For other versions of this document, see http://wikileaks.org/wiki/CRS-RL32590 ------------------------------------------------------------------------------ Order Code RL32590 CRS Report for Congress Received through the CRS Web Average Farm Subsidy Payments, by State, 2002 September 16, 2004 Jasper Womach Specialist in Agricultural Policy Resources, Science, and Industry Division Congressional Research Service ~ The Library of Congress Average Farm Subsidy Payments, by State, 2002 Summary The U.S. Department of Agriculture makes direct subsidy payments through the Commodity Credit Corporation to farmers for commodity price and income support, certain conservation and environmental activities, and some disaster losses. In 2002, these direct farm subsidy payments amounted to $12.151 billion. This report examines the distribution of these payments among states, calculates the average size of payments going to recipient farms in each state, and distinguishes between payments received by farm operators and landlords. This information is intended to aid in policy debates about subsidizing some farms but not others, changing per-person payment limits, and the altering eligibility rules for landlords to receive payments. More money went to Texas ($1.2 billion) than any other state. Texas along with the next 10 leading states received 56% of total farm subsidy payments. These states were largely concentrated in the nation's central farm belt, where much of the subsidized corn, soybeans, wheat, cotton, and rice are produced. Also ranking high were California (due to cotton and rice) and Georgia (due to peanuts). The subsidy payments were made to the operators and landlords of 707,596 farms (one-third of all farms in the nation). However, in some states a much higher proportion of the farms were subsidized (e.g., North Dakota, 78%, and Iowa, 70%). On average, the payments amounted to $17,172 per subsidized farm. The range was from a low of $3,401 per subsidized farm in West Virginia to a high of $90,214 per subsidized farm in California. Farm operators received an average of $9,251 each and landlords received an average of $5,617 each. Data on state averages obscure the high concentrations of payments to a relatively small proportion of the farms receiving subsidies. While there were a total of 1,705,514 separate "persons" that received payments in 2002, 50% of the subsidy payments went to 85,358 persons (or just 5% of the recipients). This report is intended as a reference and informational resource and is not expected to be regularly updated. Contents Farm Subsidy Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 State-By-State Distribution of Total Farm Subsidy Payments . . . . . . . . . . . . 7 Farms Receiving Subsidy Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Subsidy Payments per Farm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Subsidy Payments to Farm Operators and Landlords . . . . . . . . . . . . . . . . . 19 Concentration of Farm Subsidy Payments . . . . . . . . . . . . . . . . . . . . . . . . . . 27 List of Figures Figure 1. Total Farm Subsidy Payments, 1996-2002 . . . . . . . . . . . . . . . . . . . . . . 2 Figure 2. Farm Subsidy Payments by Major Category, 2002 . . . . . . . . . . . . . . . . 3 Figure 3. Total Farm Subsidy Payments in 2002 . . . . . . . . . . . . . . . . . . . . . . . . . 8 Figure 4. Percentage of Farms Receiving Subsidies in 2002 . . . . . . . . . . . . . . . 12 Figure 5. Average Subsidy Payment per Farm in 2002 . . . . . . . . . . . . . . . . . . . 16 Figure 6. Average Number of Landlords per Farm Receiving Subsidies in 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 List of Tables Table 1. Farm Subsidy Payments, by Program, 2002 . . . . . . . . . . . . . . . . . . . . . . 5 Table 2. Commodity Subsidy Payments, by Commodity, 2002 . . . . . . . . . . . . . . 6 Table 3. Subsidy Payments to Farm Operators and Landlords, by State, 2002 . . 9 Table 4. Proportion of Farms Receiving Subsidy Payments, by State, 2002 . . . 13 Table 5. Total Subsidy Payments Per Farm, by State, 2002 . . . . . . . . . . . . . . . . 17 Table 6. Subsidy Recipients Per Farm, by State, 2002 . . . . . . . . . . . . . . . . . . . . 21 Table 7. Average Subsidy Payments to Farm Operators, by State, 2002 . . . . . . 23 Table 8. Average Subsidy Payments to Landlords, by State, 2002 . . . . . . . . . . . 25 Table 9. Farm Subsidy Payments Reach a Large Number of Recipients, But Most of the Money Goes to a Few . