Average Farm Subsidy Payments, by State, 2002

The U.S. Department of Agriculture makes direct subsidy payments through the Commodity Credit Corporation to farmers for commodity price and income support, certain conservation and environmental activities, and some disaster losses. In 2002, these direct farm subsidy payments amounted to $12.151 billion.

This report examines the distribution of these payments among states, calculates the average size of payments going to recipient farms in each state, and distinguishes between payments received by farm operators and landlords. This information is intended to aid in policy debates about subsidizing some farms but not others, changing per-person payment limits, and the altering eligibility rules for landlords to receive payments.

Order Code RL32590 CRS Report for Congress Received through the CRS Web Average Farm Subsidy Payments, by State, 2002 September 16, 2004 Jasper Womach Specialist in Agricultural Policy Resources, Science, and Industry Division Congressional Research Service ˜ The Library of Congress Average Farm Subsidy Payments, by State, 2002 Summary The U.S. Department of Agriculture makes direct subsidy payments through the Commodity Credit Corporation to farmers for commodity price and income support, certain conservation and environmental activities, and some disaster losses. In 2002, these direct farm subsidy payments amounted to $12.151 billion. This report examines the distribution of these payments among states, calculates the average size of payments going to recipient farms in each state, and distinguishes between payments received by farm operators and landlords. This information is intended to aid in policy debates about subsidizing some farms but not others, changing per-person payment limits, and the altering eligibility rules for landlords to receive payments. More money went to Texas ($1.2 billion) than any other state. Texas along with the next 10 leading states received 56% of total farm subsidy payments. These states were largely concentrated in the nation’s central farm belt, where much of the subsidized corn, soybeans, wheat, cotton, and rice are produced. Also ranking high were California (due to cotton and rice) and Georgia (due to peanuts). The subsidy payments were made to the operators and landlords of 707,596 farms (one-third of all farms in the nation). However, in some states a much higher proportion of the farms were subsidized (e.g., North Dakota, 78%, and Iowa, 70%). On average, the payments amounted to $17,172 per subsidized farm. The range was from a low of $3,401 per subsidized farm in West Virginia to a high of $90,214 per subsidized farm in California. Farm operators received an average of $9,251 each and landlords received an average of $5,617 each. Data on state averages obscure the high concentrations of payments to a relatively small proportion of the farms receiving subsidies. While there were a total of 1,705,514 separate “persons” that received payments in 2002, 50% of the subsidy payments went to 85,358 persons (or just 5% of the recipients). This report is intended as a reference and informational resource and is not expected to be regularly updated. Contents Farm Subsidy Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 State-By-State Distribution of Total Farm Subsidy Payments . . . . . . . . . . . . 7 Farms Receiving Subsidy Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Subsidy Payments per Farm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Subsidy Payments to Farm Operators and Landlords . . . . . . . . . . . . . . . . . 19 Concentration of Farm Subsidy Payments . . . . . . . . . . . . . . . . . . . . . . . . . . 27 List of Figures Figure 1. Total Farm Subsidy Payments, 1996-2002 . . . . . . . . . . . . . . . . . . . . . . 2 Figure 2. Farm Subsidy Payments by Major Category, 2002 . . . . . . . . . . . . . . . . 3 Figure 3. Total Farm Subsidy Payments in 2002 . . . . . . . . . . . . . . . . . . . . . . . . . 8 Figure 4. Percentage of Farms Receiving Subsidies in 2002 . . . . . . . . . . . . . . . 12 Figure 5. Average Subsidy Payment per Farm in 2002 . . . . . . . . . . . . . . . . . . . 16 Figure 6. Average Number of Landlords per Farm Receiving Subsidies in 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 List of Tables Table 1. Farm Subsidy Payments, by Program, 2002 . . . . . . . . . . . . . . . . . . . . . . 5 Table 2. Commodity Subsidy Payments, by Commodity, 2002 . . . . . . . . . . . . . . 6 Table 3. Subsidy Payments to Farm Operators and Landlords, by State, 2002 . . 9 Table 4. Proportion of Farms Receiving Subsidy Payments, by State, 2002 . . . 13 Table 5. Total Subsidy Payments Per Farm, by State, 2002 . . . . . . . . . . . . . . . . 17 Table 6. Subsidy Recipients Per Farm, by State, 2002 . . . . . . . . . . . . . . . . . . . . 21 Table 7. Average Subsidy Payments to Farm Operators, by State, 2002 . . . . . . 23 Table 8. Average Subsidy Payments to Landlords, by State, 2002 . . . . . . . . . . . 