Bad Seeds: A Plan to Phase out the $5 Billion in ‘Direct Payment’ Agricultural Subsidies

8/7/2019 Bad Seeds: A Plan to Phase out the $5 Billion in Direct Payment Agricultural Subsidies

1/19www.amer icanprogress .o rg

Bad SeedsA Plan to Phase out the $5 Billion in Direct PaymentAgricultural Subsidies

Jake Caldwell May 2011


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Bad SeedsA Plan to Phase out the $5 Billion in Direct PaymentAgricultural Subsidies

Jake Caldwell May 2011

CAPs Doing What Works project promotes government re orm to e ciently allocate scarce resources andachieve greater results or the American people. This project specifcally has three key objectives:

Eliminating or redesigning misguided spending programs and tax expenditures, ocused on priority areassuch as health care, energy, and education

Boosting government productivity by streamlining management and strengthening operations in the areaso human resources, in ormation technology, and procurement

Building a oundation or smarter decision-making by enhancing transparency and per ormancemeasurement and evaluation


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Doing What Works Advisory Board

Andres AlonsoCEO, Baltimore Public School System

Yigal ArensPro essor, USC School o Engineering

Ian AyresPro essor, Yale Law School

Gary D. Bass

Executive Director, OMB Watch

Larisa BensonWashington State Director o Per ormanceAudit and Review

Anna BurgerFormer Secretary-Treasurer, SEIU

Jack DangermondPresident, ESRI

Beverly HallSuperintendent, Atlanta Public Schools

Elaine Kamarck Lecturer in Public Policy, Harvard University

Sally KatzenExecutive Managing Director, The Podesta Group

Edward KleinbardPro essor, USC School o Law

John KoskinenNon-Executive Chairman, Freddie Mac

Richard LeonePresident, The Century Foundation

Ellen MillerExecutive Director, Sunlight Foundation

Claire OConnorFormer Director o Per ormance Management,City o Los Angeles

Tim OReillyFounder and CEO, OReilly Media

Ali PartoviSenior Vice President o Business Development,MySpace

Tony ScottChie In ormation O cer, Microso t

Richard H. Thaler

Pro essor, University o Chicago Schoolo Business

Eric ToderFellow, Urban Institute

Margery Austin TurnerVice President or Research, Urban Institute

Laura D. TysonPro essor, University o Cali ornia-BerkeleySchool o Business

Members of the advisory board do not necessarily share all the views expressed in this document.


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1 Introduction and summary

3 Background: Agricultural commodity subsidiesand the 2008 farm bill

7 Outlook: The 2012 farm bill

9 A way forward

12 Conclusion

13 Endnotes

14 About the author and acknowledgements

Contents


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1 Cen e Ame can P g ess | Bad Seeds

Introduction and summary

Agricul ure and he amily arm are he ounda ion o s rong and heal hy rural com-muni ies, and a cri ical engine o U.S. economic grow h. Regretably, a key aspeco U.S. agricul ural policy does no meaning ully con ribu e o he success o U.S.

armers: Mos ederal arm subsidies are ou da ed, expensive, and inequi able.

In an era o scal cons rain and more immedia e budge priori ies, many o hese ine ec ive subsidies can no longer be jus i ed. Te ederal governmen

each year pays owners o his orical croplands $4.9 billion in direc paymen subsidies regardless o whe her he people receiving he paymen s arm heirlands. And hese paymen s are au oma ically made every year despi e rising

scal de ci s and a rela ively heal hy arm economy ha saw ne arm incomegrow by 27 percen in 2010.1

An exclusive se o commodi iescorn, sorghum, barley, oa s, coton, whea ,rice, soybeans, and peanu shave received 72 percen , or $160 billion, o allU.S. arm paymen s since 1996.2 Even among his small group o commodi ies

here are widespread dispari ies. Upland coton and rice growers, or example,receive a dispropor iona ely high level o arm program paymen s rela ive o heo her crops.3 Meanwhile, rui and vege able growers, and he majori y o o heragricul ural producers in he Uni ed S a es, receive minimal direc subsidiesdespi e con ribu ing more han 50 percen o he o al arm ga e value in heUni ed S a es.4

Because direc paymen s are linked o his orical lands and amoun o acres, he bene s o he paymen s end o accrue o larger arm opera ions wi h moreacreage. Te Depar men o Agricul ure ound ha 62 percen o arm paymen s,

including direc paymen s, wen o he larges 12 percen o arms in 2008.5

TeGovernmen Accoun abili y O ce ound ha 305 arm opera ions ha same yeareach received $200,000 or more in direc paymen s.6


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Direc paymen s also end o ow o people wi h high incomes. Te GAO oundha recipien s o direc paymen s and o her arm program paymen s in 2008 were

more han wice as likely o have higher incomes as o her ax lers.7

Several members o Congress receive direc paymen s and o her arm pro-

gram paymen s. According o a recen analysis by he Environmen al WorkingGroup, 23 ederal lawmakers curren ly in Congresssix Democra s and17 Republicansreceived agricul ural subsidies be ween 1995 and 2009.Republicans ook home $5.3 million in axpayer- unded subsidies during hisperiod while Democra s received jus less han $500,000.