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Average Farm Subsidy Payments, by State, 2002 Most federal farm subsidies are made as mandatory direct payments to producers from the U.S. Department of Agriculture's (USDA's) Commodity Credit Corporation (CCC).1 These include commodity price and income support programs, certain conservation programs, and select disaster assistance programs. CCC direct payments to farmers in 2002 are examined in this report.2 The primary data sources are the 2002 Census of Agriculture (available at [http://www.nass.usda.gov/census/]) and the Environmental Working Group's (EWG's) Farm Subsidy Database (available at [http://ewg.org/farm/home.php]). The EWG database is a compilation from CCC payment information supplied by USDA's Farm Service Agency (FSA). FSA's national network of county offices administers the subsidy programs and writes the CCC checks to the subsidy recipients.3 These two data sets facilitate a state-by state examination of payments and the division of payments between farm operators and landlords. There is unpredictability about the timing and size of market price movements as well as natural disasters. Consequently, the size of farm subsidies varies from year to year. Figure 1 shows that from 1995 through 2002 annual farm subsidy payments ranged from a low of $7.2 billion to a high of $23.5 billion, averaging $14.5 billion annually over the eight-year period.4 Commodity price and income support accounts 1 The term mandatory means that the payments are not dependent on annual congressional appropriations. Payment obligations to farmers meeting the rules of the various subsidy programs are covered by the CCC. The CCC uses its borrowing authority to obtain needed funds from the U.S. Treasury. Later, Congress appropriates monies to reimburse the CCC, so it can repay the Treasury. 2 The USDA does administer other farm subsidy programs that are not financed through the CCC and are not examined in this report. Among these are crop insurance (costing about $2 billion annually in premium subsidies), and farm ownership and operating loans for limited resource farmers (costing nearly $200 million annually in loan subsidies). 3 The data obtained by EWG are developed in FSA county offices and pertain to the farm in the county and not the address of the recipient. Recipients are unduplicated but may receive multiple payments from multiple programs throughout the year. Generally, data pertain to the calendar year of payment, but there may be exceptions. 4 The data reported by EWG for 2002 may include a combination of calendar year and crop year data, but are characterized by EWG as calendar year payments. The EWG data shown in Figure 1 differ only slightly from calendar year direct payment data published by USDA's Economic Research Service. The ERS payment numbers for 1995 through 2002 are $7.3 billion, $7.3 billion, $7.5 billion, $12.4 billion, $21.5 billion, $22.9 billion, $20.7 billion, $11.0 billion. The CCC maintains its most detailed accounts by fiscal year, but these (continued...) CRS-2 for most farm subsidy payments. As shown in Figure 2, commodity payments amounted to 73% of CCC's total farm subsidy payments in 2002. The year 2002, with total farm subsidy payments of $12.151 billion, was selected for examination in this report because of data availability. At the same time, it is fairly close to annual average total payments from 1995 through 2002. However, 2002 is unique in that peanut producers received one-time quota buyout payments of about $1 billion. Nearly half the peanut quota buyout payments were concentrated in Georgia ($483 million), with the remainder divided largely among Texas ($153 million), Alabama ($150 million), North Carolina ($107 million), Virginia ($67 million), Oklahoma ($62 million), and Florida ($48 million).5 Figure 1. Total Farm Subsidy Payments, 1996-2002 4 (...continued) records do report payments at the state or recipient level. Data from the 2002 Census of Agriculture are for calendar year 2002. 5 A full description of the peanut marketing quota buyout program is available in CRS Report RL30924, Peanut Program Policy Issues. CRS-3 Figure 2. Farm Subsidy Payments by Major Category, 2002 CRS-4 Farm Subsidy Programs Most commodity support program payments are linked to market prices.6 When market prices decline, commodity support payments increase in order to support the income of producers whose revenue otherwise would decline. Conservation payments are made to encourage farmers to remedy environmental problems. Disaster assistance is provided when crop and livestock production is substantially damaged or destroyed by natural disasters such as drought, flood, and disease, thereby reducing revenue and/or increasing the expenses of producers.7 Table 1 presents a program-by-program list of payments in 2002. Some of the payments (and refunds) shown in Table 1 were authorized by the 1996 farm bill, which originally covered the 1996 through 2002 crops. The 2002 farm bill (P.L. 107- 171, the Farm Security and Rural Investment Act of 2002) was enacted on May 13, 2002, and was made immediately applicable to 2002 crops. So, 2002 was a year of transition from the previous Production Flexibility Contract Payments to the new Direct and Counter-Cyclical Payments. Also, Counter-Cyclical Payments became the permanent replacement for ad hoc Market Loss Payments. 6 Production Flexibility Contract Payments and decoupled Direct Payments for grain and cotton producers are exceptions. These payments were based on historical production of each of the grain and cotton crops only. Recipients of these payments were able to change their mix of crops or even produce nothing. 