If you drive Interstate 80 across Iowa today, the view is wall to wall corn and soybeans as far as you can see. It feels like that's how it's always been. But it hasn't. And one law, passed 30 years ago with the best of intentions, played an outsized role in making the landscape look the way it does now.

The Federal Agriculture Improvement and Reform Act of 1996, better known as the Freedom to Farm Act, was supposed to be the beginning of American agriculture's transition away from government dependence. Instead, it kicked off a chain of events that stripped millions of acres of habitat off the landscape and locked in a subsidy system that's bigger and more entrenched than anything that came before it.

On a recent Prairie Farm Podcast Coffee Time, the crew traced this history as part of a larger conversation about what would happen if the Corn Belt brought back set aside acres. Understanding how we lost them in the first place is critical context.

Before 1996: The Era of Set Aside Acres

For decades before the Freedom to Farm Act, federal farm programs came with strings attached. If you wanted government price supports and subsidies for your grain crops, you had to set aside a percentage of your productive acres. The idea was straightforward: control supply to support prices, and use the idled ground for conservation.

This system had been a feature of U.S. farm policy since the Agricultural Adjustment Act of 1933, according to agricultural economists at the University of Illinois. The set aside rates fluctuated with market conditions. During the late 1980s, they averaged roughly 17.7% per year per program crop. By the early 1990s, strong export demand had pulled the rates down to around 3.6% on average. But even at those lower levels, millions of acres were kept out of production every year.

Those acres weren't all high quality habitat. A lot of them were planted to brome or left fallow. But they were something. They provided ground cover, nesting habitat for birds, and at minimum, a break in the endless sea of row crops. As Kent Boucher noted on the podcast, his dad's first CRP contract back in 1989 was just brown headed bush clover and big bluestem. That was considered radical conservation at the time. But it was more than nothing, and it was everywhere.

What the 1996 Law Actually Did

The Freedom to Farm Act eliminated acreage reduction programs entirely. For the first time since the New Deal, farmers could plant whatever they wanted on every acre they owned without the government telling them to hold ground out of production. The law replaced the old price support system with fixed "production flexibility contract" payments that were supposed to decrease over seven years and eventually disappear.

The logic made sense on paper. Commodity prices were high in the mid 1990s. Export markets, especially in Asia, were booming. The thinking was that American farmers could out compete anyone in the world if you just got the government out of the way. Let the market work. As the University of Illinois farmdoc analysis documented, the elimination of set asides led to an immediate increase of about 7.5 million acres planted to principal crops nationwide in the first five years after the law passed.

In Iowa, and across the Corn Belt, the impact was swift. Every marginal acre, every wet corner, every field edge that had been kept out of production under the old rules got planted. And because the law maintained the Conservation Reserve Program (keeping the CRP cap at 36.4 million acres), some people assumed there would still be plenty of conservation on the landscape. But CRP is voluntary and competes with cash rent. Set asides were mandatory. That's a fundamental difference.

The Crash Nobody Planned For

The free market experiment lasted about two years before it hit a wall.

In 1997, the Asian financial crisis slammed export demand. U.S. farm exports plunged 23% from 1997 to 1999, according to IATP. At the same time, a run of favorable weather produced six consecutive large harvests. More acres in production plus more bushels per acre plus collapsing demand equals a brutal price collapse.

By 1998, farmers were losing money. Congress, which had promised that subsidies would phase out, immediately reversed course and started passing emergency aid packages. The Federal Reserve Bank of Minneapolis reported that by 1999, roughly one third of all net farm income came from the government. Emergency spending reached billions of dollars annually.

So much for freedom from government support.

The 2002 Farm Bill: Safety Nets Without Set Asides

By 2002, the whole premise of the Freedom to Farm Act had collapsed. Prices were still soft, farmers were still struggling, and Congress was tired of passing emergency bailouts every year. So they wrote a new farm bill.

The Farm Security and Rural Investment Act of 2002 introduced counter cyclical payments, a new safety net that kicked in automatically when commodity prices fell below target levels. It also maintained the direct payments that had replaced the old production flexibility contracts. The 2002 law continued the planting flexibility that Freedom to Farm had introduced, according to Purdue University agricultural economists, while adding soybeans as a new covered commodity.

But critically, what the 2002 farm bill didn't do was bring back set aside acres. Congress reinstated the financial safety nets that farmers needed, but they left out the conservation quid pro quo. You could now get government price protection, crop insurance subsidies, and direct payments without holding a single acre out of production.

That's the system we're still living under today. As Nicolas put it on the podcast: you can't have your cake and eat it too. If you want the government to backstop your prices and subsidize your insurance, it's reasonable to ask for something in return. But for 30 years now, the conservation side of that bargain has been missing.

What It Costs Taxpayers Today

The federal crop insurance program alone cost taxpayers $17.3 billion in 2022, according to the Government Accountability Office. About $12 billion of that went to subsidizing farmer premiums, with taxpayers covering roughly 62% of premium costs. The insurance companies that administer the program earned an average annual rate of return of 16.8% from 2011 through 2022, significantly above the market rate of 10.2%.

And that's just crop insurance. Add in direct payments, conservation program funding, disaster aid, and the various other streams of agricultural support, and the total public investment in American agriculture is staggering. This isn't a knock on farmers. Farming is hard, markets are volatile, and the country needs a stable food supply. But when this much public money flows into a system, it's fair to ask whether the public is getting something back.

Before 1996, the answer was at least partially yes. Set aside acres meant habitat, ground cover, reduced erosion, and some check on overproduction. After 1996, the money kept flowing (and growing), but the conservation requirement disappeared.

Dr. Larry Weber's Proposal

On a previous episode of the Prairie Farm Podcast, Dr. Larry Weber suggested what might be the most elegant solution: tie subsidy eligibility to set aside acres. If you want crop insurance subsidies and government price protection, you dedicate a percentage of your ground to conservation. If you'd rather farm every acre without government involvement, that's your right. You just don't get the taxpayer funded safety net.

It's not a new concept. It's basically what we had from 1933 to 1996, updated for modern agriculture. And as Nicolas argued on the podcast, the economics of it actually work out. Higher commodity prices from reduced supply, combined with CRP rental payments and recreation revenue, could more than offset the lost production on those set aside acres. We covered those numbers in detail in our companion piece, "What Would Happen If the Corn Belt Set Aside 10% of Its Acres?"

Where We Go From Here

The Freedom to Farm Act was a genuine attempt at reform that ran headfirst into reality. Markets crashed, Congress panicked, and the result was a system that gives farmers more subsidies than ever while asking for less conservation in return. Understanding that history matters, because the same debates are happening right now in every farm bill cycle.

Iowa's landscape doesn't have to look the way it does from I-80. The Corn Belt's productivity is extraordinary, but there's room for both production and habitat on this landscape. We just have to decide we want it.

If you're planning a CRP planting, a prairie restoration, or a wildlife habitat project this spring, now is the time to get seed in the ground. Hoksey Native Seeds can help you build a diverse, locally adapted mix that performs for the long haul. We've been doing this for over 30 years and we're shipping CRP seed right now.

Sources: USDA Economic Research Service, University of Illinois farmdoc daily, U.S. Congress (H.R. 2854 and H.R. 2646), Purdue University Department of Agricultural Economics, U.S. Government Accountability Office, Federal Reserve Bank of Minneapolis, Institute for Agriculture and Trade Policy, Prairie Farm Podcast