Subsidize Big Business Crops? SNAP out of it.

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November 10, 2012 by brooksy

The question presented is: how can one defend the existing budget to food assistance programs, but I beg the question, how can we justify direct payments to farmers that total about $5 billion. Farm income was $101 billion in 2011 (1). That’s way more than the $80 billion for the entire food stamp program (2).

If we’re going to be objective about where farm bill money gets distributed, then let’s look at where the economic and social needs are. If you look at where money is going and why it’s going there, then it gives you a lot more insight into motives behind farm bill spending allotments.

The farm bill is not much more than an entanglement of government programs that have very little to do with each other. It seems like a great way for the USDA to continue to feel ‘needed’ in an era where farming has become like cassette tapes among industry’s MP3s. So it needs to redefine itself to include things like SNAP and environmental protection in order to avoid obsoleteness.

 

The Farm Bill is important because SNAP, along with other food and nutrition programs, is authorized and funded through this bill. SNAP is one of the seven strategies essential to meeting the goal of ending childhood hunger by 2015, and the Farm Bill is an opportunity to make needed improvements to SNAP that will help America reach that goal(5).

With the proposed cuts, two to three million people would lose their food stamp benefits. Nearly 300,000 children would also be ineligible for the free lunch program (1). This sounds like a sick and twisted strategy to combat childhood obesity.

Reductions are estimated to be about $90 per family and affect 500,000 households in 15 states (1). Cuts will have a huge impact on low-income families during a time of high unemployment. This is not the right climate to be reducing food assistance programs.

The bill includes income support to growers of selected commodities (i.e. corn for our soda sugar and ethanol, oh and to please Iowa so that politicians can keep support during caucuses (7) , keeping Brazil’s corn and Cuba’s sugar out of things (8), and feed grains so companies like Tyson can save on its chicken feed. Tyson received 2.59 billion from 1997 to 2005 (3). I wonder how much feed that buys. The subsidy keeps the cost of what we Americans have come to call ‘chicken’ low, but cut the SNAP program budget until people who need food assistance programs can’t afford to buy the cheap chicken concoction anyway.

To ensure that the bill passes, they have included components for a spectrum of areas including SNAP, international food aid and bioenergy to name a few(4). Everyone’s got a piece of the pie now, so no one wants to nix it—the pie that happens to have subsidized ingredients, so costs for crops stay low (farmers lose), thus costs for businesses stay low (businesses win). It’s in everyone’s interest to pass the bill, plus who would want to take food (cheap pie, in this case) out of someone’s mouth?

Well, where is the evidence that SNAP is effective?

It’s right here:

USDA’s ERS data shows that SNAP significantly improves the welfare of low-income households. They found an average decline of 4.4 percent in poverty prevalence due to SNAP benefits. SNAP benefits had a particularly strong effect on child poverty, reducing its severity by an average of 21.3 percent from 2000 to 2009 (6).

 

SNAP is benefitting nearly 50 million Americans, whose incomes, by the way, are well under the average $30,000 that a farmer makes. If included in total income SNAP benefits would have lifted 3.9 million Americans—43% children–above the poverty line in 2011 (9).

 

What about evidence for farm subsidies?

Big business ‘farms’ get 45% (top 7% of farmers, average income of more–way more–than $250,000) of the farm subsidy (7). Whoa cowboy, hold your horses.  Where are the economic and social arguments for supporting that?

 

The largest farms with the most revenue get nearly half of the subsidy? I bet those cowboys have some real fancy boots.

An average income high of $89 billion for the year of 2008 (which was 40% higher than the previous 10 year average) was used to set the ‘baseline’ income level (8). So the insurance subsidy guarantees 75-85% of that income. Thanks, lobbyists. $116 million was spent on lobbying among agricultural interest groups (1). How is this sort of spending justified? Who is lobbying for SNAP?

If we compare programs, SNAP qualification is 130% of poverty level (e.g. 1 person household  is $11K) as defined by HHS (10), which could provide at most about $2400/yr, about $200 per month, which is meant to supplement 30% of food costs.

The average Farmer receives $8,600/year from the subsidy (this varies greatly depending on crop, farm size, etc, but for argument’s sake let’s say $8600 (11) for a range of incomes (everyone from the small farm of about $30K/year up to 750K (1).

Currently, the government subsidizes about 62 percent of the crop insurance premiums, and the policies typically guarantee 75 percent to 85 percent of a farmer’s revenue (2). What is sustainable about this system? And why is the farm subsidy not under the same scrutiny as food assistance?

Food for thought:

Let’s restructure the bill so that the top 7% aren’t benefiting from crop subsidies, or maybe create something that keeps farms from monopolizing crop sectors. Maybe we could call it something catchy like Antitrust Act.

 

Having said all of this, I realize by decreasing subsidies on commodities that food prices would increase, and SNAP would obviously be affected. But would health be impacted because the subsidized crops (grains and feed vs. fruits and vegetables) are usually the ones found in the cheap industrial foods?

The arguments for SNAP spending make sense economically because it has shown to be effective. It also makes sense morally, although since when does the government consider ethics with social welfare when deciding who in society should benefit financially, right Romney?