7 Eligibility requirements for payments are specified in the law for each program. The payment triggers and size of commodity support payments are based upon specified price levels (an indirect income test) or physical damage levels for disaster assistance (a loss test). CRS-5 Table 1. Farm Subsidy Payments, by Program, 2002 Subsidy Number of Payment Per Program / Category Payments Recipients Recipient Total Farm Subsidies $12,150,563,185 1,705,514 $7,124 Commodity Subsidies $8,831,971,671 1,319,110 $6,695 Production Flexibility Contract Payments $3,499,997,512 1,145,725 $3,055 Loan Deficiency Payments (LDPs) $1,296,591,777 334,659 $3,874 Peanut Quota Buyout and Miscellaneous Payments $1,174,674,015 130,516 $9,000 Commodity Certificates $940,785,178 17,972 $52,347 Dairy Payments $848,186,106 71,968 $11,786 Direct and Counter-Cyclical Payments $570,589,219 210,540 $2,710 Marketing Loan Gains $458,385,698 55,588 $8,246 Lamb Payments $32,401,797 17,210 $1,883 Market Loss Assistance, Non- Supported Commodities $5,509,671 18,051 $305 Livestock Indemnity Program $3,173,145 2,099 $1,512 Market Loss Assistance, Supported Commodities $1,417,765 1,287 $1,102 Total LDP-like Grazing Payments $480,947 442 $1,088 Oilseed Program $234,989 360 $653 Wool and Mohair Payments -$16,025 1 -$16,025 Deficiency Payments -$440,125 456 -$965 Conservation Programs $1,991,020,798 429,684 $4,634 Conservation Reserve Program $1,807,458,649 397,707 $4,545 Environmental Quality Incentives Program $118,268,708 23,585 $5,015 Emergency Conservation Program $38,610,984 13,580 $2,843 Wetlands Reserve Program $17,238,484 678 $25,425 Miscellaneous Conservation Payments $8,811,436 1,839 $4,791 Agricultural Conservation Program $631,544 175 $3,609 Disaster Programs $1,327,570,716 469,165 $2,830 Crop Disaster Payments $1,324,095,908 469,068 $2,823 Karnal Bunt Programs $3,044,719 241 $12,634 Livestock Disaster / Emergency $431,298 182 $2,370 Tree Assistance Programs -$216 1 -$216 Source: Environmental Working Group, Farm Subsidy Database, United States: Subsidy Summary, Subsidy Detail, [http://www.ewg.org:16080/farm/regiondetail.php?fips=00000&summlevel=2]. Note: There is overlap of recipients across programs. For example, nearly all recipients of loan deficiency payments also were recipients of production flexibility contract payments. Similarly, many of the recipients of conservation reserve program payments also were recipients of production flexibility contract payments. On average, each individual recipient of farm subsidies received payments related to 1.71 separate programs. Negative numbers represent reimbursements from farmers for excessive or disqualified payments. CRS-6 It often is more helpful to examine commodity support payments by commodity rather than program. Farmers individually tend to specialize in certain commodities and this relates to the climate and soil conditions favored by the different commodities. In the absence of irrigation, corn and soybeans grow especially well in Iowa, Illinois, and surrounding states. Irrigation has made Texas and California leading cotton states, but production remains large in Mississippi, Georgia, and Arkansas. Rice, also, is a southern crop, with Arkansas the leading producer, while irrigation has moved California into second place. Wheat tolerates low rainfall and low humidity, and so is produced primarily in North Dakota, Kansas, Montana, Oklahoma, and Washington. Georgia dominates peanut production, but Texas is second with large irrigated acreage. Table 2 presents the commodity support data by commodity. Table 2. Commodity Subsidy Payments, by Commodity, 2002 Number of Payment Per Commodity Total Payments Recipients Recipient Total Commodity Subsidies $8,831,971,671 1,319,110 $6,695 Corn $1,981,564,489 858,077 $2,309 Cotton $1,669,746,908 127,582 $13,088 Peanuts $1,092,846,187 63,139 $17,309 Rice $1,073,167,886 34,888 $30,760 Wheat $975,272,805 750,825 $1,299 Dairy $848,347,339 71,976 $11,787 Soybeans $670,801,852 250,622 $2,677 Sorghum $188,981,974 312,031 $606 Barley $82,801,044 182,657 $453 Apples $74,334,966 6,469 $11,491 Sugar $44,288,049 5,109 $8,669 Sheep meat $32,401,797 17,210 $1,883 Sunflower seed $6,518,597 5,910 $1,103 Oats $6,226,386 345,197 $18 Tobacco $4,990,960 17,623 $283 Safflower seed $1,885,304 1,037 $1,818 Source: Environmental Working Group, Farm Subsidy Database, United States Summary, 2002 [http://www.ewg.org/farm/region.php?fips=00000&progcode=total&yr=2002] Note: There is overlap of recipients across commodities. For example, many recipients of corn subsidies also were recipients of soybean subsidies. CRS-7 State-By-State Distribution of Total Farm Subsidy Payments Figure 3 and Table 3 show the geographic distribution of $12.151 billion in total subsidy payments. Predictably, the farm states in the agricultural heartland of the country from the Canadian border to the Gulf of Mexico received most of the