Corn, wheat, oats, rice and soy are some common farm subsidies also known as subsidized crops. Subsidized crops correspond to a primary type of farm subsidy that has multiple elements, such as disaster payments, marketing loans, counter-cyclical payments and direct payments.Continue Reading
Through farm subsidies, the U.S. government makes payments to agribusinesses and farmers. In theory, farm subsidies ensure that crop production is continuous and abundant, that prices remain low, and that farmers and agribusinesses have some stability in the face of contrary economic conditions.
Farm subsidies originated in the 1930s, during the Great Depression, when approximately 25 percent of America's population resided on roughly 600,000 farms. This partially explains one original farm subsidy element that endures as of 2016: the disaster payment. With disaster payments, the government subsidizes crop insurance to protect farmers against future risk and pays farmers to make up for their losses caused by natural phenomena.
Another farm subsidy element is the marketing loan, which extends very advantageous terms to farmers, allowing them to acquire favorable gains through commodity certificates and loan deficiency payments. When an overabundance of a single crop causes market prices to dip, counter-cyclical payments compensate farmers for profit losses.
The government originally began making direct payments to help farmers transition out of farm subsidy programs. The direct payment is an annual amount paid directly to a current operator or landowner.Learn more about Agriculture