Categorized | Paying for Conservation

Budget Savings, Wildlife Benefits, and Family Farmer Benefits from Limiting Government Subsidies to the Largest Farms

Farm program subsidies, crop prices, and land values all tripled in the Dakotas in just 15 years, as has the loss of prairie pothole grassland.  Eastern North Dakota lost 10% to 15% of wetlands and grassland to crop use in just three years.  At this rate, most of the remaining grassland habitat in this major nesting region for ducks and shorebirds will be gone in just 15 years.

This is not a good time to abandon 25 years of protection for wetlands and grasslands, but crucial protections will vanish unless the Senate amends the farm bill recently passed by the Senate Agricultural Committee.  Fortunately, a budget smart farm bill amendment by Senators Toomey and Shaheen aims to save billions of tax dollars by limiting federal crop insurance subsidies to the largest farmers to $40,000 per farm.  Since the larger farmers own the great majority of the land, these subsidy limits also considerably reduce major farm program drivers for prairie grassland and wetland conversion.

Limiting crop insurance subsidies to $40,000 per farm primarily aims to reduce the federal budget deficit.  This works because subsidy limits especially affect the largest 10% of crop farms, who enjoy 75% of the program payments.  These giant farming operations historically increase their subsidies by adding more cropland.  They expand 1) by buying other farms, 2) by renting, and 3) by plowing up prairie pothole grassland.  But farmers large enough to already reach the proposed $40,000 payment limit no-longer will increase their subsidy by increasing cropland area.  Today’s more than 90 percent of farms, and all small farms, will not be directly affected by the proposed subsidy limits because their government subsidies are less than $40,000.  They own a very small portion of the crop land in the U.S., even though they still make up the vast majority of farms.  Subsidy limits actually help them compete.

Although the farm bill under consideration in the Senate (S3240) virtually eliminates compliance and swampbuster protection, Senator Cardin introduced a Senate amendment (2219) to re-introduce these important protections which have been part of farm programs for 25 years.  We think that this amendment is crucial, but its focus is soil conservation and wetland protection, not grasslands.  The $40,000 per farm limits on crop insurance subsidies, which Senators Toomey and Shaheen introduced in another amendment, reduces program pressures to plow up more prairie grassland and drain wetlands.

For over three decades, the U.S. Department of Agriculture has cautioned that farm subsidies could tilt the playing field toward the largest farmers, who capture so much of the subsidies, and away from more modest, family farms.  Meaningful payment limits address these uneven playing field problems, as well as the above budget and wildlife problems.

Meaningful subsidy limits address perverse incentives to expand cropland acreage, whether that expansion occurs by buying up neighboring farms or by busting out more prairie pothole grassland and draining wetlands.  The Senate has an opportunity simultaneously to achieve substantial budget savings, to provide major wildlife benefits, and to better serve family farms.

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Clayton Ogg is the Director, Conservation Economics & Finance for Defenders of Wildlife. Clay directs some of Defenders’ work on incentives to enhance ecosystems and prevent harm. This includes identifying incentive programs that currently work well as well as analysis of ways to improve agriculture programs and other programs to achieve measurable ecosystem outcomes.

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dotWild is the blog of scientists and policy experts at Defenders of Wildlife, a national, nonprofit membership organization dedicated to the protection of all native animals and plants in their natural communities.

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