U.S. Government Agricultural Subsidies

In 1996 the Republican-led Congress passed the Freedom to Farm Act. Among other things, the measure let farmers receive subsidies while planting whatever they wanted, rather than what the government told them to. In return, Congress mandated that the government would, over time, stop supporting America's farms. Commodity prices were good then, and federal payments were low enough to make the plan seem feasible.

But commodity prices plummeted, and five years later federal farm aid soared to $32 billion (bringing the total disbursements over the past 40 years to around $350 billion). Net farm income shows no signs of increasing without federal intervention. Government spending per head in the Great Plains is higher than anywhere else in the country (see map).

According to Ford Runge, a professor of applied economics at the University of Minnesota, "the public does not seem to be getting what they think they are getting." Roughly 20% of farmers, he estimates, are receiving some 80% of the federal subsidies. This 20% also happen to own the largest farms. They are using the federal subsidies mainly to remain viable, but also to bid land away from other farmers. The cap for federal subsidies is very high; so the larger farms get, the more subsidies they receive. As large farms bid up land prices, capital costs for smaller operations rise, and young people find it harder to buy land. In this way, say Mr Runge and others, the federal government, far from propping up small farming towns, is hastening their decline.

But looming behind all these efforts is a larger notion: that the settling of the Great Plains is a human experiment which has seen its day. Jack Zaleski, the editorial page director of the Fargo Forum newspaper, has watched small towns fade over the past decade while Fargo has grown by some 20%. According to him, the changes in agriculture are so profound that the little towns will never return.

This would have come as no surprise to Major Stephen Long, who traveled through the southern plains in 1819. He reported that the land was "almost wholly unfit for cultivation and of course uninhabitable for a people depending upon agriculture for their subsistence." American inventiveness -- including the six-shooter and barbed wire-- and trailer-loads of taxpayer dollars proved him wrong for a while. But it may take a new ingenuity to keep this part of America's heart from fading away (see map).

Source: The Economist, 15 December 2001 and 30 November 2002.