 

To learn more about the Farm Bill:

Farmandfoodproject.org

Watershedmedia.org

 

Cool infographic: http://awesome.good.is.s3.amazonaws.com/transparency/web/1206/farm-bill/flash.html

References

  1. House Agricultural Committee agrees of Farm Bill, but….
  2. Senate passes farm bill, but delays expected in the House
  3. http://www.inthesetimes.com/article/3190/whose_subsidy_is_it_anyway/
  4. What is the Farm Bill?
  5. What the proposed 2012 Farm Bill might mean for Food Assistance Programs
  6. http://www.ers.usda.gov/publications/err-economic-research-report/err132.aspx
  7. Cardello, Hank. Stuffed. 2009
  8. Food Politics What everyone needs to know (R. Paarlberg), Chapter 9
  9. http://frac.org/reports-and-resources/snapfood-stamp-monthly-participation-data/
  10. http://aspe.hhs.gov/poverty/12fedreg.shtml
  11. http://farm.ewg.org/summary.php
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3 thoughts on “Subsidize Big Business Crops? SNAP out of it.

  1. Love the Infographic! I recommend that everyone checks it out!

  2. catherinecoughlin says:

    Agree! I love the info graphic! You just introduced me to a new site (and consequently i lost a few hours of my night to it). Great article on the Farm Bill! You helped clarify many of its points.
    I realize we are a country that is known for excess; the obesity epidemic is at the forefront of most of our efforts as dietitians and public health advocates. But it is naive to think that everyone suffers from over-eating. The SNAP funding in the Farm Bill helps 45.8 million Americans who need food. (http://www.snaptohealth.org/farm-bill-usda/snap-in-the-farm-bill/) I’m particularly concerned over what you aptly referred to as the monopolization of crop sectors. How is it justifiable that this proposal continues to support the top 7% of farmers with crop subsidies while taking away lunch from about 280,000 school-aged children? I know everyone wants to save a penny at the grocery store but I bet every single one of us would change our tune if we could see or feel the hunger experienced by those children. Is having “chicken” that “contains 2% or less of {insert unrecognizable fillers here}” cost a dollar less at the checkout line worth the price of removing food from refrigerators of some of the hungriest people in America? The main problem, as you mentioned, is that supporters of SNAP funding must defend against one of the largest, deepest-pocketed lobby groups in our nation. Why can’t these lobbyists just save their time and money and give those dollars to the SNAP program?? Sometimes I don’t understand how people justify money spent.

    I don’t even pretend to have any type of solution to the struggle over SNAP funding in the Farm Bill, but I really enjoyed your article as it greatly increased my knowledge on the subject and got me thinking about how we can balance our desire to save money on commercial food products while continuing to support those in need.

  3. kevintmiller says:

    I’m going to play devil’s advocate (which won’t surprise anyone who knows me) for big business farmers here (that part will surprise anyone who really knows me). I’ll start off by being frank and saying that my personal preference is usually to avoid any provision of tax money directly to anyone who’s capable of things like buying yachts and sending their three children to private school. However, I understand that our society does not work this way and that I even might have to acknowledge that the greater good has, in the past, benefited from policies I would have bristled at initially. I believe this to be one of those circumstances.

    Having come from a biological background, I understand the way energy is lost through progressive trophic levels and understand how stressed our planet is under the burden of an enormous human population. Despite the fact that a terrible number of people in the world are hungry or starving right now, the world has also done an amazing job of providing calories to an overwhelming number of hungry mouths. This has been done, in part, through agricultural practices that are terrible ecologically and result in the need for pesticides, along with the requirement that these practices be carried out on huge tracts of land in order to be financially viable. As these practices developed, those with huge tracts of land benefitted over their competitors. When the first Farm Bill was passed, I am sure it was known that the benefits to farmers would be realized inequitably in favor of large farms, but the short-term concerns of keeping afloat a domestic food production system was a greater short-term concern. Over time, practices used on large farms are necessary for financially viable farms in all but niche markets, allowing those large farmers to outcompete their rivals and just buy up the land that eventually had to be sold. I personally usually don’t like it when government programs help a few concentrate incredible wealth. However, in this case I’m not as worried about it.

    Here’s why: big agricultural businesses have built themselves around the benefits provided by the government. If we were to take these away, what might be the effect on the our food system? I don’t know. I doubt anyone does. It’d probably mostly be okay, but could our system drastically fail? Could it become impossible to produce foods at the cost (and thus sell them at the cost) we now enjoy? Here’s another thing, too: our government provides benefits to big businesses in other industries as well – like mercenary killers in our wars overseas that embarrass us when they eliminate innocent bystanders and oil executives that somehow continue to find ways out of paying for accidents that demolish fisheries and damage the natural environment. If I had to choose one sector in which to allow the rich to continue to line its pockets, it’d probably be the industry that keeps us all fed.

    I think that SNAP is an important program and that the Farm Bill does more good that harm. Sometime in the future we might be able to gradually cut down the benefits to those who don’t need them while preserving benefits to those who do. Unfortunately, today, it seems that talks about reducing these programs will affect the wrong people. So I say that it’s in society’s best interests to forget our ideas about cutting any funding in the hopes that it’ll make things more fair. Like my mother always told me, “Life’s not fair.”

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