US agriculture is so large and diverse that it is difficult if not impossible to meet industry-wide needs with a single program, even if it is basically a cash payment.
For example, Senate Democrats are “attacking President Trump’s $28 billion farm trade aid program on the grounds that it favors southern farmers at the expense of their counterparts in the Midwest and Northern Plains.” Also there are charges that it favors growers of cotton over soybeans and large producers over smaller ones.
“The administration is using a flawed formula that helps big, wealthy farms and billion-dollar foreign-owned companies, while small farms get left behind,” Senate Minority Leader Chuck Schumer, D-N.Y., said. He wants USDA to stop “picking winners and losers, and ensure all of America’s farmers get the help they need--not just a lucky few.”
Democrats on the Senate Agriculture Committee, led by Debbie Stabenow, D-Mich., issued a report Tuesday accusing the administration of “extreme disparities” in the way it calculated the trade aid payments.
The report said five heavily Republican southern states – Georgia, Mississippi, Alabama, Tennessee and Arkansas – received the highest payment rates per acre under this year’s market facilitation payments. Ninety-five percent of counties that have a payment rate of at least $100 an acre are in the South.
This is in spite of the fact that farmers in the Midwest and Northern Plains have been hurt most by the trade war, the Democrats said.
The payments also “overcompensate” cotton growers, the Democrats claim, citing US Department of Agriculture data showing a 3.9% increase in the price of upland cotton for the 2018 crop compared with the prior year.
Democrats also criticized the program for making commodity purchases from large, foreign-owned agricultural conglomerates, including $90 million paid to a subsidiary of Brazilian-owned JBS SA.
More than half of the administration’s first-year market facilitation payments went to just 10% of the recipients in the program, according to an analysis by the Environmental Working Group of records obtained through the Freedom of Information Act.
Democrats complained the Trump administration nonetheless doubled payment caps for this year’s trade assistance program.
Last year’s trade aid made payments based on crop type, but this year the assistance rates are on a “per-county rate based on the blend of crops grown in the area,” with payments ranging from $15 to $150 an acre. The administration hasn’t released details on how it calculated financial damage from the trade war for the aid program.
Rural voters are a key constituency for President Trump as he heads into the 2020 election and government aid has become an increasingly important source of income for America’s farmers amid the financial stresses of the trade war with China, a commodity glut and wild weather, Bloomberg said.
A recent American Farm Bureau Federation study found that almost 40% of projected farm net returns this year will come from trade aid, disaster assistance, federal subsidies and insurance payments, Bloomberg said. The AFBF said the supports totaled some $33billion of a projected $88 billion in net income.
Farm bankruptcies are rising nonetheless, this year hitting the highest levels since 2011, Bloomberg said.
As criticism of the payments and the formulas used to define them grows, the administration likely faces a daunting task in its efforts to convince producers not only that the “trade aid” program is effective and fair, but also that benefits from the “get tough, tariff-based policies” will be worth their cost. This debate should be watched closely by producers as it intensifies, Washington Insider believes.
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