O her agricul ural subsidies are doled ou based on produc ion, making pricesmore vola ile or armers in he Uni ed S a es and overseas, and ofen undermin-ing U.S. developmen and an ipover y programs. As commodi y prices uc ua e,agricul ural subsidy programs in general could even ually cos axpayers be ween

$7 billion and $24 billion a year.

Botom line: Poorly designed and ine ec ive agricul ural subsidy programs weaken he compe i iveness o our na ions armers and rural communi ies, drain

axpayer resources, and should be re ormed. Among he recommenda ions wemake in his paper:

Te Uni ed S a es should reduce and phase ou he $4.9 billion per year in au o-ma ic direc paymen s o individuals and apply he savings o de ci reduc ion.

As direc paymen s are phased ou , he maximum individual direc paymenshould be capped a an appropria e level and he overall income eligibili y amoun s should be reduced.

$650 million saved rom direc -paymen reduc ion should be reinves ed in oexis ing rural-based programs o provide incen ives or renewable clean energy,energy e ciency, and advanced dedica ed biomass energy crops on he arm.

A por ion o hese savings should also be dedica ed o enhancing U.S. agricul-ural expor s in a manner ha promo es small business and is consis en wi h

in erna ional rade obliga ions. All governmen spending on agricul ural subsidies should be disclosed in an

open and ransparen manner.

I hese recommenda ions are implemen ed, he ederal governmen can savemore han $35 billion by 2020 and apply mos o hese savings o de ci reduc-

ion while also inves ing in a clean energy u ure in our rural communi ies.


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Background: Agriculturalcommodity subsidies and

the 2008 farm billMos ederal agricul ure and ood policies are oday au horized by he Food,Conserva ion, and Energy Ac o 2008.8 Te arm bill, as i s known, is an omnibus mul iyear piece o legisla ion ha es ablishes he ypes and levels o ederal bene s provided o agricul ural producers and landowners under manda ory commodi y price suppor s. I also se s governmen unding o discre ionary con-serva ion programs.

Te arm bill also au horizes many o her USDA ac ivi ies, including exporassis ance, ood aid, agricul ural research, energy ini ia ives, rural developmen ,and domes ic nu ri ion programs, such as he Supplemen al Nu ri ion Assis anceProgram, or ood s amps.9 Te ac is generally renewed every ve years and he2008 arm bill is se o expire in la e 2012.

The three types of subsidies and how they work

Agricul ural subsidies or he produc ion o commodi ies are a subs an ial compo-nen o he arm bill. Also known as income suppor , hese subsidies come in hree

ypes o manda ory paymen s: direc paymen s, coun er-cyclical paymen s, andmarke ing loan bene s available o producers o a dis inc se o crops. Under cur-ren policy, wo- hirds o U.S. armers receive no subsidies and he larges 10 perceno arms receive nearly 70 percen o he o al arm paymen s.10 Te majori y o sub-sidies are reserved or major crops including whea , corn, coton, rice, and soybeans.

Direc paymen s are no a ec ed by how much a armer produces and are avail-able o people who own or ren land ha has his orically grown a selec se o he

major commodi ies. Direc paymen s are xed annual paymen s based on his ori-cal produc ion [and] do no vary wi h curren marke prices or yields, according

o he Congressional Research Service.11 Te governmen will spend $49 billionon direc paymen s rom scal years 2012 hrough 2020, according o nonpar isancongressional es ima es.12


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Coun er-cyclical paymen s are designed as pay-men s o armers when marke prices all below a arge price es ablished by he governmen .Marke ing loan bene s give armers access oshor - erm governmen nancing when prices

all below a cer ain price. Tey are designed ogive producers o he major commodi y cropsa guaran eed oor price and he oppor uni y ouse heir crops as colla eral o secure an improvedprice on he marke a a la er da e. Marke ing loan bene s have a endency o encourage produc-

ion, and in some ins ances overproduc ion, o commodi ies when prices are low, since hey guaran ee he producer a minimum price.

