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October 15, 2020

Is Federal Ag Aid a Lot—or a Little?

 |  By: Jim Dickrell

Critics of Federal aid to farmers complain it’s a huge expenditure—often going to the largest farms. Farmers respond that the aid helps support rural economies—and that in relative terms, the aid is a small supplement to total farm income.

In an analysis of Federal farm aid and farm income done by the American Farm Bureau Federation (AFBF), it appears both sides have a point.

The analysis looks at 2019 Federal agricultural aid, which totals $22.4 billion (up 64% from 2018). The aid includes regular farm program payments, two ad hoc disaster assistance packages and Market Facilitation Program trade assistance payments to compensate farmers for losses brought on by Chinese retaliatory tariffs. “Importantly, these federal payments do not include recent ad hoc support to offset the impact of COVID-19 on the farm economy,” says John Newton, AFBF chief economist.

Iowa led all states, with nearly $2.1 billion in Federal aid, Texas was second with $1.8 billion in Federal aid and Illinois third, at $1.7 billion. “Support was highest in these areas due to the concentration of soybean and cotton production and the impact of retaliatory tariffs on the prices of the commodities,” says Newton.

Leading dairy states received: California, $420 million; Wisconsin, $501 million; Idaho, $165 million; Pennsylvania, $173 million, and New York, $123 million.

Despite these large nominal amounts, Federal support as a function of gross farm income averaged just 5%. In the 5 dairy states mentioned above, the percent of Federal aid as a function of gross farm income was even less: California, 1%; Wisconsin, 4%; Idaho, Pennsylvania and New York, 2%.