct payments to farmers. The sale of agricultural products to developing nations at below market prices has often had a devastating effect on the ability of farmers in those nations to prosper, and the continuation of such subsidies has become a stumbling block to efforts to dismantle international trade barriers. Once introduced, subsidies to maintain prices have proved extremely difficult to end. In France, farmers have vigorously protested decreases in subsidies that have made them the second largest food exporter after the United States. Agricultural subsidies in the United States, Japan, and the European Community (now the European Union) were issues of contentious debate in the Uruguay (1986-94) round of international trade negotiations under the General Agreement on Tariffs and Trade (GATT) and remain so in the World Trade Organization. Despite its long history of farm price supports, the U.S. Congress in 1996 passed the Freedom to Farm Act, which eliminated such agricultural subsidies in favor of fixed payments to farmers. The legislation failed to decrease payments to farmers, however, and by 2000 aid to farmers (including so-called emergency payments) had reached more than $22 billion, three times the 1996 level. A new federal farm bill in 2002 abandoned the 1996 goal of reducing farm payments, increasing base program expenditures by 80%. agricultural subsidies. (1995). In Dictionary of Economics, Wiley. Retrieved March 06, 2007, from http://www.xreferplus.com.libproxy.txstate.edu/entry/2763972 Government support (e.g., grants) to farmers to encourage agricultural growth.

agricultural subsidies. (2001). Richard Lowitt "Subsidies, Agricultural" The Oxford Companion to United States History. Paul S. Boyer, ed. Oxford University Press 2001. Oxford Reference Online. Oxford University Press. Texas State University - San Marcos. 6 March 2007 http://www.oxfordreference.com/views/ENTRY.html?subview=Main&entry=t119.e1487
The earliest government subsidies for farmers, beginning in 1890, benefited cane-sugar and beetsugar growers. The first general subsidy program was established in 1933 under the Agricultural Adjustment Administration, part of the New Deal's economic recovery plan. The government offered cash payments to farmers to reduce their output of such basic commodities as hogs, wheat, corn, cotton, rice, and dairy products. The goal was “parity,” by which farmers' purchasing power would match what it had been in the prosperous 1909–1914 years. Taxes on

U.S. Farm Subsidies grain mills and other food processors (ultimately passed along to consumers) financed the subsidies. As southern cotton growers reduced production in return for federal payments, sharecroppers and tenant farmers were driven from the land.


Farmers received two forms of subsidies, cash payments for taking land out of production and direct price supports through government purchase, loans, and management of surpluses. The Commodity Credit Corporation (CCC), created by executive order in 1933, lent farmers money with their crops as collateral. If prices held steady or increased, the farmer paid off his loan. If not, the CCC marketed the crop and absorbed the loss. Similar subsidy programs lasted into the 1990s. Government subsidies tended to concentrate production of basic crops in the hands of more efficient, larger owners. In 1970, for example, nine individuals or corporations each received over a million dollars in crop-reduction subsidies. In 1981, President Ronald Reagan proposed to end production controls and target prices, the mechanisms that had sustained the agricultural economy since the early New Deal Era. But huge surpluses and congressional opposition forced the administration to retreat. A 1982 program combined a smaller acreage-allotment program with guaranteed prices. Under it, the Reagan administration paid farmers more not to grow crops than any previous administration. Although the 1995 Freedom to Farm Act officially ended most agricultural subsidies, farmers continued to receive billions of dollars in phase-out payments and “emergency relief” appropriations. An elaborate milk price-support program remained in place as well. domestic. (2003). In The American Heritage® Dictionary of the English Language. Retrieved May 21, 2007, from http://www.xreferplus.com.libproxy.txstate.edu/entry/4081918 adj. 1. Of or relating to the family or household: domestic chores. 2. Fond of home life and household affairs. 3. Tame or domesticated. Used of animals. 4. Of or relating to a country's internal affairs: domestic issues such as tax rates and highway construction. 5. Produced in or indigenous to a particular country: domestic oil; domestic wine. n. 1. A household servant. 2. a. Cotton cloth. b. Household linens. Often used in the plural. 3. A product or substance discovered in, developed in, or exported from a particular country. domestic. (1996). In Merriam-Webster's Dictionary of Law. Retrieved May 21, 2007, from http://www.xreferplus.com.libproxy.txstate.edu/entry/5175076 1 : of or relating to the household or family a ~ servant ~ relations - see also family court 2 : of, relating to, or originating within a country or state and esp. one's own country or state the state has personal jurisdiction over ~ corporations - compare foreign, municipal

U.S. Farm Subsidies (2004). In Dictionary of Politics and Government. Retrieved May 21, 2007, from http://www.xreferplus.com.libproxy.txstate.edu/entry/6504152 • referring to the home country or to the country where a business has its head offices


domestic. (2004). In Merriam-Webster's Collegiate(R) Dictionary. Retrieved May 21, 2007, from http://www.xreferplus.com.libproxy.txstate.edu/entry/5231154 1 a : living near or about human habitations. b : tame, domesticated <the ~ cat>. 2 : of, relating to, or originating within a country and especially one's own country <~ politics> <~ wines>. 3 : of or relating to the household or the family <~ chores> <~ happiness>. 4 : devoted to home duties and pleasures <leading a quietly ~ life>. 5 : indigenous. - do mes ti cal ly \-ti-k( -)l \ adverb.