In he rs wo years o he 2008 arm bill, commodi y prices have remained high.Demand or coun er-cyclical paymen s and marke ing loan bene s has here ore been rela ively low, cos ing he governmen jus $2.6 billion since 2008. Direcpaymen s con inue o be paid ou a a s eady $4.9 billion per year despi e highmarke prices.13

The problem with direct payments

One o he policy goals o U.S. agricul ural subsidies is o give armers, whoengage in a cri ical and risky pro ession, income s abili y and pro ec ion agains vola ile commodi y prices. Subsidies can improve he in erna ional compe i-

iveness o U.S. agricul ural produc s. Tey also have been jus i ed as a way oenhance na ional securi y by ensuring he Uni ed S a es has consis en access o adomes ic, plen i ul, and a ordable ood supply.

Te roughly $4.9 billion in ederal direc paymen s paid ou each year are xed,au oma ic disbursemen s o landowners or ren ers based on he his orical useo he land. Farmers may plan any crop hey choose or hey may leave he land

allow and s ill receive a direc paymen . Te marke price o commodi ies has noe ec . Indeed, no commodi y produc ion on he land is required o receive hepaymen so here is litle incen ive o overproduce commodi ies.

Direct payments for crop year 2009-2010

$ per base acre

$120

$100

$80

$60

$40

$20

$0Corn Grain

sorghumWheat Upland

cottonRice Peanuts S

Source: Compiled by USDA Economic Research Service f rom USDA Farm Service Agency and USDA NAgricultural Statistics Service data.


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Direc paymen s rs appeared in he 1996 arm bill as a rade- riendly al erna ive o subsidies

ha encourage produc ion (such as marke ingloan bene s) and hereby dis or rade. Direcpaymen s were in ended o be emporary. Te

idea was ha even ually incen ives like direcpaymen s ha didn encourage overproduc ion would also be phased ou and he overall amouno agricul ural subsidies reduced.

Under he direc paymen sys em, armerson his orical cropland were exemp ed rom

radi ional res ric ive governmen limi s onplan ing and given he exibili y o grow any choice o crop, or no hing a all, and s ill receive

a paymen . Direc paymen s los heir empo-rary s a us in he 2002 arm bill and were madea permanen ea ure o U.S. agricul ural policy.

Proponen s o direc paymen s say hey help armers secure bank credi and helpcon ribu e o a arms opera ing expenses.14 Since direc paymen s represen mucho Congresss annual agricul ural spending and au horized unding in he arm bill,many lawmakers rom arm s a es see hem as a way o main ain and boos overall

ederal spending on agricul ure.

Suppor ers also say direc paymen s are he leas rade-dis or ing way o supporarmers income because he subsidies do no in uence produc ion decisions and

are generally considered o be compa ible wi h U.S. obliga ions o he World radeOrganiza ion.15 W O member na ions are in general mos concerned abou agricul-

ural subsidies ha encourage overproduc ion and resul in he dumping o com-modi ies on global marke s a low prices. An agricul ural subsidy ha is decoupled

rom produc ion incen ives is also less likely o drive global prices downward andundermine local produc ion and agricul ural marke s in developing coun ries.

Te Depar men o Agricul ure has no ed ha he primary economic impac s o direc paymen s are increases in arm income and land values.16

Some cri ics o direc paymen s pain he subsidies as litle more han incomerans ers rom axpayers o landowners o his orically armed land.17 O hers no eha he annual au oma ic paymen s in a e land values and raise ren s in rural

Per acre value of direct payments for crop year 2005-20

Source: Compiled by USDA Economic Research Service f rom USDA Farm Service Agency data.

$0-$15$16-$25$26-$35$36-$50>$51


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communi ies. While direc paymen s are available o bo h owners and ren ers o his orical lands, ren ers are requen ly disadvan aged because he landholder akesa cu . Moreover, owners end o use direc -paymen income as jus i ca ion orhigher ren on his orical land.18

Higher land prices in urn presen new armers wi h addi ional barriers o en ry.Higher land prices and low in eres ra es are giving rise o concerns abou specula-

ive land bubbles emerging in rural communi ies.19

Direc paymen s may also discourage he plan ing o crops because he subsidiesare doled ou whe her land is worked or no worked. For example, several areas in

exas ha have his orically grown rice have now become cowboy s ar er ki slarge housing developmen s and proper ies wi h a large house and small acreage

or re iring urban residen s ha no longer grow rice bu con inue o receivea direc paymen .20 As hese housing developmen s have grown, rice acreage in

exas has been reduced.

