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John W. Taylor
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John is a financial analyst in the software industry. He is formerly the President & Founder of Tiarta L.L.C. (www.tiarta.com), an independent, financial research firm that evaluates financial transparency and corporate communications in order to uncover indicators of operational, legal,... More
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  • Another Bloated Government Agency: Department of Agriculture 0 comments
    Sep 9, 2011 3:54 PM | about stocks: GDP

    The current output, measured as a subset of gross domestic product (“GDP”), for agriculture in the United States is estimated to be just over $100 billion for 2011.[i]  This accounts for less than one percent of the U.S.’s GDP.  The number of farms in the United States peaked in 1935 at 6.8 million.  The latest statistics indicate that there are just over two million farms in the country, with only 960,000 Americans claiming “farming” as their primary occupation.  About 46,000 (of the two million farms) account for 50% of the total farm revenues in the country.  And only one in four farms generate more than $50,000 a year.[ii] 

     The United States Department of Agriculture’s (“USDA”) projected budget for 2012 is a staggering $145 billion, which is almost 150% of agricultural GDP![iii]  Okay, USDA has managed to creep into other areas besides just agriculture, but even the most jaded libertarian would not have expected USDA spending to exceed agricultural output. 

     In 1839, Congress established the Agricultural Division within the Patent Office and allotted $1,000 for "the collection of agricultural statistics and other agricultural purposes."[iv] The USDA was formed in 1862 and has subsequently grown in size and mission over the last 149 years.  Per the USDA website, its current mission is to, “…provide leadership on food, agriculture, natural resources, and related issues based on sound public policy, the best available science, and efficient management.”[v] The USDA has over 100,000 employees, which equates to roughly one employee for every 10 farmers in this country.[vi]  Some of this is attributable to the department’s ever increasing scope into new and unrelated or partially related areas.

     Why has the size of the USDA not been re-calibrated?  It is not clear what is the right size for the USDA (or any governmental department/agency for that matter), but 1.5x the size of corresponding GDP is not the correct size.  A starting point would be reducing the USDA to equal agricultural output, which would result in an approximate $45 billion annual reduction.  However, USDA should probably be a very small percentage of the output, resulting in far greater reductions.

     If this kind of back of back of the envelope analysis identified obvious government largess, how many other departments within the federal government are this out of line with their respective target market? 

     


    [i] United States Department of Agriculture, Economic Research Service, http://www.ers.usda.gov/briefing/farmincome/nationalestimates.htm, accessed September 9, 2011.

     [ii] United States Environmental Protection Agency, http://www.epa.gov/agriculture/ag101/demographics.html.

     [iii] United States Department of Agriculture, “USDA FY 2012 Budget Summary and Annual Performance Plan,” http://www.obpa.usda.gov/budsum/FY12budsum.pdf.

     [iv] Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/wiki/United_States_Department_of_Agriculture accessed September 9, 2011.

     [v] United States Department of Agriculture, http://www.usda.gov/wps/portal/usda/usdahome?navid=MISSION_STATEMENT.

     [vi] Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/wiki/United_States_Department_of_Agriculture, accessed September 9, 2011.

     

    Stocks: GDP
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