domestic. (2000). In Dictionary of Law, Peter Collin Publishing. Retrieved May 21, 2007, from http://www.xreferplus.com.libproxy.txstate.edu/entry/992858 (a) referring to a family. domestic premises house, flat, etc., used for private accommodation. domestic proceedings court case which involves a man and his wife, or parents and children. (b) referring to the market of the country where a business is situated. domestic consumption consumption on the home market. domestic market market in the country where a company is based. domestic production production of goods in the home country. (c) US domestic court court which covers the district in which a defendant lives or has his address for service. farm subsidies A Dictionary of Economics. John Black. Oxford University Press, 2002. Oxford Reference Online. Oxford University Press. Texas State University - San Marcos. 6 March 2007 <http://www.oxfordreference.com/views/ENTRY.html?subview=Main&entry=t19.e1162> Subsidies to farmers. These may take the form of price support payments, to increase farm incomes per unit of output, or direct payments to farmers, for example as compensation for taking land out of cultivation. Such subsidies are designed to increase farm incomes, and slow down the tendency in modern economies for farmers to leave the land. Whether such subsidies are called food or farm subsidies, the benefits are divided between consumers, farmers and landlords. subsidy. (2003). In The American Heritage® Dictionary of the English Language. Retrieved May 21, 2007, from http://www.xreferplus.com.libproxy.txstate.edu/entry/4136717

U.S. Farm Subsidies


1. Monetary assistance granted by a government to a person or group in support of an enterprise regarded as being in the public interest. 2. Financial assistance given by one person or government to another. 3. Money formerly granted to the British Crown by Parliament. subsidy. (2000). In The Penguin English Dictionary. Retrieved May 21, 2007, from http://www.xreferplus.com.libproxy.txstate.edu/entry/1177087 1. a grant or gift of money, e.g. one made by a government to a person or organization to assist an enterprise deemed advantageous to the public. 2. in former times, a sum of money granted by Parliament to the Crown and raised by special taxation. subsidy. (2004). In The Columbia Encyclopedia . Retrieved May 21, 2007, from http://www.xreferplus.com.libproxy.txstate.edu/entry/4301563 Financial assistance granted by a government or philanthropic foundation to a person or association for the purpose of promoting an enterprise considered beneficial to the public welfare. Subsidies were used in England in the later Middle Ages, when Parliament granted funds to the king to augment or replace customs and other taxes collected by royal prerogative; such early subsidies later became the means by which the power of taxation was taken from the king and lodged in Parliament. At first a nationwide levy, it became (in the reign of Charles II) a land tax levied annually without the intervention of a parliamentary vote. In France the king was able to retain his control and acquire financial powers that made him independent of any subsidy granted by the States-General. The term subsidy has had widely varied usage in the 20th cent. Subsidies may be granted to keep prices low, to maintain incomes, or to preserve employment. They are most important as grants to private corporations for performing some public service, such as to shipping companies and airlines for carrying the mail or to railroads for maintaining passenger service. These are often required where a necessary public service, particularly one that might otherwise not be profitable, is granted funds to remain in operation. In the United States, the National Railroad Passenger Corporation (Amtrak) receives federal subsidies for its intercity railway network. American cities have frequently subsidized transit companies to induce them to provide metropolitan transportation facilities for the public. Other commonly subsidized enterprises include agriculture (see agricultural subsidies), business expansion, and housing and regional development. In the United States, 5 million households received housing assistance in 1998. Medical and educational institutions are among the largest recipients of subsidies (see foundation); in 1997, for instance, federal spending in the United States paid 46% of national medical costs. Subsidies have also been granted by one country to another country to aid it in pursuing a war effort, to gain its goodwill, or to help stabilize its economy. Very similar to a subsidy is a bounty, except that it usually takes the form of a per-unit premium or reward for a service already performed.

U.S. Farm Subsidies


subsidy (2004). In Merriam-Webster's Collegiate(R) Dictionary. Retrieved May 21, 2007, from http://www.xreferplus.com.libproxy.txstate.edu/entry/5282870 a : a sum of money formerly granted by the British Parliament to the crown and raised by special taxation. b : money granted by one state to another. c : a grant by a government to a private person or company to assist an enterprise deemed advantageous to the public.

U.S. Farm Subsidies References Gaul, G. M., Cohen, C., & Morgan, D. (2006, December 21). Federal subsidies turn farms into big business. Washington Post. p. A01.


Harkin, T. (2006). What should the priorities be in the reauthorizing of the farm bill? Roll Call, December 4, 2006. Knutson, R. D., Penn, J. B., Flinchbaugh, B. L., & Outlaw, J. L. (2007). Agricultural and food policy (6th ed.). New York: Prentice Hall. Mao, T. (1972), Quotations from Chairman Mao Tsetung (2nd vest ed.). Peking: Foreign Languages Press. Pollan, M. (2007, April 22). You are what you grow. New York Times Magazine. p. 15. Schatz, T. (2007, March 30). Pork goes to war. The New York Times. p. A 27. Stiglitz, J. (2006). The tyranny of King Cotton. Business Day. P. 13. Uncle Sam's teat: Farm subsidies. (2006, Sept. 9). The Economist, 380, 35. USDA (2007a). Fact sheet: A commitment to rural America: Release No. 0019.071. Retrieved May 21, 2007 from http://www.usda.gov/wps/portal/usdahome? contentidonly=true&contentid=2007/01/0019.xml USDA (2007b). 2007 Farm bill proposals. Retrieved May 21, 2007 from http://www.usda.gov/ documents/07finalfbp.pdf

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