Te compa ibili y o direc paymen s wi h W O obliga ions is, in all likelihood,

overs a ed. As a condi ion o receiving he direc paymen , armers are res ric edrom plan ing rui s and vege ables on his orical cropland. Tis prohibi ion in u-

ences he produc ion levels o rui s and vege ables in U.S. agricul ure and is po en-ially rade dis or ing. Indeed, a W O dispu e setlemen panel no ed ha direc

paymen s are in his way linked o produc ion and in uence in erna ional rade.21

Direct payment rates

Commodity Unit Direct payment rate Direct payment rateif enrolled in ACRE

Wheat Bushel $0.52 $0.42

Corn Bushel $0.28 $0.22

Grain sorghum Bushel $0.35 $0.28

Barley Bushel $0.24 $0.19

Oats Bushel $0.024 $0.017

Upland cotton Pound $0.0667 $0.0534

Medium-grain rice Hundredweight $2.35 $1.88

Long-grain rice Hundredweight $2.35 $1.88

Soybeans Bushel $0.44 $0.35

Other oilseeds Hundredweight $0.80 $0.64

Peanuts Ton $36.00 $28.80


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Outlook: The 2012 farm bill

Te $284 billion 2008 arm bill is se o expire in he all o 2012.22 Ex ernal ac orsincluding ederal budge cons rain s, he rela ive heal h o he U.S. agricul uraleconomy, and he scope o changes sough by policymakers will be in uen ial inshaping deba e on he 2012 arm bill.

Te ederal de ci is projec ed o reach $1.5 rillion in scal year 2011 wi hederal deb opping ou a more han $10.4 rillion. Moun ing scal de ci s

will probably mean a leaner overall arm bill wi h less unding available or allprograms in he omnibus ac .

Under he curren bill, a person can ge more han $40,000 in direc paymen s ina single year. People wi h more han $500,000 in non arm income or $750,000 in

arm income are ineligible or direc paymen s.

The current budget

On April 14, 2011, Congress passed a spending bill or he remainder o hecurren scal year ha reduces unding or overall agricul ure programs by $3 bil-lion, or 14 percen , less han he 2010 levelswi h minimal cu s o commodi y subsidies.23 Te House Agricul ure Commitee recen ly proposed ha appropria-

ors in 2012 seek unding cu s or ood s amps ra her han pursue reduc ions incommodi y subsidies.24

The presidents proposal

Presiden Barack Obamas scal year 2012 budge and de ci -reduc ion planproposes o cu direc paymen subsidies by $2.5 billion over 10 years. He accom-plishes his by lowering he $40,000 cap on direc paymen s o $30,000. Te presi-


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den would also reduce income eligibili y limi s by $250,000 over hree years ina phased reduc ion. Te Agricul ure Depar men es ima es hese changes wouldimpac 30,000 armers, or 2 percen o armers now receiving direc paymen s.25

The House Republicans 2012 budget resolutionOn April 15, 2011, House Republicans vo ed o adop a scal year 2012 spending blueprin au hored by Rep. Paul Ryan (R-WI), he budge commitee chairman.26 Tis plan proposes o cu $127 billion rom ood s amp programs, $30 billion

rom direc paymen s and crop insurance programs, and $20 billion rom conserva ion and o her ini ia ives over he nex decade.

Te GOP plan would here ore shrink direc paymen subsidies by as much as$3.3 billion a year, or 66 percen , rom he curren $4.9 billion-a-year level.27

Factors contributing to the 2012 bill

Te s a e o he domes ic general and agricul ural economy will in uence hescope and direc ion o he nex arm bill when i is writen la er his year and early in 2012. Ne arm income in 2010 was $81.6 billion, up 31 percen rom 2009,and 26 percen more han he 10-year average.28 In 2011 ne arm income is ore-cas o be $94.7 billion, up $15.7 billion (19.8 percen ) rom he 2010 orecas .29 Corn, whea , and soybean prices are curren ly high bu s ocks are low and pricesare likely o remain vola ile because o rising global demand and high oil prices, which increase arming inpu s and cos s.

Poli ical priori ies will also in uence he scope o any nal legisla ion. Givenscal priori ies and o her ac ors, Congress may ry o subs an ially re orm arm

bill programs, or i may pre er a less ambi ious ex ension o he 2008 bill hareduces unding or cer ain programs and makes only modes overall changes oagricul ural policy.