subsidy payments. The state receiving the largest amount was Texas, with nearly $1.209 billion, followed by Iowa, Georgia, Arkansas, California, Illinois, and Nebraska, each receiving over $500 million. There were 2.129 million farms in the United States in 2002 according to the 2002 Census of Agriculture, which defines a farm as producing and selling $1,000 or more in agricultural products. The state with the largest number of farms was Texas (about 229,000), followed by Missouri (about 107,000). Not all farms in the nation received subsidy payments. Eligibility is linked to the production of certain commodities or to the adoption of certain conservation practices. Commodities that received mandatory federal price and income support payments included wheat, corn, sorghum, barley, oats, rice, cotton, soybeans, sunflower seed, rapeseed, canola, safflower, flaxseed, mustard seed, crambe, sesame seed, peanuts, dry peas, lentils, small chickpeas, milk, sugar, wool, mohair, honey, and tobacco. Major categories of commodities are not supported, including fruits, vegetables, tree nuts, livestock meat, greenhouse and nursery crops, and hay and forage crops. Farm cash receipts from sales of supported commodities amounted to about $53 billion in 2002, or 28% of the $193 billion in national total commodity cash receipts in 2002.8 Some commodities not receiving mandatory support received disaster assistance and ad hoc market loss assistance payments in 2002. 8 Calculated from USDA, Economic Research Service, data on farm cash receipts. CRS-8 Figure 3. Total Farm Subsidy Payments in 2002 Million $ $0-$100M $101-$400M $400M-$1,200M Based on Environmental Working Group, Farm Subsidy Database. Farm subsidy payments in 2002 totaled $12.151 billion, of which: ! Commodity support payments totaled $8.832 billion, including: -- Corn, $1.982 billion -- Cotton, $1.670 billion -- Peanuts, $1.092 billion -- Rice, $1.073 billion -- Wheat, $0.975 billion -- Soybeans, $0.671 billion ! Conservation payments totaled $1.991 billion, including: -- Conservation Reserve Program payments of $1.807 ! Disaster payments totaled $1.328 billion. The top 11 states received $6.844 billion in farm subsidy payments (56.3% of the U.S. total): ! Texas, $1,209 million (9.9%) ! Iowa, $740 million (6.1%) ! Georgia, $661 million (5.4%) ! Arkansas, $660 million (5.4%) ! California, $652 million (5.4%) ! Illinois, $615 million (5.1%) ! Nebraska, $539 million (4.4%) ! Minnesota, $468 million (3.8%) ! Kansas, $457 million (3.8%) ! Mississippi, $438 million (3.6%) ! Missouri, $406 million (3.3%) CRS-9 Table 3. Subsidy Payments to Farm Operators and Landlords, by State, 2002 Rank State Payments to Payments to Total Payments Operators Landlords Share of Share of Share of Total Total US Total (million $) (%) (million $) (%) (million $) (%) All States $6,545.7 54% $5,604.9 46% $12,150.6 100.0% 1 Texas $529.0 44% $680.0 56% $1,208.9 9.9% 2 Iowa $538.9 73% $201.1 27% $740.0 6.1% 3 Georgia $118.5 18% $542.1 82% $660.7 5.4% 4 Arkansas $238.6 36% $421.3 64% $659.9 5.4% 5 California $168.7 26% $483.4 74% $652.1 5.4% 6 Illinois $412.6 67% $202.5 33% $615.1 5.1% 7 Nebraska $347.5 64% $191.7 36% $539.2 4.4% 8 Minnesota $350.7 75% $116.8 25% $467.5 3.8% 9 Kansas $328.2 72% $128.6 28% $456.8 3.8% 10 Mississippi $145.5 33% $292.3 67% $437.8 3.6% 11 Missouri $264.5 65% $141.4 35% $405.9 3.3% 12 North Dakota $293.1 76% $90.6 24% $383.6 3.2% 13 Indiana $224.7 67% $110.2 33% $334.9 2.8% 14 South Dakota $215.1 64% $119.5 36% $334.6 2.8% 15 Wisconsin $247.9 75% $84.5 25% $332.4 2.7% 16 North Carolina $97.7 30% $226.2 70% $323.9 2.7% 17 Oklahoma $149.9 47% $167.3 53% $317.2 2.6% 18 Alabama $77.9 27% $211.3 73% $289.2 2.4% 19 Ohio $197.4 70% $83.6 30% $281.0 2.3% 20 Louisiana $123.6 47% $139.1 53% $262.7 2.2% 21 Montana $210.7 80% $51.2 20% $261.9 2.2% 22 Washington $133.8 62% $82.0 38% $215.7 1.8% 23 Colorado $125.8 60% $85.0 40% $210.8 1.7% 24 Michigan $144.8 76% $45.9 24% $190.7 1.6% 25 Virginia $54.7 30% $127.3 70% $181.9 1.5% 26 Idaho $93.9 57% $71.5 43% $165.4 1.4% 27 New York $110.2 69% $49.1 31% $159.4 1.3% 28 Tennessee $59.2 41% $86.5 59% $145.7 1.2% 29 Kentucky $94.1 68% $44.2 32% $138.3 1.1% 30 Pennsylvania $85.8 66% $44.4 34% $130.2 1.1% 31 Florida $21.8 26% $61.1 74% $82.9 0.7% 32 Oregon $52.1 65% $28.1 35% $80.2 0.7% 33 New Mexico $50.2 68% $24.1 32% $74.3 0.6% 34 Arizona $31.8 45% $38.5 55% $70.2 0.6% 35 Wyoming $37.9 57% $28.2 43% $66.1 0.5% 36 South Carolina $38.4 59% $27.0 41% $65.4 0.5% CRS-10 Rank State Payments to Payments to Total Payments Operators Landlords Share of Share of Share of Total Total US Total (million $) (%) (million $) (%) (million $) (%) 37 Utah $26.7 49% $27.6 51% $54.3 0.4% 38 Maryland $33.1 68% $15.8 32% $49.0 0.4% 39 Vermont $24.4 67% $12.1 33% $36.4 0.3% 40 Maine $8.7 63% $5.1 37% $13.7 0.1% 41 Delaware $8.6 72% $3.3 28% $11.9 0.1% 42 Nevada $4.3 38% $7.1 62% $11.4 0.1% 43 New Jersey $4.4 69% $2.0 31% $6.5 0.1% 44 Massachusetts $4.3 70% $1.8 30% $6.1 0.0% 45 West Virginia $5.2 91% $0.5 9% $5.7 0.0% 