The Agricultural (Farm) Act: History and Changes
President Roosevelt signed the Agricultural Adjustment Act in 1933, creating the Agricultural Adjustment Administration. Agricultural support was designed to protect farmers against fluctuations in prices, revenues, and yields. Moreover, the Agricultural Act, and its governing body, subsidize conservation efforts, insurance coverage, marketing, export sales, research, and more.
Most of the direct aid goes to producers of a few critical field crops. Under the three largest farm subsidy programs — Crop Insurance, Agriculture Risk Coverage (ARC), and Price Loss Coverage (PLC) — more than 70-percent of the aid is directed to producers of corn, soybeans, and wheat.
Support for agriculture comes in the form of eight types of subsidies:
- Crop Insurance
- ARC
- PLC
- Conservation Programs
- Marketing Loans
- Disaster Aid
- Marketing and Export Promotion
- Research and Other Support
A Closer Look At Agricultural Support:
The Federal Government spends more than $20 billion each year on subsidies for agriculture. Furthermore, approximately 39-percent of the nation’s 2.1 million farms receive subsidies. U.S. agricultural policy follows a five-year legislative cycle to produce wide-ranging farm bills, which govern programs related to farming, food and nutrition, rural communities, bioenergy, and forestry.
The most recent legislative initiative was the Agricultural Act of 2014. Similarly, this Act authorizes policies for commodity programs, crop insurance, conservation of agricultural lands, agricultural trade, nutrition, farm credit, rural economic development, agricultural research, forestry, bioenergy, and horticulture.
The Agricultural Act was designed to provide much needed support and assistance to family farms, in other words, ensuring that those family farms could remain competitive in the face of growing globalization. Utilization of the program, and dependence upon it by both the government and farmers, remains strong. In 2018, President Trump announced a $12 billion subsidy to be paid to soybean farmers to offset recently enacted trade policies. The existence of the aid makes it easier for the government to manage its trade program, eliminating any backlash that may come from downstream implications of tariffs, quotas, duties and taxes.
How is Agricultural Aid Funded?
Agricultural aid is taxpayer-funded, based on a 5-year bill cycle. There is no accumulation of reserves or individual future promises tied to the benefits.
Criticisms of the Program
One criticism of the program is that it has moved away from its intended purpose of supporting and enabling small farms to remain competitive. Today, most aid is directed to farmers with household incomes over $150,000, which is three times the national average.
Richard has been conducting research on Retirement Insurance for more than 20 years. He received his Master of Accountancy (MAcc) in 1998 and is a licensed Certified Public Accountant (CPA). In the aftermath of the 2008 financial crisis, Richard found himself surrounded by friends and family who were concerned about their retirement and how they would be able to afford a comfortable life during their golden years.