Trump provides record aid to farmers
$46B in direct payments almost doubles previous record set in 2005
President Trump speaks in 2018 at the U.S. Steel Granite City Works, where he pledged support for agriculture because Chinese tariffs were intended to hurt him politically with farmers. (One Illinois/Ted Cox)
By Ted Cox
The Trump administration almost doubled the previous record this year for direct government payments made to farmers.
Not counting crop insurance, the government made $46 billion in direct payments to farmers this year, according to the U.S. Department of Agriculture’s Economic Research Service. The previous high was about $25 billion set in 2005 under President George W. Bush.
FarmWeek Now reported Thursday that of the $120 billion in overall farm income projected for 2020 — the highest mark since 2013 — almost a third of that, $36 billion, came from four ad hoc programs outside of those established in the Farm Bill, two of them related to the pandemic.
President Trump’s Market Facilitation Program was intended to compensate farmers for the ill effects of Chinese retaliatory tariffs in his trade war with China. Trump launched the trade war with tariffs on Chinese steel imports intended to reinvigorate the American steel industry. He touted the benefits in an appearance at the U.S. Steel Granite City Works in 2018, when he also made it personal politically, saying, "China tried to hurt the American farmer because that way they would hurt me." Touting what was then $12 billion in direct payments to farmers, he urged unity of purpose, saying, "We're going to stick together and win together."
According to FarmWeek, the first round of MFP payments amounted to $8.2 billion and the second round was $13.6 billion. At the end of last year, it was estimated the government had paid $28 billion in handouts to farmers in the trade war — more than double the bailout of the auto industry in the Great Recession a decade ago.
But the U.S. steel recovery has flagged, and the MFP payments have drawn flak, with U.S. Sen. Dick Durbin charging they went disproportionately to Southern cotton farmers instead of Midwest corn and soybean growers who bore the brunt of the tariffs. There were also findings that the payments went disproportionately to the largest farms.
Farmers also received direct payments this year through the Coronavirus Food Assistance Program and the Paycheck Protection Program, part of the original CARES Act COVID-19 relief package, although FarmWeek pointed out that about $8 billion in PPP funds went to agriculture, forestry, and fishing.
Farmers also gained this year from the Wildfires and Hurricanes Indemnity Program Plus, which compensated not only Southern farmers for hurricane damage but also Iowa and Illinois farmers for damage sustained in the derecho wind storm that swept through the states this summer.
According to USDA research, standing payments made to farmers through the Farm Bill have remained fairly level over the last five years, with $10 billion in aid allotted to farmers this year and another $2 billion in crop insurance. But the ad hoc programs have exploded, with $16 billion sent directly to farmers last year and the $36 billion this year.
Joe Janzen, an assistant professor at the University of Illinois, told FarmWeek, “We have never seen government payments at this level both in nominal terms and even after adjusting for inflation.”
Given Trump’s strong agriculture support, and that 2020 was an election year, one might well wonder whether the president was paying to solidify that support. But Nick Paulson, University of Illinois agricultural and consumer economics associate professor and director of graduate programs, said it’s tangled up in the larger economy and the economic impact from the pandemic.
“We’ve got this public perception issue where we’ve got close to record farm income levels, a relatively high share of that coming from taxpayer dollars, all while we’re experiencing some slowing in the overall recovery,” he told FarmWeek. “We still have 10.7 million unemployed individuals as of the latest jobs report, 6.7 percent unemployment rate.”
Aid to farmers also often results in lower prices for consumers at the supermarket. But, just as Bush cut aid to farmers in a budget crunch after that previous record amount of aid in 2005, Paulson warned farmers to beware another reckoning. “Thinking about what we in the agriculture industry can bring to the table, so to speak, to justify the support we receive,” he said. “Ag support is justified by the abundant, cheap, and safe food supply that we all supply, and that shouldn’t be discounted. I think moving forward we’re going to have to think how we can be more proactive in bringing other aspects to the table. Whether they are climate-related, conservation-related, sustainability-related, or some other things that we may not even be thinking about right now.”