Agricultural Subsidies in Developed Countries: History, Rationale, and Global Costs

(II) How Subsidies Exacerbate the Concentration of Agricultural Production On the surface, subsidies appear to be a universal policy aimed at 'supporting agriculture.' In reality, however, they systematically accelerate the concentration of agricultural production—functioning as a 'meat grinder' that consumes small- and medium-sized farms. Mechanism I: Subsidies are allocated based on 'output' and 'land area,' inherently favoring large-scale operators. Subsidies are typically tied to planted acreage, output volume, or livestock headcount—the larger the scale, the greater the subsidy received. Under a $60-billion U.S. subsidy expansion plan, massive funds will flow into agricultural subsidy programs, with 'large farms—especially those in the South—receiving the largest benefits.' In the European Union, 80% of agricultural subsidies go to just 20% of farm operators; although large farms constitute only 8% of all EU farms, they receive 37% of direct payments. The logic governing subsidy distribution is 'the bigger, the more dominant'—scale itself serves as a passport to greater subsidies. Mechanism II: Subsidies depress agricultural commodity prices, squeezing profit margins for small- and medium-sized farms. Subsidies enable large-scale producers to sell commodities below cost, rendering it impossible for smaller farms to turn a profit at such price levels. A U.S. Department of Agriculture (USDA) census reveals a grim reality: fewer than 1.9 million farms remain nationwide, a 7% decline over the past five years; nearly 140,000 farms have permanently closed over the past decade, with an average of 38 farmers signing land transfer agreements daily under pressure from debt, low prices, and competitive expansion. The disappearance of wheat farms is especially stark—down by over 40% compared to two decades ago. A U.S. Congressional report notes that thousands of farms vanished in 2025 alone, stating that 'smaller producers find it increasingly difficult to remain operational.' Mechanism III: Subsidies raise capital barriers for land and equipment, blocking entry and survival for small- and medium-sized farms. Subsidies become capitalized into land values, forcing farms seeking expansion to shoulder higher debt burdens. A single large-scale harvester costs hundreds of thousands of dollars; genetically modified seeds must be repurchased annually. Small- and medium-sized farms receive insufficient subsidies while lacking the financial capacity to bear these high input costs—leaving them inevitably eliminated in the 'race for scale.' The ultimate result: farms with annual revenues exceeding $1 million account for two-thirds of total U.S. agricultural output, while medium-sized farms continue to shrink. Though intended to 'help farmers,' subsidies in practice help large farms absorb and displace smaller ones. (III) Indirect Beneficiaries: Seed, Pesticide, Farm Machinery, and Agri-Finance Industries The impact of agricultural subsidies extends far beyond the commodity markets themselves—they profoundly reshape upstream and downstream industrial structures in agriculture, giving rise to a vast interest group dependent on the subsidy system. Seed Industry: 'Annual Harvesting' Under Patent Monopolies. Agricultural subsidies stimulate large-scale monocropping (e.g., soybeans and corn in the U.S.), creating ideal conditions for the promotion of genetically modified (GM) seeds. Seed giants like Monsanto leverage patent barriers to prevent farmers from saving and replanting seeds, compelling them to purchase new seeds every year. The profit margin per seed grain is multiplied several times over—exceeding even those of many luxury brands. In effect, subsidy policies use taxpayer money to provide 'demand assurance' for seed industry patent monopolies.

The Most Severe Agricultural Crisis in 40 Years: Potential $31-Billion Loss This Year; Iran War Leaves Farmers Unprofitable for Next Two Years! The American Farm Bureau Federation Says Next Year Will Be the Sixth Consecutive Year of Losses for Most U.S. Crops

Pam Johnson, former president of the National Corn Growers Association and a northern Iowa farmer, stated: '(The Iran) war has created enormous uncertainty for us farmers. Farmers are expected to be unprofitable for the next two years.' According to data from the U.S. Energy Information Administration, the national average price of diesel—widely used in farm equipment—has surged to $5.45 per gallon, up from $3.81 before the outbreak of hostilities. Brad Lubben, Professor of Agricultural Economics at the University of Nebraska–Lincoln, also noted increases in interest expenses, labor costs, and farm machinery prices. 'If you examine every component of the production budget, most have risen sharply over the past few years.' Drought and Extreme Weather Compound the Crisis Drought and hot, dry weather across the U.S. Corn Belt have further intensified difficulties for some farmers. John Dietrich, who grows corn and soybeans near Meadow Grove, Nebraska, said the combined risks from weather events and rising costs 'are the highest I’ve seen in my 44-year career.' 'Production costs are extremely high, and the volatility and uncertainty surrounding every factor affecting both production and commodity prices are unprecedented.' Weather factors are pushing up corn prices, prompting traders to lower their yield forecasts for 2026. U.S. corn futures for December delivery have risen 10% this month to $5.15 per bushel—the highest level since 2023. Prices of other commodities—including soybeans and wheat—have also rebounded recently. Experts warn this may push inflation, already above the Federal Reserve’s 2% target, even higher. Brian T. D. Choi, CEO of the Food Institute, stated: 'This certainly means food prices will rise—and ultimately be passed on to consumers. Corn prices have already increased nearly 20% this year.' Nebraska is among the states hardest hit by drought. From January through July this year, the state received only 301 millimeters of precipitation—about 79 millimeters below normal—making it the 18th driest such period since record-keeping began in 1895. 'Given all the early-season stress, there’s no sign of a bumper crop—especially for rain-fed fields… which simply aren’t receiving moisture and have suffered severe damage for six consecutive weeks.' Urgent Additional Fiscal Support Is Needed Years of high input costs, falling crop prices, trade uncertainty, global energy price volatility, and negative profit margins have weakened farm balance sheets and working capital. Without additional support, more farms will face the difficult decision of whether to continue operations into the next crop year. Additional economic assistance is viewed as critical—and enjoys bipartisan support. Complementary fiscal aid is essential to offset trade-related losses, rising input costs, and deep financial pressures confronting producers of U.S. field crops, specialty crops, hay, and sugar crops. Congress and the administration have previously taken significant steps to address these economic headwinds. At the end of 2024, Congress passed the 'American Relief Act,' which includes $10 billion in aid for field crop growers through the Emergency Commodity Assistance Program (ECAP), to compensate for economic losses incurred during the 2023 and 2024 crop years. The 'Farm Bridge Assistance Program' provides $11 billion in short-term economic relief to field crop growers. Initially, the USDA set aside an additional $1 billion for 2025 losses among specialty crop and sugar crop producers; this was later finalized as $1.625 billion through the 'Assistance for Specialty Crop Farmers (ASCF) Program' for eligible fruit, vegetable, and nut growers—exceeding the original allocation—while sugar crop assistance was handled separately.

USDA Selects Eight Fertilizer Projects for $573 Million in Proposed Funding

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The USDA selected eight fertilizer projects for $573 million under its FIELDS program to expand domestic nitrogen, phosphorus, potassium, and sulfur production capacity and reduce foreign supplier reliance.

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USDA Selects Eight Fertilizer Projects for $573 Million in Proposed Funding

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