Farm Bill 2013: Corporate Welfare on Steroids

    Text size

If you're like most Americans, you probably think the primary purpose of the Farm Bill up for congressional authorization this year is to help farmers.

Of course, when it comes to the ways of Washington, nothing is ever that simple.

The 2013 edition of the Farm Bill, which is the main federal legislation for setting U.S. food policy, passed the Senate last week and now moves on to the House.

First crafted during the Great Depression to help struggling farmers, the Farm Bill is renewed and modified every five years. Congress was supposed to renew it last year, but instead merely extended it in deference to the 2012 election.

This year's Farm Bill calls for spending of $955 billion over 10 years and is 1,150 pages long.

And yes, some of that nearly $1 trillion does go to programs that help farmers. But not much of it.

Nearly 80% goes to fund the food stamp program, otherwise known by the more politically correct name of "Supplemental Nutrition Assistance Program" (SNAP) it was given in 2008.

Yet what's most appalling about Farm Bill 2013 is how much it benefits dozens of large U.S. corporations, such as Wal-Mart Stores, Inc. (NYSE: WMT), Monsanto Co. (NYSE: MON), Kraft Foods Group Inc. (Nasdaq: KRFT) and Tyson Foods Inc. (NYSE: TSN).

Back in 2008, $173.5 million was spent on lobbying that year's farm bill, most of it by corporations eager to ensure that their subsidy gravy train wouldn't get derailed.

It was the second-most lobbying money ever spent on any U.S. legislation, falling short only of the $250 million spent on Dodd-Frank.

That kind of money buys top-of-the-line lobbying power.

"On the [2008] Farm Bill, special interests hired an army of well-connected lobbyists to press their case with Congress, including 45 former members of Congress, [and] at least 461 former congressional and executive branch staffers (including 86 that worked for former agriculture committee members or the U.S. Department of Agriculture)," noted a report on Farm Bill lobbying by Food & Water Watch.

It's little wonder that Farm Bills are chock full of corporate welfare.

Digging into Farm Bill 2013 -- Where the SNAP Money Ends Up

While most Americans who receive SNAP benefits need them to get by, most of that money ends up in the hands of big, profitable corporations.

The Farm Bill 2013 allocates $760.5 billion to the food stamp program, and many corporations have gone to great lengths over the years to ensure their share of that pie is as large as possible.

One of the best examples is the soda industry. The Center for Science in the Public Interest estimated that $4 billion in SNAP money was spent on soda purchases in 2010 (this despite that the primary purpose of SNAP is to make sure low-income people can purchase nutritious food).

That's a significant incentive. And sure enough, two All-American companies - Coca Cola Co. (NYSE: KO) and Pepsi Co, Inc. (NYSE: PEP) -- helped get soda eligible for food stamps back in 1964, and continue to spend large sums on making sure it stays that way.

Back in 2008, Coca-Cola spent $513,000 lobbying the Farm Bill; Pepsi spent $437,000.

The fight to keep snacks and sodas on the list of SNAP eligibility is a running battle, and big corporations are definitely winning.

Several states, including New York, Florida, California, and Illinois have tried to modify SNAP eligibility at the state level to try to get more of the benefits spent on healthier foods, but objections from corporate lobbyists halted every effort.

Florida bill 1658 would have prohibited a long list of junk foods, including sodas, sweet foods like ice cream, cupcakes, pies and pudding, and salty snacks like pretzels, popcorn and potato chips.

Companies that fought against the Florida bill - and helped defeat it - included Coca-Cola, Kraft, and the Florida Retail Federation.

"The biggest opponents I have right now are Coca- Cola, the soda companies, the chip companies, and the convenience store operators. Why is that? Because they know they are raking it in from food stamps," Florida State Sen. Ronda Storms, a Republican, told Fox News at the time.

Meanwhile, the stores where SNAP benefits are used also have a keen interest in broadening product eligibility.

While the U.S. Department of Agriculture, which administers SNAP, doesn't release national data on how the benefits are spent at retailers, Massachusetts journalist Michael Morisy found in 2010 that $33 million in SNAP benefits were spent at just nine Wal-Mart stores in the state.

Another group of reporters in Oklahoma in 2011 found that nearly half of all food stamp dollars in that state -- $506 million - were spent at Wal-Mart.

Morisy also found that more than 83% of all SNAP dollars were spent at supermarkets and supercenters. In national terms, that's hundreds of billions of dollars.

Back in 2008, Wal-Mart spent $440,000 lobbying the Farm Bill. Two major supermarket chains weren't far behind, with SuperValu Inc. (NYSE: SVU) spending $367,000 and Safeway Inc. (NYSE: SWY) spending $350,000.

Even some Big Banks benefit from the food stamp program. As Money Morning told you back in April, JPMorgan Chase & Co. (NYSE: JPM) has a vested interest in SNAP (and the growth of the program) because it administers the benefits in 23 states.

Other Corporate Welfare in the Farm Bill 2013

While SNAP is by far the largest portion of Farm Bill 2013, there's plenty of corporate welfare in the other parts of the bill - you know, the parts that actually concern farming...

One of the major parts of the bill concerns subsidies for crop insurance, which makes up $89 billion of the Farm Bill 2013.

Not only does most of the subsidy money end up in the hands of large and profitable agribusiness operations, but the size of the subsidy - between 38% and 80% of premiums - encourages farmers to buy more insurance than they need.

In addition to subsidizing many well-off farmers, the program is a boon to insurance companies, who end up with about 20% of the subsidy money.

Similarly, Farm Bill 2013 provides $41.3 billion for commodity subsidies - a set of programs designed to protect farmers from commodity price fluctuations.

Much of that money ends up in the pockets of seed companies like Monsanto and DuPont Co. (NYSE: DD) and agricultural commodity processing companies like Archer Daniels Midland Co. (NYSE: ADM).

Such companies were among the top-spending lobbyists in 2008, with Monsanto dropping $2.46 million, DuPont $669,000 and Archer Daniels Midland $1.25 million.

Why Doesn't Anyone Do Anything About This?

One of the few things that both the left and right of the political spectrum can agree on is that the generous corporate welfare in the Farm Bill is an outrage.

Yet Farm Bill 2013 is expected to pass easily, as have other Farm Bills in the past.

One reason is that the big corporations spending so lavishly on lobbying the Farm Bill collectively donate millions to the lawmakers that sit on the agriculture committees in the House and Senate.

But another reason is that both Republicans and Democrats have something to gain in the Farm Bill 2013. Republicans from rural farm states get their farm subsidies; Democrats from poor urban areas get their SNAP benefits.

Everybody wins -- except for the American taxpayer.

Related Articles: