Contents
Get the answer to the question, “How much does the government spend on agriculture?” You may be surprised by the answer.
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Introduction
American agriculture is a vital part of the economy, and the government provides a variety of support mechanisms to ensure its continued viability. From subsidies and tax breaks to research and development spending, the agricultural sector benefits from significant government investment.
According to the latest data from the United States Department of Agriculture (USDA), the federal government spent a total of $24.3 billion on agriculture in fiscal year 2017. This figure includes spending on agricultural programs, farm support, food assistance, and other related activities.
The majority of government spending on agriculture goes towards farm subsidies, which are payments made to farmers to encourage them to produce certain crops or engage in certain activities. In 2017, farm subsidies accounted for $16.8 billion of government spending on agriculture, or about 69% of the total.
Other major categories of government spending on agriculture include agricultural research and development ($2.5 billion), food assistance ($1.9 billion), and farm support ($1.6 billion).
Government spending on agriculture has come under scrutiny in recent years, with some critics arguing that it is too high and benefits large agribusinesses more than small family farms. However, others argue that government support is necessary to ensure the continued viability of American agriculture.
Federal government spending on agriculture
The federal government spends a lot of money on agriculture. In fact, it is one of the largest categories of government spending. In 2016, the government spent $136 billion on agriculture. This includes money spent on subsidies, research, and food assistance programs.
United States
According to the Congressional Research Service, federal government spending on agriculture totaled $25.9 billion in fiscal year 2017. The vast majority of this spending ($22.6 billion) went to farm programs, with the remainder going to food and nutrition programs ($2.1 billion), agricultural research ($1.2 billion), and rural development ($0.05 billion).
Total federal spending on agriculture has declined in recent years, from a peak of $29.0 billion in 2010. However, this decline is largely due to the expiration of certain farm programs that were enacted in response to the Great Recession of 2008-2009; when these programs are excluded, federal spending on agriculture has actually increased slightly over this time period.
Federal spending on farm programs is targeted at a variety of objectives, including supporting farm incomes, promoting farm exports, and protecting farmers from losses due to adverse conditions (such as drought or low prices). The largest single program is the Supplemental Nutrition Assistance Program (SNAP), which provides food assistance to low-income individuals and families; in 2017, SNAP accounted for $68.0 billion (or 71 percent) of all federal spending on food and nutrition programs.
Canada
In Canada, the federal government provides support to the agriculture and agri-food sector through programs, regulations and services delivered by three main departments: Agriculture and Agri-Food Canada (AAFC), Employment and Social Development Canada (ESDC) and Health Canada (HC).
The following table shows federal government spending on agriculture in Canada for fiscal years 2013-14 to 2017-18, in millions of Canadian dollars.
2013-14 2,105
2014-15 2,153
2015-16 2,216
2016-17 2,265
2017-18 2,362
European Union
In the European Union, the common agricultural policy (CAP) is a system of subsidies and other programs designed to support farmers within the EU. The CAP is one of the largest items in the EU budget, accounting for around 40% of all spending.
The CAP has been criticized for its high cost, its distortion of trade, and its negative impact on the environment. In recent years, the EU has made reforms to try to address these problems.
The United States also has a number of programs that support farmers and agriculture. These programs are administered by the U.S. Department of Agriculture (USDA).
The USDA spends about $20 billion per year on farm subsidies. The largest program is the farm bill, which includes subsidies for crop insurance, disaster relief, and conservation programs. Other programs provide direct payments to farmers, support for rural development, and research on agriculture.
State and local government spending on agriculture
In 2018, state and local government spending on agriculture totaled $28.7 billion, or 1.4 percent of all state and local government spending. This was a decrease from $29.6 billion in 2017, but still higher than the $27.1 billion in 2016. The majority of state and local government spending on agriculture goes to the Department of Agriculture, which received $19.8 billion in 2018.
United States
In the United States, state and local government spending on agriculture totaled $13.1 billion in 2017, the most recent year with complete data. This was an increase of $100 million, or 0.8 percent, from 2016. The vast majority of this spending came from state governments, which accounted for $11.7 billion, or 89.4 percent of the total.
The largest share of state and local government spending on agriculture went to highways and streets, which accounted for $4.0 billion, or 30.6 percent of the total. This was followed by public buildings and works, at $2.9 billion (22.1 percent); schools and hospitals, at $2.2 billion (16.8 percent); and agricultural extension services, at $730 million (5.5 percent).
Canada
In recent years, the Canadian federal government has been a big supporter of the country’s agriculture industry. In 2017, the government spent $3.6 billion on agriculture, which was about 7.5 percent of all federal spending.1
The bulk of the government’s agricultural spending goes to subsidies and insurance programs that help farmers when they are struggling financially. For example, in 2017, the government spent $1.9 billion on crop insurance and $815 million on income support programs.2 The government also spends money on research and development, marketing, and infrastructure projects that benefit the agriculture industry.
While the Canadian federal government is the biggest source of agricultural funding, provincial and municipal governments also contribute to the industry’s bottom line. In total, Canadian state and local governments spend billions of dollars every year on agriculture-related activities.
European Union
In 2018, the European Union (EU) spent €57 billion on CAP measures, down from a peak of €107 billion in 2013. The largest items of expenditure are direct payments to farmers (approximately €40 billion in 2018), rural development programmes (€10 billion) and market-related expenditure, such as intervention buying and export subsidies (€5 billion).
The EU has been gradually reforming the CAP since the early 2000s. The most recent major reform was agreed in 2013 and implemented in 2014-16. The main changes introduced were:
-A gradual shift from production-based subsidies (‘ Pillar 1 ’) to rural development measures (‘Pillar 2’).
-The capping of direct payments at €300,000 per farm and the introduction of ‘greening’ payments, which require farmers to implement certain environmentally-friendly practices.
-Making a greater proportion of CAP funds conditional on compliance with cross-compliance standards, such as those relating to environmental protection, animal welfare and public health.
Conclusion
The government spends a lot on agriculture, but the amount varies depending on the year. In general, though, the government seems to be investing more in agriculture than it did in the past.
