Highly Concentrated Subsidies: Bones in the Closet

If you think it's too early to plan for the 2012 Farm Bill, check again. Some observers have joked that the contentious legislation will lead to civil war. But short of joining the 2012 doom's day bandwagon, observers have good reason to be concerned. Each new Farm Bill offers the chance to sweep out what doesn't work and sign onto a new program. Unfortunately, the skeletons of the past are stacked too high to simply brush away.

According to the Farm Subsidy Database from the Environmental Working Group (EWG), of the quarter trillion dollars of farm subsidies allocated since 1995, 30% has gone to corn growers. In 2009, total corn subsidies fell by only 6% from 2008 even though the number of recipients dropped by nearly 99% from a year earlier. In other words, roughly the same amount of money in 2009 for far fewer companies than in years past (since 2003 at least).

What goes into a corn subsidy? A lot more than money for farmers. The EWG numerates the many facets of corn subsidies, including loans, insurance and warehousing the harvested crops. The subsidy program nurtures corn from its early life as seedlings, through the harsh uncertainty of weather and pests and past harvest to the point of storing and selling. This helps ensure that money be spent where it's needed.

But as many critics point out, the subsidy system is based on an antiquated set of challenges. We no longer have grain shortages. Rather, we have surplus that feeds the junk food machine. There's waste in the food system because crops like corn are too cheap not to process into every food product imaginable.

But there's also waste because the structure of corn subsidies has created dinosaurs: entities that exist primarily to fulfill a single stage of the crop process, such as storage.

For example, the largest single recipient of farm subsidies from 1995-2009 was the American Peanut Marketing Association (APMA). Along with the second largest beneficiary, Concordia Allied Producers, APMA is listed by the Farm Service Agency (FSA) as a Marketing Association. The top three recipients from 2009, subsidized primarily for rice, are all listed as Marketing Associations. According to the FSA, these companies buffer farmer collectives from the volatility of markets by storing produce for later sales.

This sounds innocuous because it is, or, better put, it was, when crises like the Dust Bowl ravaged the Farm Belt and threatened the nation's food supply. But now there's too much stability. There's little competition between large-scale farmers to grow a variety of crops because the infrastructure that exists is streamlined for a limited set of cash crops, frozen in the past.

If you think this is an exaggeration, The Washington Post scooped a story in 2006 about some landowners who continued to collect subsidy checks for crops grown on their land--crops grown in the past. Their lands lay fallow but still the checks arrived. Fittingly, for the fossilized subsidy program, those checks were part of an effort to free farmers from the rigidity of earlier Farm Bills. They did that and more, opening the way for housing developers (and other speculators) on former farmlands to literally cash in on subsidies.

The farm subsidies are rife with reasonable motives and goals. But as the need (and demand) for diverse and competitive food markets mount, subsidies increasingly act as burdens rather than buffers. As total costs of subsidizes rise, wealth concentrates and foodstuffs bulge with cash crop-derivatives, we're all heading for a crash.