Biden visit underscores big role of government money in farm policy

President Joe Biden traveled to a hog and crop farm in Northfield yesterday to promote the administration’s spending on rural communities. The visit underscored the irony that while farmers are often praised in platitudes for their independence and self-reliance, agriculture is one of the American industries most heavily reliant on government management and supports.

Government payments have made up anywhere from 20 to 40% of total farm profits in recent years, driven in large part by ballooning subsidies to farmers under former President Donald Trump. Those direct payments include everything from price supports to cash subsidies for conserving land to the share of crop insurance paid for by the federal government.

Robert Kluver, the owner of the farm visited by President Biden this week, has been a direct beneficiary of many of these programs. From 1995 to 2021 he received a total of $1 million in conservation subsidies, commodity subsidies, and disaster payments from the USDA, according to an Environmental Working Group database. More than half of those payments occurred between 2018 and 2021, demonstrating the largesse extended to farmers under the Trump administration.

But federal policies directly benefit farmers’ bottom lines in many indirect ways as well. The USDA spends billions marketing American commodities overseas, for instance, and tightly manages the import and export of certain commodities. Biofuel mandates ensure a steady demand for corn ethanol and other renewable fuel crops. Farms receive favorable treatment under the federal tax code.

“Facing higher costs and earning less, family farms have struggled to make the math work,” Biden said at the event. 

But for many agricultural producers, the industry remains lucrative. In 2021, the typical farm household’s income was 30% higher than that of the median non-farm household, according to the USDA. The average farm family has a net worth of over $2.1 million, well above the U.S. average.

Last year in Minnesota, the typical farm netted almost $180,000 in income after expenses, according to an estimate from the University of Minnesota. Crop farms earned even more. 

There are many good reasons for a strong federal hand in agricultural markets. Weather and climate variables can result in radically different yields and profits from year to year, for instance, and farm policy helps smooth over those differences. The government also has an obvious interest in ensuring a steady supply of affordable food.

But in recent years many economists, environmentalists and politicians on both sides of the aisle have questioned whether decades of subsidy-heavy policy have accelerated the destruction of family farms and spurred the creation of agricultural mega-corporations.

Most subsidy benefits, for instance, accrue to the biggest, wealthiest farms. In 2018 and 2019, the richest 10% of farms captured 58% of farm subsidy payments, according to an estimate by the Environmental Working Group.

Biden alluded to these realities during his remarks. “Over the past 40 years or so we’ve had an economic practice called trickle-down economics,” he said. “And it hit rural America especially hard. It hollowed out Main Street, telling farmers the only path to success was to get big, or get out.”

The administration hopes that the billions in rural investments announced during the visit will help reverse some of these trends. 

But many observers, within farm country and outside it, believe that real change won’t happen without a radical rethinking of American farm policy.