USDA Squeezes the Food Industry with Outdated Subsidies

Our national production of food and fiber comes almost exclusively from agricultural giants, according to the United States Department of Agriculture (USDA). 89 percent of agricultural sales come from about 12 percent of farms.

The United States farm subsidy program began as a safety net meant to protect farmers’ incomes and improve consumer nourishment during the hungry times of the Great Depression. The largest 15 percent of farm businesses receive over 85 percent of farm subsidies.

To remain competitive with one another and global imports, farms compete on the margin through expensive capital investments. Environmental Working Group (EWG) identified 50 billionaires who received government handouts through farm subsidies.

The goal of Sustainable Development Goal 2 is to "end hunger, achieve food security and improved nutrition, and promote sustainable agriculture." USDA can aid in this mission by fixing agriculture subsidies. It can do this by refocusing economic forces to grow food that is more affordable, healthy and sustainable.

The first goal is to stop distributing wealth to a disproportionate minority of large farms and instead support smaller farms. By dissociating subsidies from protected crops requiring huge capital investments and granting market and capital access to those people who need it, the government can help thousands of farmers become competitive.

Increasing the familiarity, diversity and taste of specialty crops would probably create demand, leading to healthier food choices. Also, with technology enabling urban farms, inner-city food deserts can participate in the agricultural renaissance. Research by Charles Branas, an epidemiologist at the University of Pennsylvania, finds that urban farms are linked to increased feelings of community and lower levels of violence. This led to the Centers for Disease Control and Prevention (CDC) reviewing greening as a tool for violence prevention.

Sustainable Soils

Commercial row-crop farming requires a large upfront capital investment for agricultural machinery, storage structures, and processing equipment. Thus, each additional farmed acre decreases the average cost as the investment is spread across a larger base.

Seeking subsidy eligibility, farmers have cultivated marginal lands with poorer soils and climates. These soils provide less nutrients for crops, requiring additional fertilizers.

Cultivating marginal lands increases soil erosion, leading to sedimentation of lakes and streams as well as subjugation of the native ecosystems and reduction of wildlife habitat diversity, according to CAB International. The combination of erosion and increased fertilizer use has been documented to wreck environments such as the Florida Everglades.

Instead of realigning subsidies to incentivize high-value, specialty crops over intensive farming, current USDA conservation programs dispense about $3 billion annually to millions of acres of idle farmland.

Proponents argue that paying farmers to take agriculturally used croplands out of production and convert them to vegetative cover will cause reductions in land erosion and improvements in water quality and wildlife benefits. However, an EWG analysis found that farmers opportunistically sign up for this rental income when crop prices are low and drop out when prices rebound. Conservation could be better served with perpetual conservation easements.

Moreover, subsidies incentivize farmers to move away from crop rotation towards monocropping - the practice of planting the same crop year after year. Monocropping efficiently allows farmers to specialize, developing only specific skills and market relations and investing in known equipment and inputs. However, this prevents the natural soil nutrient replacement that crop rotation and periodic fallowing encourage.

The practices of monocropping and farming on marginal land not only wreck soil ecology but also enable parasitic species. Insects, fungi, microorganisms and weeds flourish at the expense of biodiversity, according to American Society of Agronomy. Already weakened plants are vulnerable food sources that offer little resistance.

Farmers have been fighting parasites with pesticides ranging from insecticides to herbicides. But according to the journal Annual Review of Plant Biology, natural selection has allowed resistant species to thrive.

These pest-killing efforts have damaged populations of beneficial species. Bees have been dying from exposure to insecticides, according to the United States Environmental Protection Agency. Bees aren’t just crucial in ecosystems across the country; The Nature Conservancy reports that their value as commercial pollinators is more than $15 billion annually.

Pesticide runoff into lakes, rivers and oceans has been reported by the United States Geological Survey to be at concentrations deemed harmful to water-based species and fish-eating wildlife. According to Ecological Economics, this problem generates annual environmental and health costs of at least $10 billion. 

Finally, humans exposed to pesticides through farming, runoff and/or foods face increased cancer and lowered IQ, the National Institute of Health reports.

Nutrition Affordability

Farmers received $353.5 billion in subsidies between 1995 and 2016, according to EWG. 20 percent of this went towards ecosystem conservation and disaster relief. Of the remaining amount, 80 percent was distributed to staple grain and oilseed crops. 20 percent was used for livestock, dairy, cotton and tobacco.

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Data from the USDA Economic Research Service show federal price and income support programs do not directly cover fruit and tree nuts or vegetable production. Hence, less than 1 percent of subsidies went toward specialty crops (including vegetables and fruits). This was split between the Apple Market Assist Program and crop insurance, according to EWG.  Because of subsidies, USDA results show fewer than 3 percent of all cropland acreage was used for vegetables, orchards and berries.

Vegetables and fruits provide nutrients, a deficiency of which increases rates of certain cancers, heart diseases, and autoimmune diseases. However, the CDC researchers found in 2013 that 87 percent of adults do not have diets that meet the federal recommendations for vegetable and fruit consumption. Current methods of agriculture are unsustainable for human nutritional needs.

After evaluating current food consumption and retail prices, the USDA found that United States citizens would need to spend 40 percent of our food budgets to satisfy federal health guidelines. Meanwhile, the typical household spends only 25 percent of its food budget on fruits and vegetables. And that percentage is cut in half for lower-income households.

Some of the heathiest vegetables – including kale, broccoli, brussels sprouts, and many others – are cultivars of wild cabbage plants that have been grown through selective breeding without the use of GMOs. There are thousands of cultivars already available for a wide range of fruits and vegetables – and yet only a tiny sample gets into the supermarket supply chain. Refocusing food subsidies towards nutritious and exciting offerings is possible – by supporting local farming as well as vertical farming.

The economic incentives put in place by our government were developed during the Great Depression. They now directly cost over $20 billion per year and create market imbalances that profit huge farms planting corn and soya beans.

Farmers aren’t to blame. Large investments and an ever-increasing need for fertilizer and pesticides continue to squeeze their profits. Retooling our subsidies would benefit our ecosystems, taxes and health without destroying livelihoods or endangering food security. Liberalizing our food system and encouraging new market entrants would strengthen us as a country by helping achieve food security, improve public nutrition, and promote sustainable agriculture.

This article has been revised after its original publication by GreenBiz in 2017.

You may email the author via our office at cbey@yale.edu.