13 July 2010

Farm Subsidies Down, For Now

National net farm income in 2008 was $87.3 billion, up from $50.7 billion in 2000, the Census Bureau said last week. Net income was greatest in California, Iowa, Minnesota and Illinois.

Meanwhile, government payments to farmers in 2008 totaled $12.2 billion, down about 50% from nearly $24.4 billion in 2005. The decrease in funding results from an approximately 90% drop in payments that depend on market prices, including countercyclical payments, according to data from the U.S. Department of Agriculture. Other payments — including those from disaster relief programs and peanut and tobacco buyout programs — decreased about 40%. Agricultural government payments were highest in 2005 in the 10 years between 1998 and 2008.


From here.

A big part of the drop was due to high prices for farm commodities that made countercyclic payments unnecessary; "the all crops index of prices received by farmers jumped 45% between January 2005 and December 2008." The rising prices made agriculture a major contributor to GDP growth in 2007. Still, even in this year of exceptionally good crop prices, government payments were 15% of net farm income.

Farm land was worth a lot more, which may have put more small farms into the market, although small farms continue to provide an inconsequential share of overall farm revenue.

[The] number of farms in the U.S. — just over 2.2 million in 2007, [was] up from more than 2.1 million in 2002 . . . [with] about a 52% increase in overall property value, but the average size of farms has fallen to 418 acres from 441 acres over the same period.

About 59.8% of farms sold less than $10,000 worth of agricultural products in 2007, and only 16.2% sold more than $100,000.


Keep in mind that the sales numbers are gross, before the costs of seeds, fertilizer, pesticides, labor, fuel for farm vehicles, equipment, or land. Few than 400,000 American farms are capable of supporting even a single full time farmer at much more than a poverty level.

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