Harkin Finds Cause to Change Course

July 20, 2001

Senate Agriculture Committee Chairman Tom Harkin (D-IA) has released a General Accounting Office report on federal farm payments he says illustrates the failures of the 1996 farm law. The report revealed that Freedom to Farm has caused what Harkin terms "an ever-widening gulf" in federal agricultural payments between small farms and large farms.

According to the study entitled, "Information on Recipients of Federal Payments," since 1996 "the portion of payments that has gone to large farms has increased and the portion to small farms has decreased." Harkin said, "This report confirms what we have known for a long time, that Freedom to Farm has unfairly benefitted large farms while disadvantaging small farmers."

About one half of U.S. farms are receiving some form of federal payments from USDA. According to the report the largest share of the total goes to the largest farms with gross receipts over $250,000 numbering a few hundred thousand operators, while those farms with less than $50,000 in annual sales -- which includes more than 1 million farmers -- received the smallest share.

The report also showed that the percentage of payments to small farms has declined dramatically while the percentage of payments to large farms have increased significantly. In 1995 small farms received 29% of all federal support; however in 1996 that percentage began to decline and in 1999 small farms received only 14% of payments even though they made up 76% of all farms. Conversely large farms, who make up 7% of all farms, received an increase in payment of 7-15% since 1996.

"This study proves that we can and should be doing more to ensure that these payments are distributed fairly," said Harkin. "The report found that in 1999 about 31% of small farms received payments while 70% of large and medium sized farms did."

In 1999, the average payment to large farms was $64,737, while the average to small farms was only $4,141, representing a gap of more than $60,000 between the two groups. By contrast, the gap that prevailed between the two groups in other years in the 1990s was only about one-third of that amount, about $20,000.

The report indicated that young farmers also are hurt by the low proportion of payments which go to small farms. Because medium and large farms receive more federal support than small farms, which are typically operated by young farmers, small farms are left at a competitive disadvantage. As a result the number of small farmers have declined along with the percentage of payments.

Harkin also took exception to comments made by USDA in the report. According to the report USDA maintains that the nonagricultural economy in rural communities has grown steadily and as a result rural areas have been able to maintain a constant non-farm share of the population. "The contention by USDA that all is well, even while farmers are going under, simply because the rural non-agriculture economy has increased is alarming," said Harkin.

"The bottom line is we must have a fairer system for providing support to farmers in the next farm bill," said Harkin. "The AMTA program has been the most glaring failure in Freedom to Farm. And when it was needed most to help small family farmers stay in business it simply dumped money on large farms and strengthened their position. There has to be a better answer than this."