Lawmakers fuel the national debt crisis with an $11 billion farm bailout nobody needs

The war in Iran is being used to justify an $11.1 billion farm bailout, but the claims don't add up.

Most of the new payments will flow to the largest 10% of crop producers.

Before House Speaker Mike Johnson received a supplemental funding request that included an additional $11.1 billion in ad hoc farm subsidies, farmers were already scheduled to receive substantial payments from the U.S. Treasury in 2026.

The U.S. Department of Agriculture's most recent farm-income forecast from February predicted that farmers would receive more than $20 billion through multi-year programs and other permanent legislation authorized by Congress. Ad hoc payments through emergency aid and discretionary management would provide an additional $23 billion. And the USDA predicted that farmers will also receive $11 billion dollars in net subsidies from the highly generous federal crop-insurance program.

Farm income is expected to be lower than its near-record 2023 level, but still at or above its long-run average.

Put this all together and farmers - mainly large-scale row-crop producers of corn, soybeans, wheat, cotton, rice and peanuts - are already set to receive roughly $55 billion from the U.S. Treasury in 2026. Most of this is likely funded through government borrowing and yet another substantial increase in the federal budget deficit that only further exacerbates the rising national debt.

The Office of Management and Budget sent the supplemental funding request to Congress asking for $87.6 billion - largely to fund Operation Epic Fury in Iran. To justify the $11.1 billion included for new emergency farm aid, the request claimed that farmers are in urgent need of additional financial help.

For the farm sector as a whole, this assertion is highly questionable. According to the USDA, in 2026 farm income is expected to be lower than its near-record 2023 level, but still at or above its long-run average, and the sector's 13% debt-to-asset ratio is surprisingly low.

Of the funds requested by OMB for additional farm aid, $10 billion would be for row and specialty crops (fruits and vegetables) confronted by war-driven increases in production costs, plus $1.1 billion to compensate Florida farmers for losses caused by recent severe storms. Senate Republicans responded to the OMB's request by pushing for farmers to be given even more taxpayer dollars - as much as $17.3 billion.

Sen. John Hoeven, R-North Dakota, a member of the Senate appropriations committee, said he is willing to collaborate with the chairs of the Senate and House agricultural committees to expedite and perhaps augment the OMB's request for an additional $11.1 billion (or more). So it seems likely that farmers will get substantially more subsidies that would increase total federal farm payments in 2026 to between $66 billion and $70 billion.

The bulk of these payments will flow to the roughly 150,000 farms that constitute the largest 10% of crop producers. To provide perspective, the Congressional Budget Office recently estimated that in fiscal year 2026, total spending on the SNAP program, which serves about 40 million recipients, will total $100 billion.

The U.S. farm sector is financially resilient and stable. There is no need for an additional massive bailout.

Requests for additional farm funding are largely motivated by claims of disproportionate and potentially devastating impacts on energy and fertilizer prices, largely related to the Iran war. But the numbers indicate otherwise.

In the U.S., prices for potash fertilizer were largely unaffected by the conflict. Prices for nitrogen increased when the Strait of Hormuz closed but have sharply declined. And phosphate prices, while 20% higher than in February, are also expected to drop in response to a temporary suspension of tariffs on imports from Morocco.

Regardless of current prices, the impacts on actual farm costs have been relatively modest, not least because most farmers purchased their fertilizer for much of the 2026 crop year well before the Iran war and the closure of the Strait of Hormuz.

The truth is that the U.S. farm sector is financially resilient and stable. There is no need for an additional massive bailout. Arguably, the sector is also not in desperate financial need of the significant increase in subsidies over longstanding income and price-support programs that were harvested from the One Big Beautiful Bill Act last year. So, the extra $11.1 billion in emergency aid requested by the Trump administration is not needed to ensure the survival of U.S. agriculture and the country's food supply chain.

To the extent that significant unavoidable and genuinely catastrophic physical and financial damage to Florida crops caused by severe weather has not been addressed by other programs, federal help may be warranted. But many crop losses are covered through the heavily subsidized federal crop-insurance program. Why then should U.S. taxpayers respond twice to cover those losses?

There is no genuine financial hardship case for increasing federal subsidies to row and other crop producers above the $55 billion they are already promised. As the country faces a national debt crisis, Congress should seriously evaluate the need and rationale for more ad hoc spending on farm programs.

Vincent H. Smith is a nonresident senior fellow and the director of agricultural policy studies at the American Enterprise Institute. Barry K. Goodwin is a nonresident senior fellow at the American Enterprise Institute, where he focuses on U.S. agricultural policy and the federal crop insurance program.

-Vincent H. Smith -Barry K. Goodwin

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July 24, 2026 07:50 ET (11:50 GMT)

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