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A way forward

Policymakers shaping he nex arm bill will do so in an economic landscape haea ures bo h s rong arm incomes and he need or scal res rain . Such a clima e

argues orce ully or a reduc ion in he $4.9 billion a year in inequi able direc -paymen subsidies. Te 2012 arm bill is also an oppor uni y o craf a arm policy

ha rewards more o our armers while con ribu ing o e or s o promo e rural- based clean energy, energy e ciency, and U.S. agricul ural expor s.

We believe savings rom reduced direc paymen s should be dedica ed primar-ily o de ci reduc ion. Bu reinves ing some o he savings o he developmeno renewable clean energy on arms and in rural communi ies will provide new revenue s reams and long- erm cos savings o rural communi ies.

Te upside o such a policy approach is more han de ci reduc ion. In con raso curren commodi y-based direc paymen s,all armers could be eligible or he

renewable clean energy programs. Te in a ionary pressure curren ly being appliedo land values as a resul o commodi y-based direc paymen s will be modera ed.

And he prac ice o au oma ically paying non arming landowners will end.

As direc paymen s are phased ou , a ransi ional adjus men period should bees ablished or curren recipien s. Direc paymen s should be gradually reduced oa cap o $10,000 per individual in a single year, wi h eligibili y res ric ed o individ-uals earning less han $150,000 in non arm income and $250,000 in arm income.

Farm policy should promo e energy cos savings and rural-based clean energy in wind, solar, geo hermal, bioenergy, and o her renewables. While he majori y o savings rom a cur ailed direc -paymen program should go o de ci reduc ion,

Congress can and should redirec $650 million o he money in he ollowing ways.


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Grants to farmers for clean energy projects: $300 million

Congress should dedica e $300 million o arm-based clean energy hrough heexis ing Rural Energy or America Program by providing gran s and loan guar-an ees direc ly o armers, ranchers, and rural small businesses seeking o design

and cons ruc heir own clean energy projec s. Projec s and echnologies mighinclude bioenergy acili ies, manure diges ers, energy e ciency projec s, and wind, solar, and geo hermal power, and should priori ize small armers.

Home repair loan and grant program for rural areas: $40 million

Energy e ciency re ro ting is he mos cos -e ec ive way o reduce householdenergy cos s while providing manu ac uring and cons ruc ion jobs in local ruralcommuni ies. Low-income amilies who own homes in need o repair under he

curren program are eligible o receive loans and gran s o under ake home reno- va ions, including replacing hea ing and wa er sys ems. Te programs priori iesshould be expanded o include energy e ciency improvemen s and moderniza-

ion o homes.

Encourage farmers to grow advanced biofuel crops: $300 million

Farm policy mus bring advanced bio uels o commercial scale as rapidly aspossible. Advanced bio uels are made rom agricul ural and o her was es, woodchips, algae, or dedica ed energy crops such as swi chgrass. Biomass growersare primarily loca ed in rural areas and he cos s o collec ing and ranspor ing biomass means many produc ion acili ies are in rural communi ies and willprovide rural jobs.

USDAs exis ing Biomass Crop Assis ance Program provides unding o producersand armers o renewable energy crops o up o 75 percen o he cos o es ablish-ing he energy crop and annual paymen s or up o 15 years or crop produc ion,and deserves addi ional suppor . Te program unding should be increased by

$50 million rom FY 2010 appropria ions. Funding priori y should be given oarmers who es ablish and plan dedica ed energy crops.


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Support U.S. agricultural exports: $10 million

Farm legisla ion should s reng hen agricul ures role in mee ing he presiden sNa ional Expor Ini ia ive goal o doubling U.S. expor s by 2015. We should boos in ras ruc ure and echnical assis ance unding by $10 million. In addi ion,

he Uni ed S a es should redouble i s e or s in a varie y o in erna ional radeorums and agreemen s ha provide marke access or U.S. agricul ural produc s,including he World rade Organiza ion Doha round o nego ia ions; bila eral

ree rade agreemen s wi h Korea, Panama, and Colombia; and he evolvingrans-Paci c Par nership.


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Conclusion

Curren direc -paymen agricul ural subsidies are ou da ed and are shor chang-ing he vas majori y o hardworking U.S. armers. Tese subsidies cos axpayers$4.9 billion a year, ar i cially in a e land values, crea e barriers or beginning

armers, provide minimal pro ec ion agains risk, and are no made available omos armers hroughou he Uni ed S a es. Direc paymen subsidies were neverdesigned o endure or 16 years.

