In addition, the Times says the $12 billion bailout program created to “make it up” to farmers has actually “done little to cushion the blow, with red tape and long waiting periods resulting in few payouts so far.”
The main point of the article is that USDA is reporting that only $838 million has been paid out to farmers since the first $6 billion pot of money was made available in September. Another pool of up to $6 billion is expected to become available next month.
Though, as DTN reported Monday, the payments had reached $1.128 billion by Monday morning. The top five commodities being soybeans, corn, wheat, dairy and hogs. The top five states for recipients are Illinois, Indiana, Iowa, Kansas and Minnesota.
Also, the “government is unlikely to offer additional money beyond the $12 billion,” according to Sonny Perdue, the agriculture secretary.
The program’s limitations are beginning to test farmers’ patience, the Times thinks. The trade war shows no signs of easing, with China and the United States locked in a stalemate that has reduced American farmers’ access to a critical market for soybeans, farm equipment and other products. Europe is planning more retaliatory tariffs on top of those already imposed on American peanut butter and orange juice and Canada and Mexico continue to levy taxes on American goods, including on pork and cheese.
President Trump, who has had broad support in many farm states, still insists that his get-tough approach to trade will ultimately help American farmers, a position Secretary Perdue reiterated last month when he said farmers are “resilient” and can plan ahead for market conditions.
Farmers are no strangers to foreign tariffs or to government subsidies. But receiving monetary support in response to a trade dispute set off by the United States government is unusual.
Different commodities receive different rates — for instance, hog farmers get $8 per head for 50% of their herd, while dairy farmers get 12 cents for every hundred pounds of milk. In addition, the government plans to purchase about $1.3 million worth of certain products, such as apples, oranges and pork, which it will distribute through nutrition assistance programs.
Farmers had mixed feelings about the “bailout” when it was announced last summer, as they tend to prefer free enterprise over government intervention. “Many” say they are disappointed as the subsidies have not made up for their losses, NYT says.
“I don’t think this is going to be enough to compensate them,” said Eric Belasco, an economist at Montana State University and a scholar at the American Enterprise Institute. “It seems like there’s not really an end in sight.”
The dairy industry has been particularly critical of the program and, in a recent letter to Perdue, asked the administration to rethink how it calculates subsidies and to make them more generous to dairy farmers.
“This was supposed to make sure farmers were not the victims of this trade policy,” said Jim Mulhern, president of the National Milk Producers Federation. “I think most agriculture producers feel that the payments have not come close to making up for the damage for the tariffs.”
Like any program offering free money, there are also opportunities to game the system. On Monday, the watchdog organization Environmental Working Group released a report that shows city residents who own shares in farms and relatives of farmers have been capitalizing on the bailout and that some farmers appear to have been paid large sums of money.
The program caps the amount farmers can receive, limiting payments to $125,000 per person or legal entity. But farms are often structured as partnerships, meaning that people who are not physically working on farms can still receive subsidies.
The Environmental Working Group’s analysis of 87,704 payments made through October found that 1,142 farmers in the nation’s 50 largest cities have received bailout payments.
Farmers in general are having a tough year. The USDA’s Economic Research Service predicts net farm income in the United States this year will fall by $9.8 billion, to $65.7 billion, a 13% drop from 2017. Weak pricing and tight credit have put pressure on farms in recent years, and new trade barriers have exacerbated their economic problems.
Pork has also been getting pinched. The National Pork Producers Council estimated that China’s pork tariffs, which were a response to Trump’s steel and aluminum tariffs, could cost the industry more than $2 billion this year.
So, we will see. Farmers are notoriously skeptical of programs that are expected to offset losses from policy decisions, a characteristic they have shown repeatedly in the past. Analysts suggested that the administration largely escaped political retaliation for its trade policies in the recent midterms. At the same time, few seem to believe that producers will support the administration’s tough trade policies and the retaliations they bring indefinitely, especially if it turns out that the so-called farm aid has been seriously oversold — a debate producers will need to watch closely as it proceeds, Washington Insider believes.