Farm Commodity Programs: Essential Safety Net or Corporate Welfare?

Abstract

Farm Commodity Programs: Essential Safety Net or Corporate Welfare? Luther Tweeten Contemporary commodity programs poorly serve publicly stated objectives for agricultural policy. These programs have become an exercise in politics rather than in economics. In a bidding war using taxpayers’ money to win votes, Congress has ignored the new agricultural paradigm that farm commodity markets are efficient, that farm households have higher income and wealth than nonfarm households, and that farm people and natural resources are more appropriate targets than commodities for public policy. This paper contends that the most effective anecdote for government failure lies not in political science but in economic education—a better informed public pressuring Congress for policy reform that recognizes the new agricultural policy paradigm. Introduction From 1933 to 2000, taxpayers spent $561 billion (year 2000 dollars) to support farm prices and incomes (Luttrell, p.17; Spitze; US Department of Agriculture, March 2001 and earlier editions). Spending since 1950 alone totaled $451 billion or nearly $9 billion per year. Whether federal funds for farm price and income support have been well spent depends on the public objectives for those funds and whether these objectives were served. Farm numbers dropped from 6.5 million in 1933 to 2.0 million in year 2000 or by 69 percent (US Department of Agriculture, July 1960, p. 40; February 2000, p.39), but preserving farms is only one objective of commodity programs. In the best tradition of public policy economics, it is customary for an economist to list positivistic options (means) to meet the needs of people. The media make clear that society wants policies that improve well-being of people through greater economic efficiency (more real income), economic equity (if transfers are made they best go from the wealthy to the poor), and freedom to make decisions. Somewhat more objective socio-psychological scales of the wellbeing constructed by social scientists also indicate that these objectives contribute to the well-