Over the past 15 years, the federal government paid nearly $150 billion in subsidies to U.S. farmers. It paid $77 billion to plant corn in the U.S. between 1995 and 2010; $32.4 billion to plant wheat; and $24.4 billion to plant soybeans. All of that money came from American taxpayers. The question is whether Americans received any benefit at all from these subsidies.
A subsidy is, according to the Environmental Working Group, “a ‘safety net’ paid by the government to provide financial incentive for farmers to grow certain crops in the place of others.” Because farmers can only plant so many crops, these subsidies direct what farmers are willing to grow.
The use of subsidies has been controversial because they alter the normal relationship between the supply of crops and the market demand for the food and fuel they produce. This manipulation of standard market forces may have a number of benefits for the taxpayers such as keeping the prices of subsidized crops low and the economic ripple effects that follow.
In an ideal world, five dollars of tax money used to subsidize corn production would return more than five dollars to the taxpayer because the subsidy keeps corn-based product prices low. If the entire farming sector plants hundreds of thousands of acres of corn, which it might not do were it not for the subsidy, the additional supply should keep prices low. That seems straightforward, but the situation becomes more complicated because corn is not simply used as food for humans and animals. It is also a critical commodity for the massive ethanol industry. That means a corn subsidy is also a subsidy for the ethanol industry. The low cost of corn means an improved profit margin for companies that produce ethanol for the operation of machinery and automobiles. In the government’s wisdom, it has decided that it will help consumers and the alternative energy industry at the same time.
The presence of subsidies and the huge economic benefit that they can bring to the agricultural sector and businesses that rely on crop prices means it is very likely that a number of businesses try to game the system. Each of the major crop producers has a large lobbying and public communications association that press for favorable legislation and tax rates for the farmers and other businesses that it represents. The presence of these middlemen further complicates a system which could simply be the underwriting of crops that are needed more or less from one planting season to another. Subsidies have gone from being simply economic to political.
24/7 Wall St. consulted a database on historical agriculture subsidies compiled by the Environmental Working Group, a public health and environment research organization. From this, we extracted the food-producing commodities that are subsidized most by the federal government. Next, consulting national growers associations for these crops, we determined the most commonly produced food from each. We also accessed information from the U.S. Census Bureau, the U.S. Department of Agriculture, and other organizations to determine changes in consumption over the past fifteen years. We also identified some of the largest producers of these crops and foods. These companies can be appropriately called, the firms that benefit the most from U.S. farm subsidies.
One of the most important conclusions that 24/7 Wall St. drew from its research is that the subsidy system has become so complex it has made it impossible for taxpayers to understand the extent to which they benefit from giving an incentive for farmers to grow certain crops.
The Nine Foods The Government Pays You To Eat
9. Sunflower Oil
> Commodity: Sunflowers
> Total Subsidies (1995-2010): $880 million
> % Change in Annual Subsidies (1995-2010): 540%
> Biggest Producers: Cargill, Dow AgroChemical
Sunflowers, mainly used to produce oil and seeds, have received more subsidy dollars in the past fifteen years than canola, oats, or apples. It should be noted that more than $400 million of this funding, nearly half of the total given over 15 years, occurred in the three-year period between 1999 and 2001. While seeds eaten out of the shell are a common snack, accounting for 25% of all consumption, sunflower oil is the most common use of the plant. The oil is used both for flavor enhancement and as a cooking oil, as well as in cosmetics.
8. Peanut Butter
> Commodity: Peanuts
> Total Subsidies (1995-2010): $3.4 billion
> % Change in Annual Subsidies (1995-2010): +675%
> Biggest Producers: The J.M. Smucker Co., Unilever
As of 2008, Americans consumed nearly one additional pound of peanuts per person than they did in 1995. In 2008, peanut subsidies were almost ten times the amount they were in 1995. Peanut subsidies did not exceed $26 million during the 1990s. They increased in the early 2000s, however, reaching a peak in 2002, when peanut farmers received a massive $1.11 billion to help adjust to new competition brought on by the North American Free Trade Agreement. Peanut butter is currently consumed in 90% of U.S. households, according to the National Peanut Board. The board also reported that Americans consumed more than 4 billion pounds of peanuts in 2010.
7. Ground Beef
> Commodity: Livestock
> Total Subsidies (1995-2010): $3.6 billion
> % Change in Annual Subsidies (1995-2010): +258%
> Biggest Producers: Fairbank Farms, Cargill
Between 1995 and 2010, livestock producers received roughly $3.6 billion in federal subsidies. While subsidies have increased more than 250% in those fifteen years, the annual payout is down significantly from 2002, when farmers received nearly $1 billion in one year alone. While livestock includes goats, sheep and pork, beef is by far the most commonly produced and consumed of these. More than 40% of beef is sold as ground beef. At last count, Americans ate roughly 66 pounds of beef in one year, 28 pounds of which was ground.
