Does Farm Size Matter? Distribution of Crop Insurance Subsidies and Government Program Payments Across U.S. Farms
Bekkerman, Anton; Belasco, Eric J.; and Vincent H. Smith (2018).Applied Economic Perspectives and Policy
Who receives what benefits from farm subsidy programs has been a focus of economics research throughout the evolution of U.S. agricultural policy. Several studies have shown that farm subsidies are directed toward larger-scale commercial farms and relatively high-income households. These studies raise questions about whether these programs play a substantive role in sustaining smaller, less financially-secure farms.
Data on individual farms and farm operators were obtained from the 2014 Agricultural Resource Management Survey (ARMS), an annual national survey of agricultural producers conducted by the USDA. These data were used to estimate the amount of premium subsidies each farm received.
Results indicate that farms within the top decile for crop sales receive over two-thirds of the total payments from these programs. Indeed, the last 50 years of research has shown that agricultural safety net program benefits are concentrated among the largest, wealthiest farms. While the major goal of farm programs is the help protect all agricultural producers from the negative economic impacts of production and market uncertainty, this study shows that it is unlikely that the 2014 Farm Bill corrected the unequal distribution of support payments across U.S. farms.
Recent legislative proposals have sought to limit the payment inequities by implementing payment caps on each farm. This study shows that these proposals would impact a relatively small percentage of farms, almost all of which are in the top decile of crop sales and receive the largest payments. However, taxpayer savings from such programs could be upwards of $2.5 billion.