In May, President George W. Bush signed into law the Farm Security and Rural Investment Act of 2002, the latest in a series of farmer support legislation going back to 1933. Critics say that the law, which increases spending by more than 70 percent, will further undermine the faltering free-trade movement. It gives big farmers unprecedentedly large payments that can be used to buy out small farmers and, they maintain, hurts farmers in developing countries, who cannot compete with low, subsidized American prices. On the plus side, the act gives a strong economic stimulus to agricultural states, such as Iowa.
Only farmers who produce certain crops benefit directly from subsidies: growers of corn, wheat, oilseeds, rice and cotton got more than 90 percent of payments in 1999, yet they accounted for less than 36 percent of total agricultural output. Those who produced cattle, hogs, poultry, fruit, vegetables and other products received no payments. All farmers, however, can benefit from U.S. Department of Agriculture programs, including those for conservation and subsidized crop insurance. The prices of some crops, such as sugar, are kept high by restrictive tariffs. Of the estimated 1.9 million farms in the U.S., those with $250,000 or more in sales--about 7 percent of the total number--received 45 percent of direct federal subsidies in 1999.
This article was originally published with the title Down on the Farm.