Farm Subsidies

Let the Buffalo Roam

Is it time to consider reverse homesteading?

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Much of the western United States was settled under the 1862 Homestead Act, which allowed Americans to claim title to 160 acres of land in return for just $18 and five years of hard work. Twenty-eight years later the Census Bureau declared the "frontier closed," on the basis that most western counties had achieved population densities of six people per square mile.

Today, the frontier is reopening. Some 261 counties on the Great Plains contain fewer than six inhabitants per square mile, and the dwindling rural population that remains consists largely of farmers and ranchers who are maintained by an endless stream of federal government farm subsidies. Not all is bleak—while the family farms, ranches and tiny towns they supported are dying off, many larger cities on the plains are growing. Cities such as Fargo, North Dakota, and Rapid City, South Dakota have successfully attracted technology firms seeking lower costs and calmer lives. Still, people are abandoning rural areas as family plots consolidate into fewer and fewer large farms and ranches.

Naturally the depopulating of the rural West is being characterized as a "crisis," provoking the usual calls that the government do something in the name of "rural development." Last year, the Bush Administration backed the 2002 Farm Bill, which boosted farm subsidies by a massive $73 billion, up to a total of $180 billion over the next 10 years. Sixty percent of all farmers and ranchers get no subsidies at all, but of those who do, "ten percent of the biggest (and often most profitable) subsidized crop producers collected 71 percent of all subsidies, averaging $34,800 in annual payments between 1995 and 2002," according to the Environmental Working Group. Farm subsidies encourage farm consolidation and thus depopulation. They also artificially boost farmland prices as the stream of future government handouts is incorporated into selling prices.

The subsidies also promote crop overproduction and subsequent dumping in foreign markets, which undermines developing-country farmers and imperils progress toward a more open world trading system. So what to do?

My first instinct is that "he who lives by the subsidy should die by its withdrawal." Cut the subsidies and let farmers either learn to succeed at farming without them or go into some other line of work. But given the number of U.S. senators from the Plains states, that is a political nonstarter.

So how about some "reverse homesteading"? Instead of encouraging people to settle and work the land, pay them to leave it voluntarily. This could work in a variety of ways. The feds could outright buy the farms and put them back into the public domain. Even given the significant management problems that the National Park Service and Bureau of Land Management have, this option would nevertheless spare taxpayers from the fate of endless subsidy payments, while giving erstwhile farmers a nest egg to start their new lives.

This could be the prelude to establishing the extremely controversial "Buffalo Commons" idea, advocated by some environmentalists. Essentially, according to the plan, the Great Plains would be dotted with urban centers surrounded by open public lands over which restored herds of bison and antelope would once again roam free.

Another less drastic option would be to give farmers a one-time payment to forever stop growing whatever their subsidized crops are. They would still own the land; they'd just have to use it differently. The risk here is that farmers would take the money, continue to try to farm, and when times got rough again (as they surely will), run crying back to Congress for additional handouts.

The idea of reverse homesteading is not completely novel. Already, the National Marine Fisheries Service has paid fishers $140 million since 1995 to remove 79 boats from New England's failing groundfish fleet. Under the 2002 Farm Bill, the Department of Agriculture is paying $1.3 billion to buy out farmers with peanut quotas. (This is not as good a piece of news as it might seem, since the peanut quota program is being replaced with a standard subsidy program.) And currently, Congress is considering legislation that would spend up to $20 billion to buy out tobacco quotas established for individual farms in 1938 by the federal government. Of course, anti-smoking activists are worried that without the quotas, tobacco prices will fall steeply, encouraging people to succumb to the demon weed… but that is a discussion for another time.

Again, reverse homesteading may not be the "best" option—cutting off the subsidies altogether is obviously preferable—but as a second-best, politically feasible option, it could spare future taxpayers the cost of endless subsidies while encouraging failing farmers to go into more productive lines of work.