Yesterday I showed you that agricultural subsidies lift about 35,000 farmers above the poverty line.1 The question you should ask yourself, dear reader (hi dad!), is whether that really lifted them out of poverty in “the future is bright and I can’t wait to plant another crop b/c next year will be THE year” sense, or in the “I hope we get our subsidy check again next year because I want to keep our subscription to HBO” sense. Unfortunately, there is not a lot of good evidence on this.2 But here’s some interesting suggestive evidence I’ve dug up.
In 2006 133,698 farms were labelled “Limited Resource” farms by the USDA. These folks have low sales, low assets, and low income. But in 2007 only 45,990 (34 percent) of them were again labelled “Limited Resource” farms. This in spite of the fact that there were 50,000 more Limited Resource farms in 2007. In other words, it looks like poverty is transitory for most poor farmers in the U.S.
The next question you should ask yourself is what happens when we remove their safety net, i.e., direct payments? Will they recover on their own, or just fold?
1 Calculated as follows: 2.2 million farmers about 37 percent (820,000) of whom receive subsidies, which lifts 4.2 percent of them (~35,000) above the poverty line.
2 Major gripe number 1: the USDA doesn’t consistently ask the same farmers the same questions year after year. So it’s impossible to answer this and many more fundamental questions.