25 Table 9. Farm Subsidy Payments Reach a Large Number of Recipients, But Most of the Money Goes to a Few . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Average Farm Subsidy Payments, by State, 2002 Most federal farm subsidies are made as mandatory direct payments to producers from the U.S. Department of Agriculture’s (USDA’s) Commodity Credit Corporation (CCC).1 These include commodity price and income support programs, certain conservation programs, and select disaster assistance programs. CCC direct payments to farmers in 2002 are examined in this report.2 The primary data sources are the 2002 Census of Agriculture (available at [http://www.nass.usda.gov/census/]) and the Environmental Working Group’s (EWG’s) Farm Subsidy Database (available at [http://ewg.org/farm/home.php]). The EWG database is a compilation from CCC payment information supplied by USDA’s Farm Service Agency (FSA). FSA’s national network of county offices administers the subsidy programs and writes the CCC checks to the subsidy recipients.3 These two data sets facilitate a state-by state examination of payments and the division of payments between farm operators and landlords. There is unpredictability about the timing and size of market price movements as well as natural disasters. Consequently, the size of farm subsidies varies from year to year. Figure 1 shows that from 1995 through 2002 annual farm subsidy payments ranged from a low of $7.2 billion to a high of $23.5 billion, averaging $14.5 billion annually over the eight-year period.4 Commodity price and income support accounts 1 The term mandatory means that the payments are not dependent on annual congressional appropriations. Payment obligations to farmers meeting the rules of the various subsidy programs are covered by the CCC. The CCC uses its borrowing authority to obtain needed funds from the U.S. Treasury. Later, Congress appropriates monies to reimburse the CCC, so it can repay the Treasury. 2 The USDA does administer other farm subsidy programs that are not financed through the CCC and are not examined in this report. Among these are crop insurance (costing about $2 billion annually in premium subsidies), and farm ownership and operating loans for limited resource farmers (costing nearly $200 million annually in loan subsidies). 3 The data obtained by EWG are developed in FSA county offices and pertain to the farm in the county and not the address of the recipient. Recipients are unduplicated but may receive multiple payments from multiple programs throughout the year. Generally, data pertain to the calendar year of payment, but there may be exceptions. 4 The data reported by EWG for 2002 may include a combination of calendar year and crop year data, but are characterized by EWG as calendar year payments. The EWG data shown in Figure 1 differ only slightly from calendar year direct payment data published by USDA’s Economic Research Service. The ERS payment numbers for 1995 through 2002 are $7.3 billion, $7.3 billion, $7.5 billion, $12.4 billion, $21.5 billion, $22.9 billion, $20.7 billion, $11.0 billion. The CCC maintains its most detailed accounts by fiscal year, but these (continued...) CRS-2 for most farm subsidy payments. As shown in Figure 2, commodity payments amounted to 73% of CCC’s total farm subsidy payments in 2002. The year 2002, with total farm subsidy payments of $12.151 billion, was selected for examination in this report because of data availability. At the same time, it is fairly close to annual average total payments from 1995 through 2002. However, 2002 is unique in that peanut producers received one-time quota buyout payments of about $1 billion. Nearly half the peanut quota buyout payments were concentrated in Georgia ($483 million), with the remainder divided largely among Texas ($153 million), Alabama ($150 million), North Carolina ($107 million), Virginia ($67 million), Oklahoma ($62 million), and Florida ($48 million).5 Figure 1. Total Farm Subsidy Payments, 1996-2002 4 (...continued) records do report payments at the state or recipient level. Data from the 2002 Census of Agriculture are for calendar year 2002. 5 A full description of the peanut marketing quota buyout program is available in CRS Report RL30924, Peanut Program Policy Issues. CRS-3 Figure 2. Farm Subsidy Payments by Major Category, 2002 CRS-4 Farm Subsidy Programs Most commodity support program payments are linked to market prices.6 When market prices decline, commodity support payments increase in order to support the income of producers whose revenue otherwise would decline. Conservation payments are made to encourage farmers to remedy environmental problems. Disaster assistance is provided when crop and livestock production is substantially damaged or destroyed by natural disasters such as drought, flood, and disease, thereby reducing revenue and/or increasing the expenses of producers.7 Table 1 presents a program-by-program list of payments in 2002. Some of the payments (and refunds) shown in Table 1 were authorized by the 1996 farm bill, which originally covered the 1996 through 2002 crops. The 2002 farm bill (P.L. 107171, the Farm Security and Rural Investment Act of 2002) was enacted on May 13, 2002, and was made immediately applicable to 2002 crops. So, 2002 was a year of transition from the previous Production Flexibility Contract Payments to the new Direct and Counter-Cyclical Payments. Also, Counter-Cyclical Payments became the permanent replacement for ad hoc Market Loss Payments. 