15.10. Federal Farm Aid

Over the past 65 years, the federal government has led the way in sponsoring programs to help farmers. In general, these programs can be divided into four categories: price supports, crop restrictions, direct payments, and import quotas.

• Price-support programs set a minimum price for selling a commodity. The government purchas­es those goods that remain unsold. In 1984 the total value of grains, dairy products, cotton, and tobacco held by the government as part of its price-support programs came to over $7 billion.

• Crop restrictions seek to raise farm income by reducing production. In a 1985 farm bill, for example, farmers who agreed to limit the number of acres devoted to growing a particular crop were guaranteed a minimum price for the crops they actually produced.

• Direct payments are exactly that - payments to farmers by the federal government. One form of direct payment, known as "deficiency payments," was introduced by the Agriculture Act of 1973. Under the provisions of that law, farmers received a "deficiency payment" whenever the selling price of a particular commodity fell below the price-sup­port point. Deficiency payments were also a fea­ture of the 1985 farm bill.

• Import quotas limit the amount of foreign com­modities allowed to enter this country. Sugar is one of the crops that has consistently been pro­tected by import quotas. Since the domestic price of sugar is about four times the world price, limit­ing imports enables domestic producers to remain in business.

Should Aid Continue? "No" say those opposed to federal farm programs. Critics of American farm pol­icy argue that federal programs benefit large corpo­rate farms more than needy family farmers, and place an unfair burden on consumers and taxpayers.

For example, The 1987 Economic Report of the President noted that one large California cotton pro­ducer received more than $12 million in crop pay­ments; the crown prince of Liechtenstein received a farm subsidy of more than $2 million; and 112 dairy producers in California, Florida, Idaho, Texas, and Arizona received payments exceeding$ 1 million under a dairy program. Meanwhile, the report contin­ued, government benefits "provided little assistance to those suffering the greatest financial hardship."

Critics of the farm programs also argue that they place an unfair burden on consumers and taxpayers. By interfering with the forces of supply and demand, they say, government policy serves to raise food prices. In addition, the overproduction that these policies fos­ter is costly to the government and to taxpayers who ultimately pay to purchase and store the surplus. If farmers are unable to make a go of it on their own, they continue, let them quit farming and enter some other line of work. After all, hundreds of small businesses collapse every year, and taxpayers and the gov­ernment do not keep those inefficient firms alive. However, those who support the federal farm pro­grams say "Yes." They want to continue aid because agriculture is different from other businesses. They argue that although farmers represent only 3 per­cent of the labor force, agriculture generates jobs in many other industries. It has been estimated that as much as 20 to 25 percent of all U.S. economic activi­ty is based in part on farming. Further, since people cannot survive without food, it is in everyone's inter­est to make sure the nation maintains a vigorous farm economy. If Americans were to allow foreign competition to put farmers out of business, who would feed us if the supply of food were interrupted?

Supporters also point out that according to U.S. budget figures, farmers are not the largest recipi­ents of federal subsidies. In fact, the estimated $15.7 billion in outlays for agricultural programs in 1993 representedjust 1 percent of government spending that year.