> Commodity: Dairy
> Total Subsidies (1995-2010): $4.9 billion
> % Change in Annual Subsidies (1995-2010): +1.5%
> Biggest Producers: Dean Foods, Dairy Farmers of America
Despite the fact that the dairy industry has received subsidies totaling just under $5 billion since 1995, milk consumption has decreased in the U.S. since that year. Whole milk, specifically, has decreased consistently. Despite the decline, the average person consumed 20.8 gallons of the beverage per year. Annual dairy subsidies have been inconsistent. In 2008, just under $13 million was given to dairy farmers. In 2009, that amount increased dramatically to $1.2 billion, as dairy farmers were hit by the recession and a decrease in exports.
> Commodity: Sorghum, Barley
> Total Subsidies (1995-2010): $10.6 billion
> % Change in Annual Subsidies (1995-2010): -4.3% (Sorghum) -1.4% (Barley)
> Biggest Producers: Anheuser-Busch InBev, MillerCoors, Pabst
Two of the most subsidized crops in America, Barley and Sorghum, go into making one of the most popular beverages in the country. Other than being used as animal feed, the most common use for each of these products is to aid in beer production. Sorghum and Barley are put through the malting process, in which they are converted to syrup used in fermentation. Forty-four percent of Barley is used in this way. In 2008, Americans drank 21.7 gallons of beer per capita, down just slightly from 21.9 gallons in 1995. Nearly the same amount of milk is consumed each year.
> Commodity: Rice
> Total Subsidies (1995-2010): $12.9 billion
> % Change in Annual Subsidies (1995-2010): -52%
> Biggest Producers: American Rice,
According to the USA Rice Federation, “rice is the primary dietary staple for more than half of the world’s population.” This may soon be the case in the U.S. Rice has consistently become more popular in the U.S. over the past 15 years, with the average American eating 21 pounds of the grain in 2008. This amount is up 22% from 17.1 pounds in 1995. Government rice subsidies have totaled $12.9 billion since 1995. Eighty-five percent of the rice that is consumed in the U.S. is also grown domestically.
3. Soybean Oil
> Commodity: Soybeans
> Total Subsidies (1995-2010): $24.3 billion
> % Change in Annual Subsidies (1995-2010): +1,047%
> Biggest Producers: Cargill, Archer Daniels Midland
Soybeans are the first of the three American food crops that make up the vast majority of national subsidy recipients. In the last 15 years, $24.3 billion went to soybean growers, more than Rice, Sorghum and Dairy combined. According to the North Carolina Soybean Producers Association “nearly all soybeans are processed for their oil.” Once the oil has been extracted, it is used for cooking, as a preservative and flavor enhancer. It is also made into specialty health products like tofu and soy milk, which have exploded in popularity in recent years.
> Commodity: Wheat
> Total Subsidies (1995-2010): $32.4 billion
> % Change in Annual Subsidies (1995-2010): +141%
> Biggest Producers: Entenmann’s, Pepperidge Farm, Sara Lee
Bread has been a staple food in the U.S. for generations. Yet, despite the popularity of both bread and other wheat products, wheat has been heavily subsidized for years, with the industry receiving over $1 billion every year since 1996. Between 1995 and 2010, over $32 billion was given for the production of wheat. Wheat subsidies seem to have at least some direct effect on consumers’ habits. In 2000, the government spent almost $4 billion on wheat subsidies and the average American consumed 146.3 pounds of wheat flour. In 2005, the government spent $1.5 billion on subsidies and the amount of wheat flour consumed per person dropped to 134.4 pounds.
1. Corn Syrup
> Total Subsidies (1995-2010): $77.1 billion
> % Change in Annual Subsidies (1995-2010): +24%Fi
> Biggest Producers: Archer Daniels Midland
It is well-publicized that corn is by far the most subsidized crop in America, with farmers garnering over $77 billion in the last fifteen years. This sum is as much as the total combined amounts for rice, soybeans and wheat. While a large part of this funding comes from massive subsidy funding for corn-based ethanol, which can be used as an alternative source of gas, corn is one of the most-consumed grains in the country. In 1980, Americans consumed 12.9 pounds per capita of corn-based products. Since then, partially as a result of the introduction of corn syrup as a common sweetener in food and soda, that number has grown to 33 pounds per capita.
Michael Sauter & Douglas A. McIntyre