Te 2012 arm bill provides an oppor uni y o re orm direc paymen s, saveaxpayer money, reduce he de ci , and bring more armers and rural communi-ies in o he sa e y ne o U.S. agricul ural policy. By phasing ou and reducing he

annual direc paymen s, and applying he majori y o savings o de ci reduc ion, we can save more han $35 billion by 2020.

A he same ime, a por ion o hese savings should be reinves ed in armers andrural communi ies. A modes inves men in arm-based renewable energy, energy e ciency, and advanced bio uels will genera e new revenue, reduce energy cos s, and lessen our na ions dependence on ossil uels. Inves ing in agricul uralexpor s will open marke s o U.S. produc s and make our agricul ural sec or evenmore compe i ive han i is oday.

Our na ions armers deliver an a ordable and abundan ood and ber supply every day. Tey deserve an agricul ural policy ha bene s more armers and works or, and no agains , heir needs. Congress can simul aneously reduce hede ci and inves in economic compe i iveness by phasing ou direc paymensubsidies and revi alizing our his orically s rong commi men o armers and ruralcommuni ies. Te ime or re orm is now.


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Endnotes

1 C s ne S ebb ns, US M dwes a mland p ce jumps 12pc n 2010, reu e s, Feb ua y 17, 2011, ava lable a p://www. eu e s.c m/a cle/2011/02/17/usa- a mland-m dwes -

dUSN1719246020110217.

2 randy Sc nep , Measu ng Equ y n Fa m Supp Levels (Was ng-n: C ng ess nal resea c Se v ce, 2010).

3 ib d.

4 h n. Denn s Ca d za, open ng S a emen , h use Subc mm een h cul u e and o gan c Ag cul u e, C mm ee n Ag cul u e,

hea ng rev ew Spec al y C p and o gan c Ag cul u e P g amsn Advance e 2012 Fa m B ll, July 21, 2010.

5 Fa m inc me and C s s: Fa ms rece v ng G ve nmen Paymen s,ava lable a p://www.e s.usda.g v/b e ng/ a m nc me/g v -payby a m ype. m(las accessed Ma c 2011).

6 G ve nmen Acc un ab l y o ce, opp un es reduceP en al Dupl ca n n G ve nmen P g ams, Save tax D lla s,and En ance revenue, GAo-11-318SP, rep C ng ess nalAdd essees, Ma c 2011.

7 ib d.

8 The Food, Conservation, and Energy Act of 2008 , Publ c Law 110-246,h.r. 6124, 110 C ng. (June 18, 2008).

9 t e spec c les a e: t le i-C mm d y P g ams; t le ii-C nse -va n; t le iii-t ade; t le iV-Nu n P g ams; t le V-C ed ; t leVi-ru al Devel pmen ; t le Vii-resea c and rela ed Ma e s; t leViii-F es y; t le iX-Ene gy; t le X-M scellane us.

10 EWG Fa m Subs dy Da abase, ava lable a p:// a m.ewg. g/summa y.p p (las accessed Ma c 2011).

11 rene J ns n and J m M nke, W a s e Fa m B ll? (Was ng-n: C ng ess nal resea c Se v ce, 2010).

12 Denn s A. S elds, J m M nke, and randy Sc nep , Fa m Sa e y NeP g ams: issues e Nex Fa m B ll (Was ng n: C ng ess nalresea c Se v ce, 2010).

13 B uce A. Babc ck, tes m ny be e e h use Ag cul u e C mm -ee, May 13, 2010, ava lable a p://ag cul u e. use.g v/ es -

m ny/111/ 051310/Babc ck.pd .

14 S elds, M nke, and Sc nep , Fa m Sa e y Ne P g ams.

15 randy Sc nep and Jaspe W mac , P en al C allenges U.S.Fa m Subs d es n e Wto: A B e ove v ew (Was ng n: C n-g ess nal resea c Se v ce, 2007).

16 Fa m and C mm d y P l cy: P g am P v s ns: D ec Paymen s,ava lable a p://www.e s.usda.g v/b e ng/ a mp l cy/d ec pay-men s. m(las accessed Ap l 2011).

17 Babc ck, tes m ny be e e h use Ag cul u e C mm ee.Babc ck n es: Desp e m g y ef s by s me e w ldsbes ag cul u al ec n m s s nd s me ma ke mpac d ecpaymen s, e ev dence sugges s a ey ep esen m ney n ng. t ey a ve l ke cl ckw k even w en g c p p cesand g y elds c mb ne gene a e ec d nc me levels, leav ngn ng n e wake. Su ely we can acc mpl s m e w $5 b l-l n an s mply dep s ng n e bank acc un s land wne sand en e s w base ac es.