46 Connecticut $3.7 74% $1.3 26% $4.9 0.0% 47 New Hampshire $3.8 103% -$0.1 -3% $3.7 0.0% 48 Hawaii $0.9 46% $1.0 54% $1.9 0.0% 49 Alaska $1.8 99% $0.0 1% $1.8 0.0% 50 Rhode Island $0.5 81% $0.1 19% $0.7 0.0% Source: Data on subsidy payments to farm operators are based on payments to farms reported in the 2002 Census of Agriculture. Data on total subsidy payments are from the Environmental Working Group, Farm Subsidy Database. Payments to non-operator recipients are calculated as the difference between total payments and payments to operators. CRS-11 Farms Receiving Subsidy Payments Of the nation's 2.1 million farms, 707,596 (33%) received subsidy payments and 1,421,386 (67%) did not receive payments in 2002. Figure 4 and Table 4 show the percentage of farms in each state that received payments in 2002. In North Dakota, 78% of farms received subsidy payments, followed by Iowa, Illinois, Nebraska, South Dakota, Kansas, and Minnesota, each with payments going to more than half the farms in the state. This concentration reflects the specialization of farms in these states in the production of subsidized feed grains, oilseeds, and wheat. Generally the other states proportionally have more livestock and specialty crops that do not receive price support. CRS-12 Figure 4. Percentage of Farms Receiving Subsidies in 2002 Percent of All Farms 0%-19% 20%-49% 50%-78% Based on data from USDA, 2002 Census of Agriculture Nationally, 33% of farms received subsidies (707,596 farms out of 2,128,982). More than 50% of the farms in each of seven states received subsidies in 2002. This proportion of subsidized farms reflects highly concentrated production of wheat, corn, and/or soybeans by most farms in these state. These states were: ! North Dakota (78%) ! Iowa (70%) ! Illinois (66%) ! Nebraska (65%) ! South Dakota (64%) ! Kansas (61%) ! Minnesota (54%) CRS-13 Table 4. Proportion of Farms Receiving Subsidy Payments, by State, 2002 Farms w/ Share of Farms Rank State All Farms Subsidies w/ Subsidies (%) All States 2,128,982 707,596 33% 1 North Dakota 30,619 23,892 78% 2 Iowa 90,655 63,074 70% 3 Illinois 73,027 47,857 66% 4 Nebraska 49,355 32,007 65% 5 South Dakota 31,736 20,259 64% 6 Kansas 64,414 39,191 61% 7 Minnesota 80,839 43,927 54% 8 Wisconsin 77,131 37,234 48% 9 Indiana 60,296 26,841 45% 10 Montana 27,870 12,389 44% 11 Missouri 106,797 43,379 41% 12 Ohio 77,797 28,851 37% 13 Michigan 53,315 18,133 34% 14 Wyoming 9,422 3,163 34% 15 Colorado 31,369 10,163 32% 16 Georgia 49,311 15,510 31% 17 Mississippi 42,186 12,383 29% 18 Oklahoma 83,300 24,316 29% 19 Alabama 45,126 12,863 29% 20 Idaho 25,017 7,098 28% 21 Maryland 12,198 3,372 28% 22 Louisiana 27,413 7,562 28% 23 New York 37,255 9,896 27% 24 Kentucky 86,541 22,825 26% 25 Delaware 2,391 617 26% 26 South Carolina 24,541 6,112 25% 27 North Carolina 53,930 12,312 23% 28 New Mexico 15,170 3,246 21% 29 Pennsylvania 58,105 11,991 21% 30 Washington 35,939 7,332 20% 31 Vermont 6,571 1,296 20% 32 Utah 15,282 2,987 20% 33 Virginia 47,606 9,206 19% 34 Texas 228,926 42,217 18% 35 Tennessee 87,595 16,034 18% 36 Maine 7,196 1,244 17% 37 Arkansas 47,483 7,811 16% 38 Nevada 2,989 439 15% 39 Alaska 609 72 12% 40 Arizona 7,294 833 11% 41 Oregon 40,033 4,430 11% 42 New Hampshire 3,363 359 11% 43 California 79,631 7,228 9% 44 West Virginia 20,812 1,675 8% CRS-14 Farms w/ Share of Farms Rank State All Farms Subsidies w/ Subsidies (%) 45 Massachusetts 6,075 415 7% 46 Connecticut 4,191 254 6% 47 Rhode Island 858 52 6% 48 New Jersey 9,924 582 6% 49 Florida 44,081 2,554 6% 50 Hawaii 5,398 113 2% Source: Data on farms and farms receiving subsidies are from the 2002 Census of Agriculture. CRS-15 Subsidy Payments per Farm Total subsidy payments of $12.151 billion divided among 707,596 recipient farms is equal to $17,172 per farm. However, the average by state ranges from $90,214 per farm in California to $3,401 in West Virginia (see Figure 5 and Table 5). Generally, the states with the largest per-farm payments are those that produce rice and cotton. Other states receiving the larger per-farm payments in 2002 benefitted from peanut quota buyout payments, disaster payments, and apple market loss assistance payments. While each farm has an operator, there may be other individuals associated with the farm who are eligible to receive subsidy payments. Generally, individuals must be actively engaged in the farming operation to receive subsidy payments. Actively engaged means providing a significant contribution of capital, land, or equipment, as well as a significant contribution of personal labor or active personal management to the operation. This personal contribution of labor or management must be in proportion to the share of the farm's profits and losses and it must be at risk. A landlord receiving crop share rent is likely considered actively engaged while a landlord receiving cash rent is not actively engaged.9 9 The interpretation and application of the legal requirement concerning the phrase "actively engaged" was examined in General Accounting Office