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Double Dipping: How Taxpayers Subsidize Farmers Twice for Crop Losses

Thursday, November 16, 2017

Between 2014 and 2015, three federal farm subsidy programs paid farmers multiple times for the same loss in crop yield or decline in crop price. A new EWG analysis shows that this double-dipping cost American taxpayers almost $23.9 billion.

Farmers received multiple payments through both the highly subsidized federal crop insurance program and either the Agricultural Risk Coverage program, or ARC, or the Price Loss Coverage program, or PLC. Crop insurance pays farmers when the revenue from crop sales fall below what farmers expected to earn when they planted. The ARC and PLC programs pay out for essentially the same reasons ­– when crop yields or prices are lower than expected.

In 2014, the Department of Agriculture made crop insurance payments to farmers in three-fourths of the more than 2,300 counties that also received an ARC or PLC payment. Crop insurance also paid out in 71 percent of the more than 2,800 counties that got an ARC or PLC payment for losses incurred in 2015.

The 2014 Farm Bill established the ARC and PLC programs to replace the inefficient direct payments program and save money. But these savings have never materialized. According to the Congressional Budget Office, between 2016 and 2021 ARC and PLC payments are expected in only one year to be less than the annual amount of direct payments paid out between 2009 and 2013.

Conditions in farm country have changed dramatically since crop insurance was first instituted. Annual median household income for farm families is now $20,000 more than the median household income of all Americans. The lion’s share of farm subsidies continue to go to the wealthiest farmers.

The real problems in farm country today must be addressed not through more subsidies, but with fundamental reform of the broken subsidy system. Subsidies should be targeted to farm families that actually need them, instead of paying wealthy farmers, who make up to $900,000 a year in adjusted gross income and still receive federal payments. Sensible reform would do more to help out struggling family farmers and save taxpayers billions of dollars. This would free up funds for programs protecting drinking water from agricultural pollution.

 

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