18 S elds, M nke, and Sc nep , Fa m Sa e y Ne P g ams.

19 C s ne S ebb ns, U.S. a me s d ng g -- bu w l ng?,reu e s, Ap l 15, 2011, ava lable a p://www. eu e s.c m/a -

cle/2011/04/16/us-usa- a m ng- nances- dUStrE73F06520110416.

20 Dan M gan, G lbe M. Gaul, and Sa a C en, Fa m P g am Pays$1.3 B ll n Pe ple W D n Fa m,The Washington Post , July 2,2006, p. A01.

21 Un ed S a es - Subs d es n Upland C n, ava lable ap://www.w . g/engl s / a p_e/d spu_e/cases_e/ds267_e. m(lasaccessed Ap l 2011).

22 t e C ng ess nal Budge o ce, CBo, es ma ed e ve-yeac s e 2008 Fa m B ll p g ams n June 2008 was $284 b ll n. t e $284 b ll n s d v ded am ng e maj ag cul u al p g ams

n e ll w ng manne : Supplemen al Nu n Ass s ance P -g am ( d s amps) acc un s ab u $189 b ll n, $42 b ll n supp c mm d y c ps, $24 b ll n manda y c nse va np g ams, and $22 b ll n c p nsu ance.

23 Department of Defense and Full-Year Continuing Appropriations Act,2011 , h.r. 1473, 112 C ng. (Ap l 4, 2011).

24 t m Fe n lz, Ag C mm ee Supp s Cu s F d Ass s ance,N Fa m Subs d es,National Journal , Ma c 21, 2011, ava lable a

p://www.na nalj u nal.c m/ag-c mm ee-supp s-cu s- -d-ass s ance-n - a m-subs d es-20110321?m e d=m s V ewed.

25 P l p B as e , c mmen n USDA: Subs dy cap w uld 30,000,G een F elds: Ag cul u e and Al e na ve Ene gy, Des M nes reg-

s e , c mmen p s ed Feb ua y 15, 2011, ava lable a p://bl gs.desm nes eg s e .c m/dm / ndex.p p/2011/02/15/usda-subs dy-cap-w uld- -30000/.

26 Concurrent Resolution on the Budget for Fiscal Year 2012 , h.C n.res.34,112 C ng., 1s sess. (Ap l 15, 2011).

27 Ga y Sc n key, c mmen n Ag cul u e n e republ can P -p sal P esen ed by Paul ryan, a md cda ly, c mmen p s ed Ap l8, 2011, ava lable a p://www. a md cda ly. ll n s.edu/2011/04/ag cul u e_ n_ e_ epubl can. ml.

