Minnesota farmers received $1.5 billion in federal payments in 2021

If the USDA subsidies that went to farmers in Marshall County, Minn., were distributed equally to the entire population there in 2021, every man, woman and child would have received a check for $6,000. 

Instead, the $54 million in subsidy payments were divvied up among the county’s roughly 1,000 farmers, with the largest receiving hundreds of thousands of dollars or more.

That’s among the startling findings in new data released by the Environmental Working Group, which show Minnesota farmers received a total of $1.5 billion in USDA subsidies in 2021. That figure includes:

• More than $500 million in commodity payments, including direct payments made to farmers when market prices of certain commodities like soy and corn fall below a given threshold;
• Another half billion in crop insurance subsidies, which allow farmers to pay deeply discounted premiums on insurance policies that pay out when crop yields are low;
• Nearly $300 million in payments compensating farmers who experience natural disasters like floods and fires;
• And an additional $139 million in conservation payments incentivizing farmers to keep their land in its natural state.

The USDA programs are heavily tilted toward producers of commodity crops, like soy, wheat and corn. The payments are awarded by acreage, which in practice means that the largest, wealthiest farmers receive the most federal money.

In Minnesota, for instance, the top 10% percent of farmers captured nearly two-thirds of all federal commodity payments made between 1995 and 2021, according to the EWG’s analysis. By contrast, 40% of Minnesota farmers – including many small family operations and growers of products that are ineligible for subsidy – received no payments at all.

All told, government payments accounted for about 20% of total Minnesota farm income in 2021, according to separate USDA data. The average Minnesota farm brought in more than $110,000 in total income that year. 

Geographically, most USDA farm dollars flow to the western part of the state, home to large commodity farms. 

Farm groups say subsidies like these are necessary to bolster an industry where unpredictable factors like weather and natural disasters make income highly variable year-to-year. “America’s public investment in agriculture through farm bill programs helps secure our domestic food supply and keep our country strong while consumers get the benefits of high quality, affordable food,” according to the Farm Bureau, a trade group.

But the lion’s share of USDA subsidy dollars goes to commodity crops that aren’t necessarily destined for human consumption. Most of the corn in the U.S., for instance, is grown as livestock feed or for ethanol production (itself another reflection of policymaking by subsidy), with additional amounts being sent overseas, according to the USDA.

Economists have long criticized the farm subsidy program for distorting food prices, incentivizing overproduction and diverting federal resources to wealthy landowners. Some have found that corn subsidies, for instance, have led to a glut of unhealthy processed products like high-fructose corn syrup, contributing to the obesity epidemic. 

Farmers today, on balance, are considerably wealthier than other Americans. A 2018 Congressional Budget Office report found that “about 97% of all farm households (which now constitute about 2% of the U.S. population) were wealthier than the median U.S. household,” and that farm income was about 52%  higher than typical U.S. household income – and that was before you factored federal payments into the equation.

The majority of farm payments also flow to the richest farmers, according to the CBO – in 2014 that group included those who made more than $350,000 in annual sales.

In the view of many experts, farm subsidies are a prime example of “crony capitalism” – “in which businesses earn profits not by solely providing quality products and services at competitive prices, but also by extracting transfer payments from taxpayers through collusion with the political class,” as a trio of Texas A&M economists described it.

Keep an eye out for those cozy political relationships as the U.S. Congress prepares to debate the 2023 farm bill this year.