President Donald Trump on Sunday hailed the new round of billions of dollars in taxpayer subsidies to help struggling farmers survive his trade war with China. But his praise follows a troubling report that the trade aid — a total over two years of $28 billion — is being disproportionately doled out to farmers in Trump-supporting southern states, and being paid to the largest, wealthiest farms and foreign corporations.
The Department of Agriculture said Friday it will begin making the second round of this year’s $16 billion in trade aid payments to farmers this week.
Our great Farmers will recieve another major round of “cash,” compliments of China Tariffs, prior to Thanksgiving. The smaller farms and farmers will be big beneficiaries. In the meantime, and as you may have noticed, China is starting to buy big again. Japan deal DONE. Enjoy!
— Donald J. Trump (@realDonaldTrump) November 17, 2019
The aid is not being paid “compliments of China tariffs,” as Trump tweets, but by the Market Facilitation Program funded by U.S. taxpayers. Trump’s tariffs on Chinese goods are paid by American companies that import the products and typically pass on costs to U.S. consumers.
Nor has China started to “buy big again,” as Trump claims. Though China purchased 50 million bushels of soy from American farmers in October, the American Farm Bureau Federation said it was still 76% below purchase levels before Trump launched his trade war.
Per FGIS #China has now purchased nearly 50 million bushels of #soybeans the last two weeks, YTD at 90.5 mbu. For context, it’s still 76% below pre #TradeWar levels @FarmBureau pic.twitter.com/REzq23ohqd
— John Newton (@New10_AgEcon) November 4, 2019
Also, smaller farmers will unlikely be the “big beneficiaries” of the aid, as Trump tweeted because aid is flowing to the largest and most successful farmers rather than aiding struggling operations, according to a study in August by the Environmental Working Group. More than half of the farm bailouts from January 2018 to April 2019 went to just a tenth of the recipients in the program, according to the study. The top 1% of farmers were paid an average of $183,000, while the bottom 80% averaged less than $5,000.
Trump’s praise for the aid follows by just days another critical report by Democrats on the Senate Committee on Agriculture, Nutrition, and Forestry, saying the aid package “treats farmers unfairly.”
Figures show that 95% of top payment rates are going to farmers in the South, even though they have been less affected by the trade war with China, and that significant payments have been made to wealthy farmers and foreign corporations, the report notes.
Five Southern states receive the highest payments per acre under the program — Georgia, Mississippi, Alabama, Tennessee, and Arkansas. All voted for Trump, all but Georgia voted overwhelmingly for him. The analysis determined that farmers in the Midwest and Northern Plains have been hurt the most by the trade war.
The report accused the Agriculture Department of doing nothing to direct aid to struggling small and medium farms, and farmers just starting out. Instead, the agency doubled payment limits, directing even more money to large, wealthy farming partnerships. The report also lashed the aid program for making commodity purchases from foreign-owned agricultural conglomerates, including $90 million paid to a subsidiary of Brazilian-owned JBS SA.
Meanwhile, farm fortunes continue to stumble. The Farm Bureau reported last month that farm bankruptcies were up 24%, with more on the way. In other data released last week, farm income fell in the third quarter from a year ago in each of the seven rural heartland states covered by the Kansas City Fed.
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