President Donald Trump’s snap decision to send billions of dollars in new aid to farmers could be bad for the farm economy and the federal budget.
Many farmers are still deciding what to plant this spring and could be swayed toward crops that receive higher payouts from the aid package, such as soybeans. That would add to already record supplies and further depress prices that have been falling for five years.
Trump tweeted about the new bailout for farmers earlier this month, soon after he decided to raise tariffs on $200 billion worth of imports from China and Beijing retaliated by raising duties on $60 billion in U.S. products, many of them agricultural. Agriculture Secretary Sonny Perdue, who weeks earlier denied the White House was discussing another round of aid so soon after a $12 billion bailout last year, suddenly interrupted a trip to South Korea to announce a second program.
Farm groups are headed to the White House on Thursday afternoon to join Trump as he announces what may be as much as a $20 billion boost for agriculture. The American Farm Bureau Federation and groups representing soybean, corn, wheat and pork producers are expected to attend, as well as lawmakers including Sen. John Hoeven (R-N.D.), who has worked closely with the administration on the aid package.
“We want to make sure that the farmers are being protected as we go through the process of negotiating new trade deals,” White House press secretary Sarah Huckabee Sanders said Wednesday outside the White House.
But the Trump administration’s decision to roll out the program now is drawing critics.
Sen. Chuck Grassley, an Iowa Republican, told reporters Wednesday that the White House should have been more cautious about the timing of the announcement because farmers are still planting.
“[W]e want farmers to make decisions on how many acres of corn and soybeans to plant based on the market and not something the government’s doing,” he said.
“The timing couldn’t have been worse,” said Jonathan Coppess, an agricultural policy professor at the University of Illinois, and a former head of the USDA Farm Service Agency during the Obama administration.
Rainfall in the Midwest has delayed planting, so many farmers can still switch up their crops. Even the prospect of another round of trade assistance could encourage them to plant more soybeans, Coppess said.
The crop is expected to receive the bulk of direct payments given the significant damage that China’s 25 percent tariff on U.S. imports has done to prices and demand. China, the world’s top pork producer, is expected to need fewer soybeans to feed its hogs this year because African swine fever has forced the government to kill more than a million animals.
“There is certainly enough experience at USDA to know that announcing payments during planting might well cause more problems,” Coppess said.
The first aid package in 2018 paid $1.65 a bushel for soybeans — the most for any commodity — while corn growers received 1 penny per bushel and wheat growers received 14 cents a bushel. Farmers producing other commodities like pork, cotton, milk, almonds and sweet cherries were also eligible for direct payments.
The payments depended on what farmers actually planted in 2018 — bucking Congress’ efforts over the years to make subsidy programs more market-oriented by tying them to farmers’ average historical acres and yields.
A USDA spokesperson said Tuesday that the department is ensuring that this year’s program is being designed to avoid skewing results.
“Farmers should continue to make their planting and production decisions with the current market signals in mind, rather than some expectation of what a farming support program might or might not look like, based on a media story,” the spokesperson said.
The package will primarily involve sending direct payments to farmers and ranchers using funds from the Commodity Credit Corporation, a Depression-era financial institution under the USDA that has broad authority to stabilize the farm economy.
But it is unclear whether the CCC has enough borrowing authority to fund another tariff-relief program. It is only allowed to borrow $30 billion per fiscal year from the U.S. Treasury to fund its work, and last year’s bailout used a big chunk of that. The CCC also is used to fund traditional farm subsidies authorized every five years by Congress.
Lawmakers last September included language in a short-term spending bill that effectively gave the CCC more flexibility to keep money flowing.
Hoeven, who chairs the Senate Appropriations subpanel overseeing USDA, told reporters last week that Congress can easily reimburse the financial institution if needed.
Trump is using taxpayer money to help just one industry harmed by trade policy. Other industries reeling from the tariff battles, from car manufacturers to shoe retailers, are not expected to receive financial aid.
Some farmers recognize the disparity, and stress that they would prefer to have open access to markets.
“We prefer that over a check from the government,” said Mark Watne, president of the North Dakota Farmers Union. “But right now, our own government is making our demand go down. We can’t control that.”
Sabrina Rodriguez contributed to this report.
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