Tags: Carr | farm | income | subsidy

Farm Income Survived the Recession

By    |   Friday, 31 Aug 2012 09:03 AM

Even with a severe drought, farm income will reach a record high this year. Partly due to government payouts, farmers are doing much better than the rest of the country is.

Recent U.S. Department of Agriculture estimates indicate that farm income should rise this year and top all years thanks to various government aid programs. Part of the income gains will come from higher prices for the crops that survive, but much will come from insurance and other government payments.

Crop insurance is heavily subsidized, with the government paying as much as 80 percent of the premium for some farmers. Insurers receive additional subsidies through a government backstop and would face significant losses without government subsidies.

Since 1990, crop insurance payments to farmers have exceeded the premiums paid by farmers every year except one. In 1994, the premiums paid by the farmers exceeded the losses, according to industry publication Farmdoc Daily.

Data from the Farm Journal show that average farm income has exceeded U.S. average household income every year for the past 16 years, and that trend is likely to continue. The average farm household is now about five times wealthier than the typical American household is.

Unlike the average non-farm household, average farm income has increased since the recession started.

Government subsidies are contributing to the financial success of farmers. This success is partly a redistribution of income from those living in cities to those who continue to farm.

While the media is creating visions of dust bowls and poverty on the farm, the reality is that farmers are doing much better than the rest of the country is and farm subsidies might not be needed any longer.

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Friday, 31 Aug 2012 09:03 AM
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