6 Production Flexibility Contract Payments and decoupled Direct Payments for grain and cotton producers are exceptions. These payments were based on historical production of each of the grain and cotton crops only. Recipients of these payments were able to change their mix of crops or even produce nothing. 7 Eligibility requirements for payments are specified in the law for each program. The payment triggers and size of commodity support payments are based upon specified price levels (an indirect income test) or physical damage levels for disaster assistance (a loss test). CRS-5 Table 1. Farm Subsidy Payments, by Program, 2002 Program / Category Total Farm Subsidies Commodity Subsidies Production Flexibility Contract Payments Loan Deficiency Payments (LDPs) Peanut Quota Buyout and Miscellaneous Payments Commodity Certificates Dairy Payments Direct and Counter-Cyclical Payments Marketing Loan Gains Lamb Payments Market Loss Assistance, NonSupported Commodities Livestock Indemnity Program Market Loss Assistance, Supported Commodities Total LDP-like Grazing Payments Oilseed Program Wool and Mohair Payments Deficiency Payments Conservation Programs Conservation Reserve Program Environmental Quality Incentives Program Emergency Conservation Program Wetlands Reserve Program Miscellaneous Conservation Payments Agricultural Conservation Program Disaster Programs Crop Disaster Payments Karnal Bunt Programs Livestock Disaster / Emergency Tree Assistance Programs Subsidy Payments Number of Recipients Payment Per Recipient $12,150,563,185 1,705,514 $7,124 $8,831,971,671 1,319,110 $6,695 $3,499,997,512 $1,296,591,777 1,145,725 334,659 $3,055 $3,874 $1,174,674,015 $940,785,178 $848,186,106 $570,589,219 $458,385,698 $32,401,797 130,516 17,972 71,968 210,540 55,588 17,210 $9,000 $52,347 $11,786 $2,710 $8,246 $1,883 $5,509,671 $3,173,145 18,051 2,099 $305 $1,512 $1,417,765 $480,947 $234,989 -$16,025 -$440,125 $1,991,020,798 $1,807,458,649 1,287 442 360 1 456 429,684 397,707 $1,102 $1,088 $653 -$16,025 -$965 $4,634 $4,545 $118,268,708 $38,610,984 $17,238,484 $8,811,436 $631,544 $1,327,570,716 $1,324,095,908 $3,044,719 $431,298 -$216 23,585 13,580 678 1,839 175 469,165 469,068 241 182 1 $5,015 $2,843 $25,425 $4,791 $3,609 $2,830 $2,823 $12,634 $2,370 -$216 Source: Environmental Working Group, Farm Subsidy Database, United States: Subsidy Summary, Subsidy Detail, [http://www.ewg.org:16080/farm/regiondetail.php?fips=00000&summlevel=2]. Note: There is overlap of recipients across programs. For example, nearly all recipients of loan deficiency payments also were recipients of production flexibility contract payments. Similarly, many of the recipients of conservation reserve program payments also were recipients of production flexibility contract payments. On average, each individual recipient of farm subsidies received payments related to 1.71 separate programs. Negative numbers represent reimbursements from farmers for excessive or disqualified payments. CRS-6 It often is more helpful to examine commodity support payments by commodity rather than program. Farmers individually tend to specialize in certain commodities and this relates to the climate and soil conditions favored by the different commodities. In the absence of irrigation, corn and soybeans grow especially well in Iowa, Illinois, and surrounding states. Irrigation has made Texas and California leading cotton states, but production remains large in Mississippi, Georgia, and Arkansas. Rice, also, is a southern crop, with Arkansas the leading producer, while irrigation has moved California into second place. Wheat tolerates low rainfall and low humidity, and so is produced primarily in North Dakota, Kansas, Montana, Oklahoma, and Washington. Georgia dominates peanut production, but Texas is second with large irrigated acreage. Table 2 presents the commodity support data by commodity. Table 2. Commodity Subsidy Payments, by Commodity, 2002 Commodity Total Payments Number of Recipients Payment Per Recipient Total Commodity Subsidies $8,831,971,671 1,319,110 $6,695 Corn Cotton Peanuts Rice Wheat Dairy Soybeans Sorghum Barley Apples Sugar Sheep meat Sunflower seed Oats Tobacco Safflower seed $1,981,564,489 $1,669,746,908 $1,092,846,187 $1,073,167,886 $975,272,805 $848,347,339 $670,801,852 $188,981,974 $82,801,044 $74,334,966 $44,288,049 $32,401,797 $6,518,597 $6,226,386 $4,990,960 $1,885,304 858,077 127,582 63,139 34,888 750,825 71,976 250,622 312,031 182,657 6,469 5,109 17,210 5,910 345,197 17,623 1,037 $2,309 $13,088 $17,309 $30,760 $1,299 $11,787 $2,677 $606 $453 $11,491 $8,669 $1,883 $1,103 $18 $283 $1,818 Source: Environmental