28 J ns n and M nke, W a s e Fa m B ll?

29 Fa m inc me and C s s: 2011 Fa m Sec inc me F ecas , ava l-able a p://www.e s.usda.g v/B e ng/Fa minc me/na nales -ma es. m(las accessed Ma c 2011).
http://www.reuters.com/article/2011/02/17/usa-farmland-midwest-idUSN1719246020110217http://www.reuters.com/article/2011/02/17/usa-farmland-midwest-idUSN1719246020110217http://www.reuters.com/article/2011/02/17/usa-farmland-midwest-idUSN1719246020110217http://www.ers.usda.gov/briefing/farmincome/govtpaybyfarmtype.htmhttp://www.ers.usda.gov/briefing/farmincome/govtpaybyfarmtype.htmhttp://farm.ewg.org/summary.phphttp://farm.ewg.org/summary.phphttp://agriculture.house.gov/testimony/111/h051310/Babcock.pdfhttp://agriculture.house.gov/testimony/111/h051310/Babcock.pdfhttp://www.ers.usda.gov/briefing/farmpolicy/directpayments.htmhttp://www.ers.usda.gov/briefing/farmpolicy/directpayments.htmhttp://www.reuters.com/article/2011/04/16/us-usa-farming-finances-idUSTRE73F06520110416http://www.reuters.com/article/2011/04/16/us-usa-farming-finances-idUSTRE73F06520110416http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds267_e.htmhttp://www.wto.org/english/tratop_e/dispu_e/cases_e/ds267_e.htmhttp://www.nationaljournal.com/ag-committee-supports-cuts-to-food-assistance-not-farm-subsidies-20110321?mrefid=mostViewedhttp://www.nationaljournal.com/ag-committee-supports-cuts-to-food-assistance-not-farm-subsidies-20110321?mrefid=mostViewedhttp://blogs.desmoinesregister.com/dmr/index.php/2011/02/15/usda-subsidy-cap-would-hit-30000/http://blogs.desmoinesregister.com/dmr/index.php/2011/02/15/usda-subsidy-cap-would-hit-30000/http://blogs.desmoinesregister.com/dmr/index.php/2011/02/15/usda-subsidy-cap-would-hit-30000/http://www.farmdocdaily.illinois.edu/2011/04/agriculture_in_the_republican.htmlhttp://www.farmdocdaily.illinois.edu/2011/04/agriculture_in_the_republican.htmlhttp://www.ers.usda.gov/Briefing/FarmIncome/nationalestimates.htmhttp://www.ers.usda.gov/Briefing/FarmIncome/nationalestimates.htmhttp://www.ers.usda.gov/Briefing/FarmIncome/nationalestimates.htmhttp://www.ers.usda.gov/Briefing/FarmIncome/nationalestimates.htmhttp://www.farmdocdaily.illinois.edu/2011/04/agriculture_in_the_republican.htmlhttp://www.farmdocdaily.illinois.edu/2011/04/agriculture_in_the_republican.htmlhttp://blogs.desmoinesregister.com/dmr/index.php/2011/02/15/usda-subsidy-cap-would-hit-30000/http://blogs.desmoinesregister.com/dmr/index.php/2011/02/15/usda-subsidy-cap-would-hit-30000/http://blogs.desmoinesregister.com/dmr/index.php/2011/02/15/usda-subsidy-cap-would-hit-30000/http://www.nationaljournal.com/ag-committee-supports-cuts-to-food-assistance-not-farm-subsidies-20110321?mrefid=mostViewedhttp://www.nationaljournal.com/ag-committee-supports-cuts-to-food-assistance-not-farm-subsidies-20110321?mrefid=mostViewedhttp://www.wto.org/english/tratop_e/dispu_e/cases_e/ds267_e.htmhttp://www.wto.org/english/tratop_e/dispu_e/cases_e/ds267_e.htmhttp://www.reuters.com/article/2011/04/16/us-usa-farming-finances-idUSTRE73F06520110416http://www.reuters.com/article/2011/04/16/us-usa-farming-finances-idUSTRE73F06520110416http://www.ers.usda.gov/briefing/farmpolicy/directpayments.htmhttp://www.ers.usda.gov/briefing/farmpolicy/directpayments.htmhttp://agriculture.house.gov/testimony/111/h051310/Babcock.pdfhttp://agriculture.house.gov/testimony/111/h051310/Babcock.pdfhttp://farm.ewg.org/summary.phphttp://farm.ewg.org/summary.phphttp://www.ers.usda.gov/briefing/farmincome/govtpaybyfarmtype.htmhttp://www.ers.usda.gov/briefing/farmincome/govtpaybyfarmtype.htmhttp://www.reuters.com/article/2011/02/17/usa-farmland-midwest-idUSN1719246020110217http://www.reuters.com/article/2011/02/17/usa-farmland-midwest-idUSN1719246020110217http://www.reuters.com/article/2011/02/17/usa-farmland-midwest-idUSN1719246020110217


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About the author

Jake Caldwell is he Direc or o Policy or Agricul ure, rade & Energy a American Progress. Mr. Caldwell is an adjunc pro essor o law a he Universi y o Maryland School o Law where he eaches a seminar course on he environ-

men and world rade. Mr. Caldwell received his B.A. rom McGill Universi y and a J.D. rom he Universi y o Maryland School o Law, where he served asEdi or-in-Chie o he Maryland Journal o In erna ional Law and rade.

Acknowledgements

Te au hor wishes o acknowledge he generous inpu and suppor o Gadi Dech er, and he en ire Doing Wha Works and Energy eams a

American Progress. Special hanks o Sarah Rosen War ell, Ka e Gordon, Anna Soellner, Donna Cooper, Scot Lilly, Reece Rushing, Ed Paisley,Shannon Ryan, Megan Smi h, and Daniel Wagener.


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The Center or American Progress is a nonpartisan research and educational institut

dedicated to promoting a strong, just and ree America that ensures opportunity

or all. We believe that Americans are bound together by a common commitment to

these values and we aspire to ensure that our national policies re lect these values.

We work to ind progressive and pragmatic solutions to signi icant domestic and

international problems and develop policy proposals that oster a government that

is o the people, by the people, and or the people.

Bad Seeds: A Plan to Phase out the $5 Billion in ‘Direct Payment’ Agricultural Subsidies

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