A Hundred Billion Dollar Harvest: How the Federal Government Can Find Major Savings in the Bloated Farm Bill
American Boondoggle Series
Video
About This Event
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As the deficit crisis looms and the “super committee” scours the federal budget for $1.2 trillion in cuts, farm programs are prime examples of the controversial budget items lawmakers should be looking for: unnecessary and inefficient government spending. By eliminating some programs and restructuring others, AEI research has indicated that lawmakers could achieve over $100 billion in savings. The Farm Bill's subsidy programs cost the American taxpayer between $12 billion and 18 billion a year. Most of these subsidies go to farmers far wealthier than the average U.S. household and who do not need government payments to operate financially successful farm businesses. Dan Sumner, Barry Goodwin and Vincent Smith, co-directors of the AEI 2012 Farm Bill Initiative, will discuss ways that reducing farm subsidies can contribute to federal deficit reduction and debt control and improve the efficiency of American agriculture without affecting the security of the U.S. food supply chain.


Agenda
12:00 PM
Registration and Luncheon

12:30 PM
Introduction:
DAN SUMNER, University of California, Davis

Panelists:
VINCENT H. SMITH, Montana State University
BARRY K. GOODWIN
, North Carolina State University

Question and Answer

1:30 PM
Adjournment
Event Contact Information

For more information, please contact Matthew McKillip at [email protected], 202.862.7197.

Media Contact Information

For media inquiries, please contact Véronique Rodman at [email protected], 202.862.4871.

Event Summary

WASHINGTON, SEPTEMBER 14, 2011—The day after the first hearing of the "super committee" tasked to cut $1.5 trillion from the federal budget, a panel of AEI scholars urged that at least $100 billion in cuts could be found in farm subsidies. Dan Sumner, Barry Goodwin and Vincent Smith, codirectors of the AEI 2012 Farm Bill Initiative, argued thatreducing unnecessary farm subsidies could both play a big part in federal deficit reduction and improve the efficiency of American agriculture. Most farm subsidies were initially intended to benefit small family farms but today are going to wealthy farm owners or landowners , some of whom are not directly involved in agriculture at all. Sumner opened the event by focusing on the budget implications and projected that farm subsidy reductions could account for 12 percent of total budget cuts over the next ten years. Goodwin stressed that farmers are now much wealthier than they were when the subsidies were originally enacted in the 1930s because they are well capitalized with much lower failure rates than the average business. Smith provided examples to explain how budget cuts can be realized by ending unnecessary programs. Direct payments, projected to cost $5 billion in 2012, reward farmers in proportion to their farm size, even though this irrational practice could be abolished without hindering production. Likewise, eliminating a crop insurance program that helps the agricultural insurance industry instead of farmers could save $5 billion annually. Sumner concluded the event by arguing that ending these programs not only would help the current budget crisis but also makes economic sense.

—QUAN NGUYEN

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Speaker Biographies

Vincent H. Smith is a professor in the Department of Agricultural Economics and codirector of the Agricultural Marketing Policy Center at Montana State University. He also serves as a consultant to the Bill and Melinda Gates Foundation on risk-management issues,  to the International Institute for Agricultural Risk Management on international risk and insurance and trade policy issues,  and to the US Department of Agriculture Risk Management Agency.  His fields of interest include domestic and international agricultural commodity policy,  agricultural risk management policy,  and agricultural science and technology policy.

Barry K. Goodwin is the William Neal Reynolds Distinguished Professor in the Departments of Agricultural and Resource Economics and Economics at North Carolina State University.  His award-winning research deals with many important issues in public policy analysis,  trade,  economic history,  and crop insurance.

Daniel A. Sumner is the Frank H. Buck Jr. Professor in the Department of Agricultural and Resource Economics at the University of California-Davis and the director of the University of California Agricultural Issues Center. Formerly,  he served as the assistant secretary for economics at the US Department of Agriculture. His research is primarily concerned with the economic and agricultural consequences of farm and trade policy.

 

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