03 July 2006

Another Farm Subsidy

Many people are familiar with the federal government crop subsidy program. Fewer are familiar with the loan deficiency payment system created in 1985 to replace a system where the government bought excess crops in years when prices were low. The program cost taxpayers $4.8 billion last year. Most payments (including 90% of payments to corn growers) went to farmers who actually got good prices last year, even though it is aimed at helping farmers in years when crop prices are low. Basically, the subsidy is based on crop prices on a day chosen by the farmer, who can actually sell when prices are better.

As shown in the map above, Colorado farmers get little benefit from the program, despite the huge sums received by farmers in much of the Midwest. Our international trading partners are pushing to eliminate the program. There should be pressure to do the same domestically, but few people know about it.

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