Equality of Income and Largesse of American Rice

President Obama on several occasions has made critical statements that our capitalist economic system has so aggravated the degree of income inequality in America that this is now the “most pressing issue of our age.” The President has even warned Congress that if they are not willing to pursue remedies to this inequitable situation, he would use his Executive Powers to redistribute the flow of income in our economy.

This makes one wonder whether our federal government can produce a credible claim that it could equalize American income flows across families, especially when many current examples of public policy appear to benefit a privileged few at the expense of the general tax payer. A quick look at federal agricultural policy is quite revealing.

The Environmental Working Group (EWG) is an environmental health research and advocacy organization that has created a breakdown of federal agricultural subsidies in the U.S. during the period of 1995-2012. Their website states that a total of over $292 billion in agricultural subsidies were distributed by the federal government during this 17 year period. Crop insurance and crop subsidies comprised over 78 percent (over $227 billion) of these total subsidies.

The EWG claims that data from the U.S. Department of Agriculture (USDA) show that 62 percent of U.S. farms did not collect any federal subsidies. Of those remaining 38 percent that did, only 10 percent received over three-fourths of all federal subsidies distributed. This implies that fewer than 4 percent (10 percent of the remaining 38 percent) of all farms in the U.S. received more than three-fourths of all federal subsidies.

If subsidies are distributed more or less in direct proportion to the quantity of the commodity crop that is grown, or by the total exposed acreage covered by crop insurance, then these 4 percent of farms who received the lion’s share of federal largesse would also be the richest few organizations with the largest operations. In other words, they would not likely be comprised of a multitude of small-scale farmers struggling to maintain a family farm handed down through the generations.

Indeed, the EWG list data on the concentration of agricultural subsidies paid to recipients reveals that 77 percent of all subsidies during this 17 year period went to only 10 percent of all recipients, and that 26 percent of all subsidies went to only 1 percent of all recipients. Further, just 9 percent of all subsidies went to 80 percent of all recipients. But perhaps this was based on need? Did small, low income farmers comprise the bulk of those subsidy recipients?

EWG makes available a veritable who’s who list of big agri-business corporations and cooperatives who are the principal recipients of federal agricultural subsidies from 1995-2012. At the top of the list is Riceland Foods. According to their own website, they are a corporation with 1900 employees and are “the world’s largest miller and marketer of rice.” They received over a half billion dollars of federal subsidies during this period.

Second on this list, is Producers Rice Mill, with annual sales revenues of over $300 million. They received over one-third billion dollars during this period. Third on the list is Farmer’s Rice Coop, with over a quarter million dollars in annual revenues. Their 2013 financial statement claims a 17 percent rate of return on equity to their many farmer members, yet they received nearly $150 million of federal agricultural subsidies from 1995-2012. Together, these top three recipients earned over a billion dollars of subsidies.

This list is evidence that it is not likely a large number of small-time, family farmers that receive the bulk of federal assistance. Instead, it is the financially stronger and profitable agri-business entities that employ more effective lobbying efforts aimed at federal agencies to more readily redistribute taxpayer moneys towards their own operations — via substantial agricultural subsidization subsidies.

If we are dissatisfied with how capitalism allocates incomes unequally though voluntary exchange in the marketplace, can we really trust the federal government to reallocate involuntarily collected tax payer moneys on a more “equitable” basis? Apparently, only if you are a well-organized collection of rice growers.

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