testimony titled Farm Program Payments: USDA Should Correct Weaknesses in Regulations and Oversight to Better Ensure Recipients Do Not Circumvent Payment Limitations before the Senate Committee on Finance on June 16, 2004 (GAO-04-861T). CRS-16 Figure 5. Average Subsidy Payment per Farm in 2002 $ per Farm $ 3K-$15K $15K-$30K $30K-$90K Source: Based on data from USDA, 2002 Census of Agriculture, and Environmental Working Group, Farm Subsidy Database. Subsidy payments per farm (among only the farms receiving subsidies) averaged $17,172 in 2002. The highest per-farm payments were made in California, Arkansas, and Arizona. ! California ($90,214 per farm) is notable for large rice, cotton, and dairy farms dominating the farm subsidy payments. ! Arkansas ($84,480 per farm) is the leading rice state, with many of the rice farms being large. Also, rice cooperatives in Arkansas may be the initial recipient of payments that are subsequently distributed among member farms. ! Arizona ($84,329 per farm) is notable for payments to a few, but large, cotton, dairy, and peanut farms. ! Large per-farm payments in Georgia and Florida reflect peanut quota buyout payments that were unique to 2002. ! Large per-farm payments in Mississippi reflect payments for peanuts, rice, cotton, and milk. ! Large per-farm payments in Louisiana reflect payments for rice, cotton, and milk. CRS-17 Table 5. Total Subsidy Payments Per Farm, by State, 2002 Subsidy Per Farms w/ Total Payments Recipient Farm Rank State Subsidies (thousand $) (average) All States 707,596 $12,150,563 $17,172 1 California 7,228 $652,065 $90,214 2 Arkansas 7,811 $659,871 $84,480 3 Arizona 833 $70,246 $84,329 4 Georgia 15,510 $660,662 $42,596 5 Mississippi 12,383 $437,762 $35,352 6 Louisiana 7,562 $262,702 $34,740 7 Florida 2,554 $82,881 $32,451 8 Washington 7,332 $215,736 $29,424 9 Texas 42,217 $1,208,944 $28,636 10 Vermont 1,296 $36,441 $28,118 11 North Carolina 12,312 $323,911 $26,309 12 Nevada 439 $11,378 $25,918 13 Alaska 72 $1,783 $24,766 14 Idaho 7,098 $165,428 $23,306 15 New Mexico 3,246 $74,323 $22,897 16 Alabama 12,863 $289,183 $22,482 17 Montana 12,389 $261,945 $21,143 18 Wyoming 3,163 $66,085 $20,893 19 Colorado 10,163 $210,758 $20,738 20 Virginia 9,206 $181,928 $19,762 21 Connecticut 254 $4,946 $19,472 22 Delaware 617 $11,939 $19,350 23 Utah 2,987 $54,304 $18,180 24 Oregon 4,430 $80,177 $18,099 25 Hawaii 113 $1,911 $16,911 26 Nebraska 32,007 $539,214 $16,847 27 South Dakota 20,259 $334,633 $16,518 28 New York 9,896 $159,377 $16,105 29 North Dakota 23,892 $383,645 $16,057 30 Massachusetts 415 $6,070 $14,627 31 Maryland 3,372 $48,953 $14,517 32 Oklahoma 24,316 $317,194 $13,045 33 Illinois 47,857 $615,111 $12,853 34 Rhode Island 52 $651 $12,519 35 Indiana 26,841 $334,917 $12,478 36 Iowa 63,074 $739,968 $11,732 37 Kansas 39,191 $456,829 $11,656 38 New Jersey 582 $6,476 $11,127 39 Maine 1,244 $13,745 $11,049 40 Pennsylvania 11,991 $130,179 $10,856 41 South Carolina 6,112 $65,358 $10,693 42 Minnesota 43,927 $467,542 $10,644 43 Michigan 18,133 $190,686 $10,516 CRS-18 Subsidy Per Farms w/ Total Payments Recipient Farm Rank State Subsidies (thousand $) (average) 44 New Hampshire 359 $3,701 $10,308 45 Ohio 28,851 $281,031 $9,741 46 Missouri 43,379 $405,873 $9,356 47 Tennessee 16,034 $145,723 $9,088 48 Wisconsin 37,234 $332,425 $8,928 49 Kentucky 22,825 $138,257 $6,057 50 West Virginia 1,675 $5,696 $3,401 Source: Data on the number of farms receiving subsidies are from the 2002 Census of Agriculture. Data on total subsidy payments are from the Environmental Working Group, Farm Subsidy Database. CRS-19 Subsidy Payments to Farm Operators and Landlords There were 1,705,514 separate recipients of farm subsidy payments in 2002, associated with 707,596 farms. In nearly all cases, the recipients were individual farm operators and non-operator landlords. However, in some cases the recipients were legal business entities, such as partnerships, corporations, cooperatives, and trusts involving more than one individual. In the terminology of the law each of the farm operators, landlords, or other legal entities is called a "person" and is subject to limits on the size of payments from subsidy programs.10 A simplifying assumption is made for purposes of this analysis that each of the 707,596 farms receiving subsidy payments has a single operator. It is further assumed the difference between the 707,596 farm operators and the 1,705,514 total subsidy recipients (equaling 997,918) are farm landlords.11 For the most part, these 997,918 landlords are the owners of farmland that is rented to operators. Often, the landlords are relatives of farm operators and neighboring landowners who have left farming. It is typical for farmland to be owned collectively by the children of a former farm family, none of whom remains in farming but who continue to retain ownership of their former family farm. Given the aforementioned assumption, Figure 6 and Table 6 show the proportion of landlords to farm operators in each state. On average there were 1.41 landlords