Working Group, Farm Subsidy Database, United States Summary, 2002 [http://www.ewg.org/farm/region.php?fips=00000&progcode=total&yr=2002] Note: There is overlap of recipients across commodities. For example, many recipients of corn subsidies also were recipients of soybean subsidies. CRS-7 State-By-State Distribution of Total Farm Subsidy Payments Figure 3 and Table 3 show the geographic distribution of $12.151 billion in total subsidy payments. Predictably, the farm states in the agricultural heartland of the country from the Canadian border to the Gulf of Mexico received most of the subsidy payments. The state receiving the largest amount was Texas, with nearly $1.209 billion, followed by Iowa, Georgia, Arkansas, California, Illinois, and Nebraska, each receiving over $500 million. There were 2.129 million farms in the United States in 2002 according to the 2002 Census of Agriculture, which defines a farm as producing and selling $1,000 or more in agricultural products. The state with the largest number of farms was Texas (about 229,000), followed by Missouri (about 107,000). Not all farms in the nation received subsidy payments. Eligibility is linked to the production of certain commodities or to the adoption of certain conservation practices. Commodities that received mandatory federal price and income support payments included wheat, corn, sorghum, barley, oats, rice, cotton, soybeans, sunflower seed, rapeseed, canola, safflower, flaxseed, mustard seed, crambe, sesame seed, peanuts, dry peas, lentils, small chickpeas, milk, sugar, wool, mohair, honey, and tobacco. Major categories of commodities are not supported, including fruits, vegetables, tree nuts, livestock meat, greenhouse and nursery crops, and hay and forage crops. Farm cash receipts from sales of supported commodities amounted to about $53 billion in 2002, or 28% of the $193 billion in national total commodity cash receipts in 2002.8 Some commodities not receiving mandatory support received disaster assistance and ad hoc market loss assistance payments in 2002. 8 Calculated from USDA, Economic Research Service, data on farm cash receipts. CRS-8 Figure 3. Total Farm Subsidy Payments in 2002 Million $ $0-$100M $101-$400M $400M-$1,200M Based on Environmental Working Group, Farm Subsidy Database. Farm subsidy payments in 2002 totaled $12.151 billion, of which: ! Commodity support payments totaled $8.832 billion, including: — Corn, $1.982 billion — Cotton, $1.670 billion — Peanuts, $1.092 billion — Rice, $1.073 billion — Wheat, $0.975 billion — Soybeans, $0.671 billion ! Conservation payments totaled $1.991 billion, including: ! Disaster payments totaled $1.328 billion. — Conservation Reserve Program payments of $1.807 The top 11 states received $6.844 billion in farm subsidy payments (56.3% of the U.S. total): ! ! ! ! ! ! ! ! ! ! ! Texas, $1,209 million (9.9%) Iowa, $740 million (6.1%) Georgia, $661 million (5.4%) Arkansas, $660 million (5.4%) California, $652 million (5.4%) Illinois, $615 million (5.1%) Nebraska, $539 million (4.4%) Minnesota, $468 million (3.8%) Kansas, $457 million (3.8%) Mississippi, $438 million (3.6%) Missouri, $406 million (3.3%) CRS-9 Table 3. Subsidy Payments to Farm Operators and Landlords, by State, 2002 Rank State Payments to Operators Payments to Landlords Total Payments Share of Share of Share of Total Total US Total (million $) (%) (million $) (%) (million $) (%) All States 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 Texas Iowa Georgia Arkansas California Illinois Nebraska Minnesota Kansas Mississippi Missouri North Dakota Indiana South Dakota Wisconsin North Carolina Oklahoma Alabama Ohio Louisiana Montana Washington Colorado Michigan Virginia Idaho New York Tennessee Kentucky Pennsylvania Florida Oregon New Mexico Arizona Wyoming South Carolina $6,545.7 54% $5,604.9 $529.0 $538.9 $118.5 $238.6 $168.7 $412.6 $347.5 $350.7 $328.2 $145.5 $264.5 $293.1 $224.7 $215.1 $247.9 $97.7 $149.9 $77.9 $197.4 $123.6 $210.7 $133.8 $125.8 $144.8 $54.7 $93.9 $110.2 $59.2 $94.1 $85.8 $21.8 $52.1 $50.2 $31.8 $37.9 $38.4 44% 73% 18% 36% 26% 67% 64% 75% 72% 33% 65% 76% 67% 64% 75% 30% 47% 27% 70% 47% 80% 62% 60% 76% 30% 57% 69% 41% 68% 66% 26% 65% 68% 45% 57% 59% $680.0 $201.1 $542.1 $421.3 $483.4 $202.5 $191.7 $116.8 $128.6 $292.3 $141.4 $90.6 $110.2 $119.5 $84.5 $226.2 $167.3 $211.3 $83.6 $139.1 $51.2 $82.0 $85.0 $45.9 $127.3 $71.5 $49.1 $86.5 $44.2 $44.4 $61.1 $28.1 $24.1 $38.5 $28.2 $27.0 46% $12,150.6 100.0% 56% 27% 82% 64% 74% 33% 36% 25% 28% 67% 35% 24% 33% 36% 25% 70% 53% 73% 30% 53% 20% 38% 40% 24% 70% 43% 31% 59% 32% 34% 74% 35% 32% 55% 43% 41% $1,208.9 $740.0 $660.7 $659.9 $652.1 $615.1 $539.2 $467.5 $456.8 $437.8 $405.9 $383.6 $334.9 $334.6 $332.4 $323.9 $317.2 $289.2 $281.0 $262.7 $261.9 $215.7 $210.8 $190.7 $181.9 $165.4 $159.4 $145.7 $138.3 $130.2 $82.9 $80.2 $74.3 $70.2 $66.1 $65.4 9.9% 6.1% 5.4% 5.4% 5.4% 5.1% 4.4% 3.8% 3.8% 3.6% 3.3% 3.2% 2.8% 2.8% 2.7% 2.7% 2.6% 2.4% 2.3% 2.2% 2.2% 1.8% 1.7% 1.6% 1.5% 1.4% 1.3% 1.2% 1.1% 1.1% 0.7% 0.7% 0.6% 0.6% 0.5% 0.5% CRS-10 Rank State