Photo: Iowa State University/Lisa Schulte Moore Photo: Iowa State University/Lisa Schulte Moore

How US Farm Subsidies Make Taxpayers Pay Twice (And How We Could Change That)

, senior analyst, Food and Environment | August 19, 2016, 9:48 am EDT
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Usually, when you buy something, you pay for it just once. But if you’re a US taxpayer, you’re paying twice for the food system you’re “buying” with your hard-earned tax dollars. An example: today’s massive federal farm subsidies encourage farming practices that lead to toxic algae blooms, drinking water pollution, and other costly problems we have to pay for again downstream. By contrast, modest investment in just one proven alternative farming system would achieve annual savings—in the form of water pollution averted—of $850 million.

That’s the finding of Subsidizing Waste: How Inefficient US Farm Policy Costs Taxpayers, Businesses, and Farmers Billions. In this new UCS report, my colleague and senior economist Kranti Mulik documents the problem:

  • This year, US farmers increased corn and soybean plantings, despite the fact that the crops are expected to lose money because of dramatic price drops. As a result, the farmers are expected to receive nearly $14 billion in crop insurance payouts—the most since 2006. About 25 percent of the nation’s net farm income in 2016 is expected to come from federal insurance subsidies and insurance payouts.
  • The Federal Crop Insurance Program is anticipated to cost taxpayers a total of $22 billion from 2016 to 2018, and cost estimates keep rising.
  • Corn, the largest beneficiary of federal subsidies, is often grown in ways that lead to nitrogen and phosphorus pollution of the nation’s inland and coastal waters, with costs borne by the people and businesses that rely on them.
  • The cost of removing nitrates from U.S. drinking water exceeds $4.8 billion a year. The agriculture industry covers about $1.7 billion of those costs.
  • The tourism industry loses nearly $1 billion each year, mostly from losses in fishing and boating activities because of nutrient-polluted water bodies.

But an innovative farming system developed at Iowa State University shows great promise to address this problem. Researchers at the university’s STRIPS project have found that planting areas of perennial prairie plants (“prairie strips”) on just 10 percent of farmland in and around crop fields can reduce nitrogen loss into rivers and streams by 85 percent, phosphorus loss by 90 percent, and sedimentation by 95 percent.

Our report’s analysis of their data shows that expanding prairie strips could have a big impact:

  • Adoption of these prairie strips on 10 percent of farmland in Iowa would reduce water cleanup costs by more than $375 million annually and save Iowa farmers more than $90 million in prevented nitrogen and phosphorus loss from their soil-growing season.
  • Application of prairie strips across the entire Corn Belt would have much greater benefits, amounting to more than $840 million in water cleanup savings and almost $200 million in savings to farmers
  • Based on our conservative estimates, adoption of this system across the Corn Belt would have a return on investment of two to three times its cost.

Bad Farm Policy is Poisoning Water Everywhere…But It Doesn’t Have To

Of course, costly water pollution from agriculture isn’t just a Corn Belt problem. A new UC-Davis assessment of California’s nitrogen problem found that the state generates about 1.8 million tons of nitrogen every year, more than half from agricultural sources, and that nitrate pollution affects the drinking water of at least 212,000 people in two of California’s leading farming regions. As Tom Philpott at Mother Jones notes, that’s a population more than twice as large as that of Flint, Michigan.

And though all this pollution comes from farms, the solution isn’t punishing farmers, who generally (and understandably) employ the practices for which they receive financial and technical support. Responding to his state’s assessment, a spokesperson for the California Farm Bureau told the Sacramento Bee:

This is legacy stuff. It’s an issue that is really by no means a product of any nefarious act. It’s literally people doing what they were told and thought was the best practice at the time.

Still, even in the face of subsidies that incentivize polluting practices, many farmers are bucking the system. Take Seth Watkins of Clarinda, Iowa. This fourth-generation farmer raises cattle and grows hay and corn for feed on 3,000 acres, and has integrated prairie strips on his farm. Watkins has a deep commitment to preserving clean water and productive soil as an everyday part of what he does, but he says many of his neighbors would need support and encouragement to do what he’s doing.

Because while the Washington Post recently characterized the prairie strips system as a potential savior of farmers, and the Des Moines Register editorial board praised it just this week, the latter acknowledged that there hasn’t been sufficient investment by the feds and the state of Iowa to expand its adoption:

Even now, 13 years after STRIPS was launched as a single-site research project, its reach is relatively small — not so much because farmers don’t embrace the concept, but because governmental support is lacking.

And they’re right. STRIPS and other farming systems treat farms like ecosystems show great promise for reversing decades of soil erosion, contaminated drinking water, coastal “dead zones,” and other adverse impacts of industrialized farming. But if we want farmers to switch en masse to these more sustainable practices and systems, it will take different incentives and much more investment in research, education, and technical assistance.

Last year, UCS documented the dearth of federal funding for such research. Moreover, federal/state funding for any kind of technical assistance for farmers is lagging, as this excellent article documents.

Which is why our report (the latest in a series that also includes these two) advocates for an overhaul of federal farm policy. That should include reducing crop subsidies, increasing funding for sustainable farming practices, and providing more technical assistance to farmers to adopt the alternative methods. And through our Plate of the Union campaign, we’re calling on Congress and our next president to adopt a comprehensive national food and farm policy that incorporates all of the above and more.

Featured photo: Iowa State University/Lisa Schulte Moore

Photo: Iowa State University/Lisa Schulte Moore

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  • Dave Johnson

    “This year, US farmers increased corn and soybean plantings, despite the fact that the crops are expected to lose money because of dramatic price drops. As a result, the farmers are expected to receive nearly $14 billion in crop insurance payouts—the most since 2006.”

    Please explain crop insurance. Is the crop insured, or is the price insured? This sentence state that the payouts will be made “because of dramatic price drops.” I don’t understand.