5 Ways Taxpayers Bail Out Factory Farms

The way we produce meat and dairy is responsible for all sorts of damage, and taxpayers end up footing the bill.

Closeup of cow on farm

Explainer Law & Policy Policy

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Roughly every five years or so, Congress passes a new iteration of the Farm Bill — an appropriations measure that pays for our  food production by way of, a system that has become increasingly dominated by massive global corporations. Originally slated for a vote in 2023 but delayed until this year, the next bill is projected to be the first to pass the trillion-dollar threshold. While the bill funds a range of programs, including the Supplemental Nutrition Assistance Program, or SNAP, and various rural development initiatives, a sizable chunk goes to payouts for the  meat and dairy industry.

Though it’s true that technically most of the farms in the United States — including many of the largest — are considered family farms, that label mostly comes down to legal jargon, says Eric Belasco, PhD — an economist at Montana State University. More than “95 percent of farms are technically family owned,” he says but that  definition essentially just means “people from the same family are running [what] are essentially corporations.”

These corporations are responsible for a lot of damage — climate emissions, labor abuses, air and water pollution and animal suffering — yet the corporations aren’t paying for it, taxpayers are. Here are five examples.

1. Farm Animals Killed Amid Natural Disasters

When livestock are killed by natural disasters — including the cold — farm owners can claim a payout through one of the U.S. Department of Agriculture’s many indemnity programs. For example, a rancher can receive $1618 for each 800-pound or more steer who dies in a natural disaster, through the aptly named Livestock Indemnity Program.

Given the scale of modern day factory farms, that could mean hundreds of thousands of animals. For example, when Hurricane Florence hit North Carolina in 2018, millions of farm animals perished.

Thanks to climate change, natural disasters and other extreme weather events are becoming more frequent and severe, putting more farm animals at risk. Yet factory farm operators don’t have to create a mitigation plan to prevent the death of their animals in the face of unexpected weather.

That could soon change. Proposed legislation from Senator Cory Booker (D-LA) seeks to establish a program within the USDA  that would require the farms most at risk of facing a disaster to create a  plan outlining how animals will be cared for during a natural disaster.

2. Avian Flu and Other Zoonotic Diseases

Since 2022, millions of birds have been culled due to bird flu, a disease that spreads rapidly in farms packed with animals, as most factory farms are. In response to a single case of the virus, poultry operations “depopulate” entire barns of animals, often using ventilation shutdown plus heat — a death that is extremely painful, according to a number of veterinarians.

Everytime it happens, the producer is eligible for a payout — so far more than $715 million has been paid to poultry farms. In addition to being awarded what the USDA determines to be fair market value for the birds, farmers are also reimbursed for the cost of depopulation, an industry term used to describe mass killing of farm animals.

The meat industry has also relied on depopulation for other disease outbreaks. During the spring of 2020, slaughterhouses across the country shut down as their staff fell ill with Covid — almost 60,000 became sick, and at least 269 died, reportedly. That meant that the country’s slaughterhouses couldn’t keep up with the usual flow of animals coming in, and thousands of animals had to be killed on farms, their bodies dumped or destroyed, unsold. Taxpayer money paid for the economic losses — the USDA launched the pandemic livestock indemnity program which paid farmers 80 percent of fair market value for the animals they culled.

3. Farm Animals Killed by Wolves, Allegedly

When vulnerable livestock are killed by federally protected wildlife — such as wolves, cougars or bears — farmers are eligible to receive compensation. Farmers can receive up to 95 percent of fair market value for livestock lost to predators, in fact.

The problem? Though indemnity programs typically require proof that livestock were killed by wolves, it’s notoriously difficult to tell for sure. Wolves often eat the carcass of an animal they didn’t kill, so just seeing wolves by a carcass or their prints nearby doesn’t necessarily mean that they’re responsible. As a result, wolves are often blamed for dead livestock that they didn’t necessarily kill. What’s more, wolves prefer to hunt their natural prey — deer and elk — and tend to avoid killing cattle. There are also ways ranchers can protect their cattle, which could be incentivized rather than simply offering a payout.

Wildlife predation programs aren’t just run by the USDA either. Several states also offer reimbursements, including Colorado, which — in a move heavily criticized by ranchers — recently reintroduced gray wolves. In May 2023, Colorado’s Governor Jared Polis signed legislation creating a specific fund just for reimbursing farmers for animals killed by wolves — a fund now upped to $350,000 from $175,000.

4. Big Chicken’s Debts to Contract Farmers

Around half of all meat and dairy farming dollars comes from contract farmers, according to research from 2017. These farmers don’t own the animals they’re raising nor do they have control over how they care for them. Instead, large corporations such as Tyson own the animals and dictate how they are housed, fed and transported for slaughter.

Farmers who have escaped these schemes have been very vocal about the predatory nature of the contracts and the retaliation they face if they complain. While companies like Pilgrim’s Pride and Smithfield rake in millions, contract farmers are left saddled with the heavy debt required to stay in compliance with their contract. Yet companies aren’t paying to relieve these debts, instead the taxpayers are.As part of the 2018 Farm Bill the livestock indemnity program picks up the slack for the poultry and pork industries, allocating funding to aid with the economic recovery of contract farmers.

5. Factory Farm-Sized Share of Insurance Payouts

Most of the U.S.’s food supply is grown by large farms, which are a major source of pollution, including climate emissions and harmful substances in water. Just 2.6 percent of all large family farms generate a whopping 42 percent of what we consume. Yet, collectively, these meat and dairy industry operations claim billions in payouts. Projections suggest more than $100 billion will go toward insurance subsidies in the 2023 Farm Bill, a large share of which will go to the largest farms — one dairy farm in the West has historically received subsidies totaling $6.6 million across all of their policies.

There is no income limit for the crop insurance subsidies, so whether a farm makes $1,000 in profit or $1 million, they are still eligible for money. For Montana State University’s Belasco, that’s a problem, but one with a solution: caps. One report found that reducing subsidies for the highest earning farms by 15 percent would save $15 million. And even  more aggressive strategies, like capping subsidies at $50,000 — could cut the crop insurance program’s costs by more than 30 percent.

The Bottom Line

The country’s biggest farms are also some of the country’s biggest polluters, yet it’s the taxpayers who pay for the damage. To make matters worse, when something goes wrong on a factory farm — in some cases because of the way these farms operate —  taxpayers pay for that too.

One of the main reasons why these payout schemes haven’t been reformed is “that farmers and farmers’ accountants are smarter than these laws,” says Belasco, “so even if you implement these caps they’d find some way around it.” Still, he hopes that with the passage of the new Farm Bill, some effort will be made to curb government spending.

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