Payments to Operators Payments to Landlords Total Payments Share of Share of Share of Total Total US Total (million $) (%) (million $) (%) (million $) (%) 37 38 39 40 41 42 43 44 45 46 47 48 49 50 Utah Maryland Vermont Maine Delaware Nevada New Jersey Massachusetts West Virginia Connecticut New Hampshire Hawaii Alaska Rhode Island $26.7 $33.1 $24.4 $8.7 $8.6 $4.3 $4.4 $4.3 $5.2 $3.7 $3.8 $0.9 $1.8 $0.5 49% 68% 67% 63% 72% 38% 69% 70% 91% 74% 103% 46% 99% 81% $27.6 $15.8 $12.1 $5.1 $3.3 $7.1 $2.0 $1.8 $0.5 $1.3 -$0.1 $1.0 $0.0 $0.1 51% 32% 33% 37% 28% 62% 31% 30% 9% 26% -3% 54% 1% 19% $54.3 $49.0 $36.4 $13.7 $11.9 $11.4 $6.5 $6.1 $5.7 $4.9 $3.7 $1.9 $1.8 $0.7 0.4% 0.4% 0.3% 0.1% 0.1% 0.1% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Source: Data on subsidy payments to farm operators are based on payments to farms reported in the 2002 Census of Agriculture. Data on total subsidy payments are from the Environmental Working Group, Farm Subsidy Database. Payments to non-operator recipients are calculated as the difference between total payments and payments to operators. CRS-11 Farms Receiving Subsidy Payments Of the nation’s 2.1 million farms, 707,596 (33%) received subsidy payments and 1,421,386 (67%) did not receive payments in 2002. Figure 4 and Table 4 show the percentage of farms in each state that received payments in 2002. In North Dakota, 78% of farms received subsidy payments, followed by Iowa, Illinois, Nebraska, South Dakota, Kansas, and Minnesota, each with payments going to more than half the farms in the state. This concentration reflects the specialization of farms in these states in the production of subsidized feed grains, oilseeds, and wheat. Generally the other states proportionally have more livestock and specialty crops that do not receive price support. CRS-12 Figure 4. Percentage of Farms Receiving Subsidies in 2002 Percent of All Farms 0%-19% 20%-49% 50%-78% Based on data from USDA, 2002 Census of Agriculture Nationally, 33% of farms received subsidies (707,596 farms out of 2,128,982). More than 50% of the farms in each of seven states received subsidies in 2002. This proportion of subsidized farms reflects highly concentrated production of wheat, corn, and/or soybeans by most farms in these state. These states were: ! ! ! ! ! ! ! North Dakota (78%) Iowa (70%) Illinois (66%) Nebraska (65%) South Dakota (64%) Kansas (61%) Minnesota (54%) CRS-13 Table 4. Proportion of Farms Receiving Subsidy Payments, by State, 2002 Rank State All States 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 North Dakota Iowa Illinois Nebraska South Dakota Kansas Minnesota Wisconsin Indiana Montana Missouri Ohio Michigan Wyoming Colorado Georgia Mississippi Oklahoma Alabama Idaho Maryland Louisiana New York Kentucky Delaware South Carolina North Carolina New Mexico Pennsylvania Washington Vermont Utah Virginia Texas Tennessee Maine Arkansas Nevada Alaska Arizona Oregon New Hampshire California West Virginia All Farms Farms w/ Subsidies Share of Farms w/ Subsidies (%) 2,128,982 707,596 33% 30,619 90,655 73,027 49,355 31,736 64,414 80,839 77,131 60,296 27,870 106,797 77,797 53,315 9,422 31,369 49,311 42,186 83,300 45,126 25,017 12,198 27,413 37,255 86,541 2,391 24,541 53,930 15,170 58,105 35,939 6,571 15,282 47,606 228,926 87,595 7,196 47,483 2,989 609 7,294 40,033 3,363 79,631 20,812 23,892 63,074 47,857 32,007 20,259 39,191 43,927 37,234 26,841 12,389 43,379 28,851 18,133 3,163 10,163 15,510 12,383 24,316 12,863 7,098 3,372 7,562 9,896 22,825 617 6,112 12,312 3,246 11,991 7,332 1,296 2,987 9,206 42,217 16,034 1,244 7,811 439 72 833 4,430 359 7,228 1,675 78% 70% 66% 65% 64% 61% 54% 48% 45% 44% 41% 37% 34% 34% 32% 31% 29% 29% 29% 28% 28% 28% 27% 26% 26% 25% 23% 21% 21% 20% 20% 20% 19% 18% 18% 17% 16% 15% 12% 11% 11% 11% 9% 8% CRS-14 Rank 45 46 47 48 49 50 State Massachusetts Connecticut Rhode Island New Jersey Florida Hawaii All Farms 6,075 4,191 858 9,924 44,081 5,398 Farms w/ Subsidies Share of Farms w/ Subsidies (%) 415 7% 254 6% 52 6% 582 6% 2,554 6% 113 2% Source: Data on farms and farms receiving subsidies are from the 2002 Census of Agriculture. CRS-15 Subsidy Payments per Farm Total subsidy payments of $12.151 billion divided among 707,596 recipient farms is equal to $17,172 per farm. However, the average by state ranges from $90,214 per farm in California to $3,401 in West Virginia (see Figure 5 and Table 5). Generally, the states with the largest per-farm payments are those that produce rice and cotton. Other states receiving the larger per-farm payments in 2002 benefitted from peanut quota buyout payments, disaster payments, and apple market loss assistance payments. While each farm has an operator, there may be other individuals associated with the farm who are eligible to receive subsidy payments. Generally, individuals must be actively engaged in the farming operation to receive subsidy payments. Actively engaged means providing a significant contribution of capital, land, or equipment, as well as a significant contribution of personal labor or active personal