Time to Put Farm Subsidies Out to Pasture

Lawmakers are poised to vote on a farm bill this week, and Congress has its work cut out for it. On Monday, the House Rules Committee will have to wade through more than 300 proposed amendments to separate the wheat from the chaff. One thing is nearly certain, though: large agribusinesses will get (even more) taxpayer dollars.

Recently, the digital news outlet NOTUS reported, “Lawmakers are issuing dire warnings about what might happen to American farmers if an aid package doesn’t pass. … many in Congress say farmers need more help and are pushing for a farm aid package giving American farmers billions in immediate assistance — though major details, like how much aid the package would provide and how it would be passed, are still unresolved.” The truth is that taxpayers—not large, profitable farms—desperately need a break. It’s long past time to put farm subsidies out to pasture.

When farm subsidies first began under Presidents Herbert Hoover and Franklin Roosevelt, they were a (misguided) attempt to alleviate poverty and address economic woes. Fast forward more than 100 years, and these programs have drifted far from their original purpose and now represent a steady transfer of taxpayer dollars to a narrow slice of well-connected agricultural interests. Programs that were once justified as temporary stabilization tools during the Dust Bowl or post-war volatility have calcified into permanent entitlements. Today, taxpayers are on the hook for more than $20 billion annually across crop insurance subsidies, direct payments, disaster aid, and conservation programs that often overlap or duplicate one another. Instead of serving as a true safety net, these subsidies frequently guarantee revenue regardless of market conditions, insulating recipients from the very risks that define most other industries.

As Cato Institute scholar Chris Edwards notes, “Most welfare programs are for low-income families, but farm welfare is for high-income families. The average income of US farm households in 2024 was $159,334, which was 32 percent higher than the $121,000 average of all US households. But Congress steers subsidies to the wealthiest of those farm households. Two-thirds or more of payments from the major subsidy programs go to the largest 10 percent of farms. Even billionaires can receive farm subsidies.”

In addition to direct transfers and payouts, indirect subsidy programs keep prices high for consumers. Case in point: the federal government’s sugar program, a New Deal-era system designed to protect domestic sugar producers. Through a combination of import quotas, tariffs, and price supports, the federal government tightly restricts the supply of sugar in the U.S. market. The result is predictable: Americans pay far more for sugar than consumers elsewhere.

According to a 2023 analysis by the Government Accountability Office, U.S. sugar prices are often significantly higher than the world price because of the sugar program; the “annual cost to the economy [is] around $1 billion per year.” That may be good news for sugar growers, but it’s bad news for candy makers, bakers, and millions of consumers.

To make matters even worse, recent changes under the so-called One Big Beautiful Bill (OBBB) made the program more generous to sugar producers (and less generous to everyone else), strengthening price supports and continuing tight supply controls. American Enterprise Institute fellow Vincent Smith, who has long kept a close watch on the sugar program, notes that “intervention or support prices, called loan rates, will be raised to 27 cents and 34 cents per pound, respectively [under OBBB]—substantial changes that are likely to lead to further and larger gaps between domestic and world market sugar prices. They are also likely to increase the frequency and size of federal spending on price-support purchases for US sugar output.”

Lawmakers should phase out farm subsidies and crony carveouts such as the sugar program. The farm bill should be a vehicle for fiscal reform, not a cattle call for more corporate welfare.