Every five years a new Farm Bill needs to be passed by Congress. This bill has an enormous impact on everyone involved in agriculture, as so many programs and agricultural services are tied to this bill. However, the name “Farm Bill” is kind of a misnomer because four out of five dollars that are allocated under the farm bill do not go at all into agriculture.
The reason for this is that the Farm Bill is the home for nutrition assistance programs for the impoverished. A prime example of this would be the Supplemental Nutrition Assistance Program or SNAP program. According to the numbers from the Congressional Budget Office, through the latest Farm Bill 80% of outlays went towards nutrition programs.
So this means of the $489 billion that is spent on this latest Farm Bill, $391 billion went to these non-agricultural programs. Of the remaining $98 billion, the money is split between conservation programs, crop insurance, commodity payment programs, and other expenses. The breakdown is in the chart below.
Money for these programs actually goes to farmers, but not all in the same way. Conservation programs are created to accomplish specific goals the government wants to enact on private land, as I detailed in a previous blog post. Often these take the form of cost share programs, where the farmer enacts a conservation technique and the government pays part of the expense of that technique. For example, at one point in time on our place we put up cross fences that were partially paid for through a cost share. This also includes money for the Conservation Reserve Program (CRP), which removes land from farming to be set aside for wildlife habitat.
Crop insurance takes the biggest chunk out of these programs. Basically the premise of crop insurance is like other insurance, that in the case of a disaster, such as a hail storm, the insurance pays to help make up the lost revenue. The reason the government becomes involved in crop insurance is because disasters can be so widespread that a regular, private insurance model can be overwhelmed by a massive drought, like we had in 2012.
Note that insurance for cattle ranchers and farmers is a minute portion of this, as the amount of money dedicated to livestock insurance is limited by law to $20 million per year. While this may seem like a lot, consider with the average ranch size of 200 cattle in Nebraska, it would only be enough for 67 ranchers. And this includes all livestock, including pigs, chickens, sheep, etc.
The last big chunk is the commodity payment programs. This is a major change from previous farm bills, in that the fixed, direct commodity payment made to farmers was eliminated in this farm bill for most commodities (corn and soybeans included). It is important to note that these payments were made for crop production, not livestock. Cattle ranchers and feeders did not receive a direct payment in previous farm bills either.
The main point here is that there is not half a trillion federal dollars freely given to farmers. The vast majority is for nutrition assistance programs. Only 5% goes to commodity payments and cattle farmers and ranchers do not collect any of that. If you are curious as to what government money cattle farmers and ranchers do receive, check out my last blog post on that topic.