management to the operation. This personal contribution of labor or management must be in proportion to the share of the farm’s profits and losses and it must be at risk. A landlord receiving crop share rent is likely considered actively engaged while a landlord receiving cash rent is not actively engaged.9 9 The interpretation and application of the legal requirement concerning the phrase “actively engaged” was examined in General Accounting Office testimony titled Farm Program Payments: USDA Should Correct Weaknesses in Regulations and Oversight to Better Ensure Recipients Do Not Circumvent Payment Limitations before the Senate Committee on Finance on June 16, 2004 (GAO-04-861T). CRS-16 Figure 5. Average Subsidy Payment per Farm in 2002 $ per Farm $ 3K-$15K $15K-$30K $30K-$90K Source: Based on data from USDA, 2002 Census of Agriculture, and Environmental Working Group, Farm Subsidy Database. Subsidy payments per farm (among only the farms receiving subsidies) averaged $17,172 in 2002. The highest per-farm payments were made in California, Arkansas, and Arizona. ! ! ! ! ! ! California ($90,214 per farm) is notable for large rice, cotton, and dairy farms dominating the farm subsidy payments. Arkansas ($84,480 per farm) is the leading rice state, with many of the rice farms being large. Also, rice cooperatives in Arkansas may be the initial recipient of payments that are subsequently distributed among member farms. Arizona ($84,329 per farm) is notable for payments to a few, but large, cotton, dairy, and peanut farms. Large per-farm payments in Georgia and Florida reflect peanut quota buyout payments that were unique to 2002. Large per-farm payments in Mississippi reflect payments for peanuts, rice, cotton, and milk. Large per-farm payments in Louisiana reflect payments for rice, cotton, and milk. CRS-17 Table 5. Total Subsidy Payments Per Farm, by State, 2002 Rank State All States 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 California Arkansas Arizona Georgia Mississippi Louisiana Florida Washington Texas Vermont North Carolina Nevada Alaska Idaho New Mexico Alabama Montana Wyoming Colorado Virginia Connecticut Delaware Utah Oregon Hawaii Nebraska South Dakota New York North Dakota Massachusetts Maryland Oklahoma Illinois Rhode Island Indiana Iowa Kansas New Jersey Maine Pennsylvania South Carolina Minnesota Michigan Farms w/ Subsidies Total Payments (thousand $) Subsidy Per Recipient Farm (average) 707,596 $12,150,563 $17,172 7,228 7,811 833 15,510 12,383 7,562 2,554 7,332 42,217 1,296 12,312 439 72 7,098 3,246 12,863 12,389 3,163 10,163 9,206 254 617 2,987 4,430 113 32,007 20,259 9,896 23,892 415 3,372 24,316 47,857 52 26,841 63,074 39,191 582 1,244 11,991 6,112 43,927 18,133 $652,065 $659,871 $70,246 $660,662 $437,762 $262,702 $82,881 $215,736 $1,208,944 $36,441 $323,911 $11,378 $1,783 $165,428 $74,323 $289,183 $261,945 $66,085 $210,758 $181,928 $4,946 $11,939 $54,304 $80,177 $1,911 $539,214 $334,633 $159,377 $383,645 $6,070 $48,953 $317,194 $615,111 $651 $334,917 $739,968 $456,829 $6,476 $13,745 $130,179 $65,358 $467,542 $190,686 $90,214 $84,480 $84,329 $42,596 $35,352 $34,740 $32,451 $29,424 $28,636 $28,118 $26,309 $25,918 $24,766 $23,306 $22,897 $22,482 $21,143 $20,893 $20,738 $19,762 $19,472 $19,350 $18,180 $18,099 $16,911 $16,847 $16,518 $16,105 $16,057 $14,627 $14,517 $13,045 $12,853 $12,519 $12,478 $11,732 $11,656 $11,127 $11,049 $10,856 $10,693 $10,644 $10,516 CRS-18 Rank 44 45 46 47 48 49 50 State New Hampshire Ohio Missouri Tennessee Wisconsin Kentucky West Virginia Farms w/ Subsidies 359 28,851 43,379 16,034 37,234 22,825 1,675 Subsidy Per Total Payments Recipient Farm (thousand $) (average) $3,701 $10,308 $281,031 $9,741 $405,873 $9,356 $145,723 $9,088 $332,425 $8,928 $138,257 $6,057 $5,696 $3,401 Source: Data on the number of farms receiving subsidies are from the 2002 Census of Agriculture. Data on total subsidy payments are from the Environmental Working Group, Farm Subsidy Database. CRS-19 Subsidy Payments to Farm Operators and Landlords There were 1,705,514 separate recipients of farm subsidy payments in 2002, associated with 707,596 farms. In nearly all cases, the recipients were individual farm operators and non-operator landlords. However, in some cases the recipients were legal business entities, such as partnerships, corporations, cooperatives, and trusts involving more than one individual. In the terminology of the law each of the farm operators, landlords, or other legal entities is called a “person” and is subject to limits on the size of payments from subsidy programs.10 A simplifying assumption is made for purposes of this analysis that each of the 707,596 farms receiving subsidy payments has a single operator. It is further assumed the difference between the 707,596 farm operators and the 1,705,514 total subsidy recipients (equaling 997,918) are farm landlords.11 For the most part, these 997,918 landlords are the owners of farmland that is rented to operators. Often, the landlords are relatives of farm operators and neighboring