why do we pay farmers not to farm
The U. S. Department of Agriculture announced in early May that Nebraska comes in third nationwide in the amount of farm-ground acreage the government pays farmers to leave unplanted and idle. Behind only Iowa and Washington in the program, this state will idle almost 775,000 acres total, an area roughly 1. 5 times the size of all of Lancaster County. To some, it has raised the perennial question: Why does the government pay farmers to not grow crops? As is often the case, Internet mythology about food and farming has overshadowed some of the fact. The U. S. farm program began during the Great Depression of the 1930s as a limited safety net to help support the income of farmers who were being driven from the land by the thousands. In its early and following years, it did provide some forms of "set asides," in which farmers were subsidized to reduce the supply of crops in order to help make them more scarce and thus hold their prices up. And some vestiges of that supply-control mentality does exist even today, most notably in voluntary programs in which farmers of various commodities either pool funds to buy out other farmers to keep supplies down or voluntarily restrict production per farm.
However, with the passage of the most recent federal Farm Bill, in 2014, the U. S. governmentвfor the most partвgot out of the business of paying farmers directly to support crop prices on the whole. Instead, the farm program transitioned to the goals of turning the regulation of ag commodity prices back over to the market to determine price through supply and demand, and then making aid available to help farm owners adjust to that market, most notably in the form of subsidized insurance against crop losses in bad years. The only real remaining government program that still pays farmers not to plant is the U. S. Conservation Reserve Program. The more than 30-year-old program pays landowners an annual rent over a contract period of from 10 to 15 years to leave land the government considers environmentally sensitive out of crop production. It also makes cost-sharing funds available to help landowners pay for conservation improvements like planting grasses and trees and protecting streams and rivers. The United States currently enrolls about 23. 4 million acres in CRPвdown from its high of about 36 million acres 10 years ago and nearly the maximum the government will be allowed to pay for by 2018, according to the Farm Bill.
The government's goal in paying farmers an average of about $94 per acre in Nebraska is to return that environmentally vulnerable ground, which in many cases shouldn't have been plowed in the first place, to a more natural state by replanting land cover that was removed during normal cropping. In the process, the CRP hopes to improve water quality, prevent soil erosion and restore wildlife habitat. And in some cases, CRP is still recognized to play a smaller, but still important, role in giving farmers a source of income for protecting those acres and discouraging them from selling them for non-ag uses like housing developments and golf courses. Are taxpayers getting their money's worth? Nationwide, the CRP has been credited with reducing soil erosion by nearly 224 million tons a year, or about 6. 8 tons per acre enrolled. By reducing erosion of that soil which often carries excess nutrients that can cause problems in nearby waters, the CRP has also significantly improved those waters. Research estimates it has cut the amount of the polluting nutrient nitrate by 90 percent, sediment and herbicide by 50 percent and phosphorous by as much as 30 percent in some farm regions.
Also, by converting row cropland into native grasslands and trees, CRP has given nesting cover, wintering habitat, and plant and insect feed to numerous wildlife species. A 2012 review by a pair of Oregon State rural social scientists of the CRP's selected economic benefits estimated enrolling an acre of land in the CRP improved the value of that acre by an estimated $58 per year, in 2011 dollars. Naturally, most of that value accrues to the owner of the land. However, annual benefits from the reduced soil erosion and increased recreational opportunities amounted to another roughly $49 per acre. The researchers cited studies estimating that only about 10 percent of that $49 goes back into the pocket of the landowner, with the remaining 90 percent accruing to society as a whole. They suggest those figures demonstrate that, although the performance of the CRP could be improved, the average national CRP rental cost of $52 per acre in 2011 provides benefits that outweigh its costs to taxpayers.
Editor s Note: Robert Frank, who recently for several weeks here at the Business Desk with answers to some of life s economic ironies, once again answers questions posed by viewers.
Question: Why does the government pay farmers not to grow crops? Paying farmers not to grow crops was a substitute for agricultural price support programs designed to ensure that farmers could always sell their crops for enough to support themselves. The price support program meant that farmers had to incur the expense of plowing their fields, fertilizing, irrigating, spraying, and harvesting them, and then selling their crops to the government, which stored them in silos until they either rotted or were consumed by rodents. It was much cheaper just to pay farmers not to grow the crops in the first place. Of course, paying people not to do work is bound to be politically awkward (think of the old New Yorker cartoon of an accordion player on a subway platform with a sign next to his cup that read, Will not play Lady of Spain, 25 cents ). So the government described the program as an environmental one rather than an income maintenance scheme. As described to the public, it was compensation to farmers for retiring acreage to reduce fertilizer and pesticide runoff into the nation s water supply.
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