Farm subsidies must die: how agriculture subsidies waste money, distort the economy, and steal from the poor to give to the rich.

• Author: de Rugy, Veronique
• Position: Columns

ON JANUARY 2, President Barack Obama signed a bill designed to avert the fiscal cliff. At the same time, to slightly less fanfare, he averted the "milk cliff." By extending the 2008 farm bill another nine months, he prevented the automatic revival of a 1949 law requiring the federal government to buy dairy products under certain circumstances, effectively setting a floor for the price of milk. While the actual fate of milk prices was far from clear, the milk cliff provided cover to continue the practices of subsidizing wealthy farmers, to the detriment of just about everyone else.

In 2012, the Department of Agriculture (USDA) spent $22 billion on subsidy programs for farmers. Introduced in the 1930s to help struggling small family farms, the subsidies now routinely draw condemnation from both left and right as wasteful corporate welfare. While the number of farms is down 70 percent since the 1930s--only 2 percent of Americans are directly engaged in farming--farmers aren't necessarily struggling anymore. In 2010, the average farm household earned $84,400, up 9.4 percent from 2009 and about 2c percent more than the average household income nationwide.

What's more, a handful of farmers reap most of the benefits from the subsidies: Wheat, corn, soybeans, rice, and cotton have always taken the lion's share of the feds' largesse. The Environmental Working Group (EWG) reports that "since 1995, just 10 percent of subsidized farms--the largest and wealthiest operations--have raked in 74 percent of all subsidy payments. 62 percent of farms in the United States did not collect subsidy payments."

The good news is that our fiscal problems have made these subsidies politically unsustainable. As a result, the farm bill currently under consideration by Congress is set to terminate them. But attempts to wean farmers from the federal teat have proved disastrous in the past.

Take the $4.1 billion the federal government spent on direct payments in 2011. Created in 1996 as a way to get farmers off their addiction to price guarantee programs, these supposedly temporary direct payments are still around. In 2013, a new farm bill, even with the elimination of direct payments, would be a similarly hollow victory. Lawmakers would compensate farmers by expanding another unjustifiable farm subsidy program: crop insurance.

Like most businesses, farms buy insurance policies to protect from potential losses, such as poor yields or declining prices. Unlike most...