landowners who have left farming. It is typical for farmland to be owned collectively by the children of a former farm family, none of whom remains in farming but who continue to retain ownership of their former family farm. Given the aforementioned assumption, Figure 6 and Table 6 show the proportion of landlords to farm operators in each state. On average there were 1.41 landlords receiving subsidy payments for every farm operator who received payments. However, there was a range among states from 4.05 landlords per operator in Arizona down to 0.44 in Alaska. Differences between states in the ratio of farm operators to landlords reflect differing commodity specializations, regional approaches to farm consolidation, and regional attitudes toward farmland ownership. Also, annual per-person payment limits create an incentive to add actively engaged landlords rather than expand the acreage owned by the farm operator. The national average farm subsidy payment to each farm operator in 2002 was $9,251, and the average subsidy to each non-operator recipient was $5,617. Since there were 1.41 off-farm landlords for each farm, the average subsidy per farm to offfarm landlords was $7,921 (86% of the amount paid to each operator). Table 7 shows the distribution payments to farm operators and Table 8 shows the distribution of payments to off-farm landlords. 10 See CRS Report RS21779, Grains, Cotton, Oilseeds, and Peanuts: Payments Under the 2002 Farm Bill, for more information on per-person payment limits related to commodity support programs. 11 To be eligible for commodity payments, a person must be actively engaged in farming. This can be achieved by providing a significant contribution of capital, land, or equipment, as well as a significant contribution of personal labor or active personal management to the operation. Few people qualify for commodity payments who are not operators or landlords. CRS-20 Figure 6. Average Number of Landlords per Farm Receiving Subsidies in 2002 Landlords per Farm 0.4-1.2 1.3-2.2 2.3-4.1 Source: Based on data from USDA, 2002 Census of Agriculture, and Environmental Working Group, Farm Subsidy Database. The national average number of landlords (non-operator recipients) per farm that received subsidies in 2002 was 1.41. ! Arizona (4.1) and Louisiana (3.2) had the largest number of landlords per farm that received subsidies. ! In the northeast and along the northern border of the country there were more full owner-operators. These states fell below the national average of 1.41 landlord per farm. CRS-21 Table 6. Subsidy Recipients Per Farm, by State, 2002 Rank State All States 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Arizona Louisiana North Carolina Arkansas Florida Kentucky Tennessee Alabama Georgia Nevada Kansas Illinois Virginia New Mexico California Colorado Indiana Texas South Carolina Idaho Oklahoma Washington Nebraska Mississippi Utah Oregon Delaware Wyoming Hawaii Ohio Montana South Dakota Massachusetts Missouri Vermont Michigan North Dakota Maine Rhode Island West Virginia Connecticut New Jersey Maryland Iowa All Recipients Operator Recipients Landlord Recipients Landlord Recipients Per Farm 1,705,514 707,596 997,918 1.41 4,209 31,889 46,599 28,758 8,340 74,083 51,298 40,477 46,951 1,257 111,751 134,870 25,375 8,916 19,780 27,164 71,615 111,512 16,134 18,505 63,183 18,650 78,240 29,444 7,063 10,474 1,436 7,360 253 64,311 27,591 44,982 909 94,784 2,821 38,093 49,089 2,533 105 3,297 494 1,129 6,510 119,308 833 7,562 12,312 7,811 2,554 22,825 16,034 12,863 15,510 439 39,191 47,857 9,206 3,246 7,228 10,163 26,841 42,217 6,112 7,098 24,316 7,332 32,007 12,383 2,987 4,430 617 3,163 113 28,851 12,389 20,259 415 43,379 1,296 18,133 23,892 1,244 52 1,675 254 582 3,372 63,074 3,376 24,327 34,287 20,947 5,786 51,258 35,264 27,614 31,441 818 72,560 87,013 16,169 5,670 12,552 17,001 44,774 69,295 10,022 11,407 38,867 11,318 46,233 17,061 4,076 6,044 819 4,197 140 35,460 15,202 24,723 494 51,405 1,525 19,960 25,197 1,289 53 1,622 240 547 3,138 56,234 4.05 3.22 2.78 2.68 2.27 2.25 2.20 2.15 2.03 1.86 1.85 1.82 1.76 1.75 1.74 1.67 1.67 1.64 1.64 1.61 1.60 1.54 1.44 1.38 1.36 1.36 1.33 1.33 1.24 1.23 1.23 1.22 1.19 1.19 1.18 1.10 1.05 1.04 1.02 0.97 0.94 0.94 0.93 0.89 CRS-22 Rank State 45 New Hampshire 46 New York 47 Minnesota 48 Wisconsin 49 Pennsylvania 50 Alaska All Recipients 643 17,087 75,310 63,345 19,992 104 Operator Recipients 359 9,896 43,927 37,234 11,991 72 Landlord Landlord Recipients Recipients Per Farm 284 0.79 7,191 0.73 31,383 0.71 26,111 0.70 8,001 0.67 32 0.44 Source: Data on the number of subsidy recipients are from the Environmental Working Group, Farm Subsidy Database. The data on the number of farm operators receiving subsidies are assumed to equal the number of farms receiving subsidies, which are from the 2002 Census of Agriculture. CRS-23 Table 7. Average Subsidy Payments to Farm Operators, by State, 2002 Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 State Operator Recipients Payments to Operators Total $ (thousand) $ Per