receiving subsidy payments for every farm operator who received payments. However, there was a range among states from 4.05 landlords per operator in Arizona down to 0.44 in Alaska. Differences between states in the ratio of farm operators to landlords reflect differing commodity specializations, regional approaches to farm consolidation, and regional attitudes toward farmland ownership. Also, annual per-person payment limits create an incentive to add actively engaged landlords rather than expand the acreage owned by the farm operator. The national average farm subsidy payment to each farm operator in 2002 was $9,251, and the average subsidy to each non-operator recipient was $5,617. Since there were 1.41 off-farm landlords for each farm, the average subsidy per farm to off- farm landlords was $7,921 (86% of the amount paid to each operator). Table 7 shows the distribution payments to farm operators and Table 8 shows the distribution of payments to off-farm landlords. 10 See CRS Report RS21779, Grains, Cotton, Oilseeds, and Peanuts: Payments Under the 2002 Farm Bill, for more information on per-person payment limits related to commodity support programs. 11 To be eligible for commodity payments, a person must be actively engaged in farming. This can be achieved by providing a significant contribution of capital, land, or equipment, as well as a significant contribution of personal labor or active personal management to the operation. Few people qualify for commodity payments who are not operators or landlords. CRS-20 Figure 6. Average Number of Landlords per Farm Receiving Subsidies in 2002 Landlords per Farm 0.4-1.2 1.3-2.2 2.3-4.1 Source: Based on data from USDA, 2002 Census of Agriculture, and Environmental Working Group, Farm Subsidy Database. The national average number of landlords (non-operator recipients) per farm that received subsidies in 2002 was 1.41. ! Arizona (4.1) and Louisiana (3.2) had the largest number of landlords per farm that received subsidies. ! In the northeast and along the northern border of the country there were more full owner-operators. These states fell below the national average of 1.41 landlord per farm. CRS-21 Table 6. Subsidy Recipients Per Farm, by State, 2002 Landlord All Operator Landlord Recipients Rank State Recipients Recipients Recipients Per Farm All States 1,705,514 707,596 997,918 1.41 1 Arizona 4,209 833 3,376 4.05 2 Louisiana 31,889 7,562 24,327 3.22 3 North Carolina 46,599 12,312 34,287 2.78 4 Arkansas 28,758 7,811 20,947 2.68 5 Florida 8,340 2,554 5,786 2.27 6 Kentucky 74,083 22,825 51,258 2.25 7 Tennessee 51,298 16,034 35,264 2.20 8 Alabama 40,477 12,863 27,614 2.15 9 Georgia 46,951 15,510 31,441 2.03 10 Nevada 1,257 439 818 1.86 11 Kansas 111,751 39,191 72,560 1.85 12 Illinois 134,870 47,857 87,013 1.82 13 Virginia 25,375 9,206 16,169 1.76 14 New Mexico 8,916 3,246 5,670 1.75 15 California 19,780 7,228 12,552 1.74 16 Colorado 27,164 10,163 17,001 1.67 17 Indiana 71,615 26,841 44,774 1.67 18 Texas 111,512 42,217 69,295 1.64 19 South Carolina 16,134 6,112 10,022 1.64 20 Idaho 18,505 7,098 11,407 1.61 21 Oklahoma 63,183 24,316 38,867 1.60 22 Washington 18,650 7,332 11,318 1.54 23 Nebraska 78,240 32,007 46,233 1.44 24 Mississippi 29,444 12,383 17,061 1.38 25 Utah 7,063 2,987 4,076 1.36 26 Oregon 10,474 4,430 6,044 1.36 27 Delaware 1,436 617 819 1.33 28 Wyoming 7,360 3,163 4,197 1.33 29 Hawaii 253 113 140 1.24 30 Ohio 64,311 28,851 35,460 1.23 31 Montana 27,591 12,389 15,202 1.23 32 South Dakota 44,982 20,259 24,723 1.22 33 Massachusetts 909 415 494 1.19 34 Missouri 94,784 43,379 51,405 1.19 35 Vermont 2,821 1,296 1,525 1.18 36 Michigan 38,093 18,133 19,960 1.10 37 North Dakota 49,089 23,892 25,197 1.05 38 Maine 2,533 1,244 1,289 1.04 39 Rhode Island 105 52 53 1.02 40 West Virginia 3,297 1,675 1,622 0.97 41 Connecticut 494 254 240 0.94 42 New Jersey 1,129 582 547 0.94 43 Maryland 6,510 3,372 3,138 0.93 44 Iowa 119,308 63,074 56,234 0.89 CRS-22 Landlord All Operator Landlord Recipients Rank State Recipients Recipients Recipients Per Farm 45 New Hampshire 643 359 284 0.79 46 New York 17,087 9,896 7,191 0.73 47 Minnesota 75,310 43,927 31,383 0.71 48 Wisconsin 63,345 37,234 26,111 0.70 49 Pennsylvania 19,992 11,991 8,001 0.67 50 Alaska 104 72 32 0.44 Source: Data on the number of subsidy recipients are from the Environmental Working Group, Farm Subsidy Database. The data on the number of farm operators receiving subsidies are assumed to equal the number of farms receiving subsidies, which are from the 2002 Census of Agriculture. CRS-23 Table 7. Average Subsidy Payments to Farm Operators, by State, 2002 Rank State Operator Payments to Operators Recipients Total $ (thousand) $ Per Operator All States 707,596 $6,545,678 $9,251 1 Arizona 833 $31,760 $38,127 2 Arkansas 7,811 $238,577 $30,544 3 Alaska 72 $1,765 $24,514 4 California 7,228 $168,698 $23,340 5 Vermont 1,296 $24,377 $18,809 6 Washington 7,332 $133,763 $18,244 7 Montana 12,389 $210,749 $17,011 8 Louisiana 7,562 $123,599 $16,345 9 New Mexico 3,246 $50,201 $15,465 10 