Congress should help hungry Americans, not rich farmers
The farm sector has been a surprising standout economic performer during the pandemic, and it appears to have avoided any long-term sector-wide major catastrophic consequences associated with the coronavirus. After adjusting for inflation, according to U.S. Department of Agriculture projections, farmers are enjoying their fourth best year ever over the past 50 years, earning 43 percent more than in 2019. By any standards, the farm sector is doing very well.
Yet, despite the good news, Congress is throwing in an additional $13 billion in subsidies to farm businesses in the new pandemic relief package.
Farmers have done exceptionally well in 2020 after receiving over $50 billion in federal subsidies. The CARES Act included an astonishing $32 billion gift from Congress for perceived COVID losses from associated economic lockdowns. An additional $4 billion was given for losses “associated” with Trump’s trade war with China, followed by $16 billion from permanent, long-standing price and income subsidy programs — i.e., what farmers normally get yearly from the federal government.
Many of the disruptions that prompted these exceptional levels of farm subsidies are largely over, including most of the impacts associated with the pandemic. Trade has resumed with China following completion of a new “Phase One” deal last year. Now the USDA forecasts that the U.S. will ship agricultural commodities worth a record $27 billion to China in 2021. Commodity prices, which fell by 15-20 percent during the early days of COVID lockdowns, generally recovered quite rapidly and most are now at or above pre-pandemic levels. Despite dire projections about a catastrophic collapse of the food supply chain, farm revenues from market sales are expected to be $365.5 billion in 2020, only 1.1 percent lower than in 2019. Numbers are projected to be even higher in 2021.
It’s ironic that while farmers are doing better, Congress is giving them even more money instead of helping those who truly need it. And most of the funds – including the Coronavirus Food Assistance Program payments distributed between April and July 2020 – will go to fewer than 200,000 of the largest farms, farms that always receive 80 to 90 percent of all farm subsidies.
The current stimulus package appears to have earmarked $13 billion for much needed food assistance programs, in addition to an identical additional $13 billion for farm businesses. Households owning farms would on average receive $6,500, compared to the $2,400 allocated to lower income and out of work families of four. The disparity is even more egregious because, based on how COVID and other subsidies have been distributed, most of the new monies will go to large farms whose household incomes are far higher than those of the average U.S. family, let alone families living in poverty.
Meanwhile, only $13 billion seems to be targeted for nutrition programs at a time when the number of people going hungry is unconscionably high and increasing at an alarming rate. The Census Bureau recently reported that 27 million adults say their households aren’t getting enough to eat, and across the nation food pantries are facing long lines and demands for food assistance at twice the usual rates. Some of the $13 billion will increase monthly Supplemental Nutrition Assistance Program payments by 15 percent for the next six months, but this only adds about $25 per family member to the monthly benefits already being received. While this helps, fewer than 50 percent of the families facing hunger currently receive SNAP benefits.
A substantial share (40 percent) of the folks who depend on food pantries or churches for food also receive SNAP. Last week alone, 11 million Americans reported that they were helped by a food pantry or church. A temporary increase in SNAP benefits might reduce the number of families needing food from those institutions—providing a little help to food pantries struggling to meet surging demands. The proposed bill does contain a badly needed increase in emergency assistance to food banks (the larger storehouses which distribute food to community food pantries), but the proposed increase is modest and inadequate.
An obvious way to address the problem would be to shift all or most of the $13 billion earmarked for farmers to federal nutrition programs that serve hungry families in real need. The additional funds could extend the increase in SNAP benefits beyond six months to help those families as the economy recovers. They could also give food banks and pantries the funds to restock and help hungry families without access to other programs. All of this could have been done without raising the overall price tag of the stimulus package, by making sure the funds go to those who need it most, and not to an agricultural sector already enjoying a banner year for farm income.
Joseph W. Glauber is a visiting fellow at the American Enterprise Institute (AEI) and a senior research fellow at the International Food Policy Research Institute. Diane Whitmore Schanzenbach is director of the Institute for Policy Research at Northwestern University. Vincent H. Smith is director of Agriculture Studies at AEI and professor of economics at Montana State University.