Operator All States 707,596 $6,545,678 $9,251 Arizona Arkansas Alaska California Vermont Washington Montana Louisiana New Mexico Connecticut Delaware Idaho Texas Colorado North Dakota Wyoming Oregon Mississippi New York Nebraska New Hampshire South Dakota Massachusetts Rhode Island Nevada Maryland Utah Illinois Iowa Florida Kansas Indiana Minnesota Michigan North Carolina Hawaii Georgia New Jersey Pennsylvania Maine Ohio Wisconsin 833 7,811 72 7,228 1,296 7,332 12,389 7,562 3,246 254 617 7,098 42,217 10,163 23,892 3,163 4,430 12,383 9,896 32,007 359 20,259 415 52 439 3,372 2,987 47,857 63,074 2,554 39,191 26,841 43,927 18,133 12,312 113 15,510 582 11,991 1,244 28,851 37,234 $31,760 $238,577 $1,765 $168,698 $24,377 $133,763 $210,749 $123,599 $50,201 $3,681 $8,643 $93,934 $528,979 $125,774 $293,067 $37,913 $52,085 $145,508 $110,234 $347,517 $3,823 $215,084 $4,268 $528 $4,322 $33,131 $26,669 $412,636 $538,896 $21,818 $328,244 $224,701 $350,709 $144,771 $97,696 $886 $118,535 $4,441 $85,794 $8,664 $197,425 $247,942 $38,127 $30,544 $24,514 $23,340 $18,809 $18,244 $17,011 $16,345 $15,465 $14,492 $14,008 $13,234 $12,530 $12,376 $12,266 $11,986 $11,757 $11,751 $11,139 $10,858 $10,649 $10,617 $10,284 $10,154 $9,845 $9,825 $8,928 $8,622 $8,544 $8,543 $8,375 $8,372 $7,984 $7,984 $7,935 $7,841 $7,642 $7,631 $7,155 $6,965 $6,843 $6,659 CRS-24 Rank 43 44 45 46 47 48 49 50 State South Carolina Oklahoma Missouri Alabama Virginia Kentucky Tennessee West Virginia Operator Recipients 6,112 24,316 43,379 12,863 9,206 22,825 16,034 1,675 Payments to Operators Total $ (thousand) $38,384 $149,942 $264,475 $77,930 $54,677 $94,053 $59,231 $5,180 $ Per Operator $6,280 $6,166 $6,097 $6,058 $5,939 $4,121 $3,694 $3,093 Source: Operator recipients are assumed to match data on farms receiving subsidies as reported by the 2002 Census of Agriculture. CRS-25 Table 8. Average Subsidy Payments to Landlords, by State, 2002 Rank State All States 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 California Arkansas Georgia Mississippi Arizona Florida Texas Nevada Vermont Virginia Alabama Hawaii Washington New York Utah Wyoming North Carolina Idaho Louisiana Pennsylvania Connecticut Maryland Colorado South Dakota Oregon Oklahoma New Mexico Nebraska Delaware Maine Minnesota New Jersey Massachusetts North Dakota Iowa Montana Wisconsin Missouri South Carolina Indiana Tennessee Landlord Recipients Payments to Landlords Total $ (thousand) $ Per Landlord 997,918 $5,604,885 $5,617 12,552 20,947 31,441 17,061 3,376 5,786 69,295 818 1,525 16,169 27,614 140 11,318 7,191 4,076 4,197 34,287 11,407 24,327 8,001 240 3,138 17,001 24,723 6,044 38,867 5,670 46,233 819 1,289 31,383 547 494 25,197 56,234 15,202 26,111 51,405 10,022 44,774 35,264 $483,367 $421,294 $542,127 $292,254 $38,486 $61,063 $679,965 $7,056 $12,064 $127,251 $211,253 $1,025 $81,973 $49,143 $27,635 $28,172 $226,215 $71,494 $139,103 $44,385 $1,265 $15,822 $84,984 $119,549 $28,092 $167,252 $24,122 $191,697 $3,296 $5,081 $116,833 $2,035 $1,802 $90,578 $201,072 $51,196 $84,483 $141,398 $26,974 $110,216 $86,492 $38,509 $20,112 $17,243 $17,130 $11,400 $10,553 $9,813 $8,626 $7,911 $7,870 $7,650 $7,321 $7,243 $6,834 $6,780 $6,712 $6,598 $6,268 $5,718 $5,547 $5,270 $5,042 $4,999 $4,836 $4,648 $4,303 $4,254 $4,146 $4,025 $3,942 $3,723 $3,720 $3,648 $3,595 $3,576 $3,368 $3,236 $2,751 $2,691 $2,462 $2,453 CRS-26 Rank 42 43 44 45 46 47 48 49 50 State Ohio Illinois Rhode Island Michigan Kansas Kentucky Alaska West Virginia New Hampshire Landlord Recipients 35,460 87,013 53 19,960 72,560 51,258 32 1,622 284 Payments to Landlords Total $ (thousand) $83,606 $202,475 $123 $45,915 $128,585 $44,204 $18 $516 -$122 $ Per Landlord $2,358 $2,327 $2,321 $2,300 $1,772 $862 $568 $318 -$431 Source: Data in this table are tabulated from 2002 Census of Agriculture and Environmental Working Group, Farm Subsidy Database, data shown elsewhere in this report. CRS-27 Concentration of Farm Subsidy Payments Data on average payment per farm operator and the average payment per landlord mask the fact that payments were concentrated among a comparatively small proportion of the recipients. Table 9 shows that 85,358 top recipients (5% of all recipients) received 50% of all payments for an average of $70,523 per recipient. Included in the very top recipients are a number of cooperatives, corporations, and trusts that divided the payments among several and sometimes numerous farmers. In addition, several individuals received multi-million dollar payments, particularly in conjunction with the peanut quota buyout. Table 9. Farm Subsidy Payments Reach a Large Number of Recipients, But Most of the Money Goes to a Few % of All Recipients % of Payments Number of Recipients Total Subsidy Payments Average Payment Per Recipient Top 5% 50% 85,358 $6,019,739,668 $70,523 Next 5% 15% 85,359 $1,865,686,784 $21,857 Next 10% 16% 170,718 $1,970,454,705 $11,542 Remaining 80% 19% 1,365,741 $2,294,682,028 $1,680 100% 1,705,514 $12,150,563,185 $7,124 All Recipients Source: Environmental Working Group, Farm Subsidy Database.