Connecticut 254 $3,681 $14,492 11 Delaware 617 $8,643 $14,008 12 Idaho 7,098 $93,934 $13,234 13 Texas 42,217 $528,979 $12,530 14 Colorado 10,163 $125,774 $12,376 15 North Dakota 23,892 $293,067 $12,266 16 Wyoming 3,163 $37,913 $11,986 17 Oregon 4,430 $52,085 $11,757 18 Mississippi 12,383 $145,508 $11,751 19 New York 9,896 $110,234 $11,139 20 Nebraska 32,007 $347,517 $10,858 21 New Hampshire 359 $3,823 $10,649 22 South Dakota 20,259 $215,084 $10,617 23 Massachusetts 415 $4,268 $10,284 24 Rhode Island 52 $528 $10,154 25 Nevada 439 $4,322 $9,845 26 Maryland 3,372 $33,131 $9,825 27 Utah 2,987 $26,669 $8,928 28 Illinois 47,857 $412,636 $8,622 29 Iowa 63,074 $538,896 $8,544 30 Florida 2,554 $21,818 $8,543 31 Kansas 39,191 $328,244 $8,375 32 Indiana 26,841 $224,701 $8,372 33 Minnesota 43,927 $350,709 $7,984 34 Michigan 18,133 $144,771 $7,984 35 North Carolina 12,312 $97,696 $7,935 36 Hawaii 113 $886 $7,841 37 Georgia 15,510 $118,535 $7,642 38 New Jersey 582 $4,441 $7,631 39 Pennsylvania 11,991 $85,794 $7,155 40 Maine 1,244 $8,664 $6,965 41 Ohio 28,851 $197,425 $6,843 42 Wisconsin 37,234 $247,942 $6,659 CRS-24 Rank State Operator Payments to Operators Recipients Total $ (thousand) $ Per Operator 43 South Carolina 6,112 $38,384 $6,280 44 Oklahoma 24,316 $149,942 $6,166 45 Missouri 43,379 $264,475 $6,097 46 Alabama 12,863 $77,930 $6,058 47 Virginia 9,206 $54,677 $5,939 48 Kentucky 22,825 $94,053 $4,121 49 Tennessee 16,034 $59,231 $3,694 50 West Virginia 1,675 $5,180 $3,093 Source: Operator recipients are assumed to match data on farms receiving subsidies as reported by the 2002 Census of Agriculture. CRS-25 Table 8. Average Subsidy Payments to Landlords, by State, 2002 Rank State Landlord Payments to Landlords Recipients Total $ $ Per Landlord (thousand) All States 997,918 $5,604,885 $5,617 1 California 12,552 $483,367 $38,509 2 Arkansas 20,947 $421,294 $20,112 3 Georgia 31,441 $542,127 $17,243 4 Mississippi 17,061 $292,254 $17,130 5 Arizona 3,376 $38,486 $11,400 6 Florida 5,786 $61,063 $10,553 7 Texas 69,295 $679,965 $9,813 8 Nevada 818 $7,056 $8,626 9 Vermont 1,525 $12,064 $7,911 10 Virginia 16,169 $127,251 $7,870 11 Alabama 27,614 $211,253 $7,650 12 Hawaii 140 $1,025 $7,321 13 Washington 11,318 $81,973 $7,243 14 New York 7,191 $49,143 $6,834 15 Utah 4,076 $27,635 $6,780 16 Wyoming 4,197 $28,172 $6,712 17 North Carolina 34,287 $226,215 $6,598 18 Idaho 11,407 $71,494 $6,268 19 Louisiana 24,327 $139,103 $5,718 20 Pennsylvania 8,001 $44,385 $5,547 21 Connecticut 240 $1,265 $5,270 22 Maryland 3,138 $15,822 $5,042 23 Colorado 17,001 $84,984 $4,999 24 South Dakota 24,723 $119,549 $4,836 25 Oregon 6,044 $28,092 $4,648 26 Oklahoma 38,867 $167,252 $4,303 27 New Mexico 5,670 $24,122 $4,254 28 Nebraska 46,233 $191,697 $4,146 29 Delaware 819 $3,296 $4,025 30 Maine 1,289 $5,081 $3,942 31 Minnesota 31,383 $116,833 $3,723 32 New Jersey 547 $2,035 $3,720 33 Massachusetts 494 $1,802 $3,648 34 North Dakota 25,197 $90,578 $3,595 35 Iowa 56,234 $201,072 $3,576 36 Montana 15,202 $51,196 $3,368 37 Wisconsin 26,111 $84,483 $3,236 38 Missouri 51,405 $141,398 $2,751 39 South Carolina 10,022 $26,974 $2,691 40 Indiana 44,774 $110,216 $2,462 41 Tennessee 35,264 $86,492 $2,453 CRS-26 Rank State Landlord Payments to Landlords Recipients Total $ $ Per Landlord (thousand) 42 Ohio 35,460 $83,606 $2,358 43 Illinois 87,013 $202,475 $2,327 44 Rhode Island 53 $123 $2,321 45 Michigan 19,960 $45,915 $2,300 46 Kansas 72,560 $128,585 $1,772 47 Kentucky 51,258 $44,204 $862 48 Alaska 32 $18 $568 49 West Virginia 1,622 $516 $318 50 New Hampshire 284 -$122 -$431 Source: Data in this table are tabulated from 2002 Census of Agriculture and Environmental Working Group, Farm Subsidy Database, data shown elsewhere in this report. CRS-27 Concentration of Farm Subsidy Payments Data on average payment per farm operator and the average payment per landlord mask the fact that payments were concentrated among a comparatively small proportion of the recipients. Table 9 shows that 85,358 top recipients (5% of all recipients) received 50% of all payments for an average of $70,523 per recipient. Included in the very top recipients are a number of cooperatives, corporations, and trusts that divided the payments among several and sometimes numerous farmers. In addition, several individuals received multi-million dollar payments, particularly in conjunction with the peanut quota buyout. Table 9. Farm Subsidy Payments Reach a Large Number of Recipients, But Most of the Money Goes to a Few % of All % of Number of Total Subsidy Average Payment Recipients Payments Recipients Payments Per Recipient Top 5% 50% 85,358 $6,019,739,668 $70,523 Next 5% 15% 85,359 $1,865,686,784 $21,857 Next 10% 16% 170,718 $1,970,454,705 $11,542 Remaining 80% 19% 1,365,741 $2,294,682,028 $1,680 All Recipients 100% 1,705,514 $12,150,563,185 $7,124 Source: Environmental Working Group, Farm Subsidy Database. ------------------------------------------------------------------------------ For other versions of this document, see http://wikileaks.org/wiki/CRS-RL32590