Farm Bill 2013: Should We Cut Subsidies For Wealthy Agribusiness, Or Poor Families?

Last week, the Senate voted to end the debate on the nearly $100 billion Agriculture Reform, Food and Jobs Act of 2013, more commonly known as the farm bill, paving the way for passage in a 66-27 vote on Monday. This puts pressure on the House to move forward with its own version later this month.

Every few years, Congress passes a farm bill, which sets policy for the next five years on a multitude of issues including environmental conservation, biofuels, agricultural research, rural economic development, and international foreign aid, as well as big headline topics like farm subsidies and food stamps.

Congress is months late in passing a new farm bill. Efforts failed last year after House leaders refused to bring their version of the bill to the floor for a vote, insisting on higher cuts to food stamps; the Senate passed its version of the bill. The most recent farm bill was passed in 2008, and extended through September.

Both the House and Senate versions of the farm bill cut traditional farm subsidies. The Senate version of the bill eliminates farm subsidies called direct payments, which pay farmers whether they farm or not, and cost about $5 billion a year. Some of these savings, however, go into new farm subsidies and expand crop insurance, the most expensive part of the farm safety net. Crop insurance subsidies are limited for farmers making more than $750,000, and those that take insurance must participate in soil conservation.

Eighty percent of the farm bill under consideration before the Senate goes to food stamps. About 15% is intended for farm subsidies and crop insurance subsides. The remaining amount is designated for conservation, rural development, renewable energy, and other farm programs. Both the Senate and House are out to cut overall spending with their versions of the farm bill. The Senate bill would reduce the deficit annually by $2.4 billion, the House bill by almost $4 billion. The White House supports the passage of the Senate farm bill, while calling for greater cuts to subsidy programs. 

The issue that’s garnered the most attention has been cuts to food stamps for the needy in both bills. The Supplemental Nutrition Assistance Program (SNAP), formerly known as the Food Stamp Program, provides nutrition assistance to millions of low-income individuals and families. It is the largest program in our “domestic hunger safety net,” according to the U.S. Department of Agriculture. Currently, 46.6 million people use the program more than half of whom are children.

Following the Great Recession, food-stamp aid increased, and the program more than doubled in cost.  Proponents of cuts to SNAP argue that the program has redundancies and excesses. The Senate version of the farm bill would cut about $400 million a year from SNAP, or about 0.5%. The House bill goes much further, slashing $20 billion in food stamps over the next decade and eliminating food assistance to nearly 2 million low-income people, mostly working families with children and senior citizens.  In addition, 210,000 children in low-income families would lose free school meals when their families lose SNAP benefits because eligibility for those meals is tied to their family’s receipt of food stamps. According to the nonpartisan think tank, Center on Budget and Policy Priorities, “the SNAP cuts in this farm bill on top of the benefit cuts that will take effect in November is likely to put substantial number of poor families at risk for food insecurity.

For decades, the farm bill represented a powerful deal struck between urban and rural states. Lawmakers from farm states received important farm subsidies. Those with urban constituents got food stamps to help the poor.  That has begun to change. Members of both parties are looking for ways to cut the deficit and reduce spending. Reducing subsidies for agribusiness, which is doing quite well, is one proposed way to cost-cut. House Republicans strongly favor cutting the $80 billion a year food-stamp program.

Doing so, however, would likely jeopardize the health of thousands of Americans, including children. Studies have demonstrated that food insecurity predicts academic and social problems in school. While cuts to food stamps may contribute to small reductions in the deficit, there are serious short and long-term effects to health that should not be dismissed or ignored. Members of Congress will have to reconcile these issues as they vote on the farm bill.

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Dana Teppert

Dana Teppert researches leadership at Harvard Business School. A graduate of Brown University, she holds a B.A. in English Literature. She enjoys tea drinking, running, writing, and traveling.

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