Dan Murphy: Farm Payment Failure

12:24PM Nov 19, 2019
Piles of grain
Farmers will receive payments for losses due to tariffs.
( FJ )

The billions that have been earmarked — some would say needlessly — to offset famers’ losses in the trade wars … turns out they might not be helping the very folks who need help the most.

President Trump is praising the latest round of scheduled payments for U.S. farmers hurt by the trade war with China.

He tweeted that, “Our great Farmers will recieve (sic) another major round of ‘cash,’ compliments of China Tariffs, prior to Thanksgiving. The smaller farms and farmers will be big beneficiaries.”

Now, I know that media personalities are always encouraging us to take sides regarding our president’s behavior: Either he’s a lying, cheating grifter, or he’s a just a tough guy who’s changing the way commanders in chief do business.

Such partisanship might qualify politics as usual, or even be considered fairly benign when it comes to Republican or Democratic positioning prior to the presidential primaries, but with critical security issues, spinning reality to fit a partisan narrative is deeply troubling.

And food security IS national security, no matter how many Americans remain clueless about the vital importance of farm productivity.

In that context, there’s a lot to unpack from both the president’s tweet and the impact of the approximately $28 billion that’s been doled out or is scheduled to be gifted to farmers struggling to deal with the loss of foreign markets as a result of the tariff wars the administration unilaterally initiated.

Misleading, at best

Even as USDA announced last week that the department would begin the second round of “trade aid” payments to farmers — some $16 billion as part of its Market Facilitation Program (talk about euphemisms) — a scathing new report from the minority caucus of the Senate Agriculture Committee cast serious doubt on the effectiveness of those billions, if not the rationale for the payments themselves.

First of all, the funding isn’t being paid “compliments of China Tariffs,” as Trump tweeted, but by the taxpayers. As has been noted ad nauseum by pundits and politicians alike, tariffs on Chinese goods are paid by U.S. companies that import those products, with the costs passed on to American consumers.

Also, smaller farmers are apparently not the “big beneficiaries” of the aid. According to an analysis by the (admittedly partisan) Environmental Working Group earlier this summer, more than half of the total payments from January 2018 to April 2019 went to just 10% of program recipients. EWG’s report stated that the top 1% of farmers were paid an average of $183,000, while the bottom 80% averaged less than $5,000.

That’s because the initial round of payments was linked to crop production data, which favored the largest growers of commodity crops. And although USDA placed a $125,000 cap on program payments, the department ended up allowing relatives in farm families — in some cases, ones who were not integral to operations — to also receive payments, allowing many farms to sidestep the cap.

Even the changes implemented for the second round of payments favor bigger famers, according to the EWG report, as USDA Secretary Sonny Purdue announced that payments would now be scaled according to acreage, not production volume. As the report phrased it, “The bigger the farm, the bigger the government check.”

That disparity may not be the worst of the problems with the Market Facilitation Program, however, according to the Senate Ag Committee’s Minority Report.

According to data compiled by Democrats on the Senate Committee on Agriculture, Nutrition, and Forestry, 95% of the top payment rates are going to famers in Georgia, Mississippi, Alabama, Tennessee, and Arkansas, all states that voted solidly for President Trump in 2016.

Coincidence? Maybe not.

USDA’s own data show that farmers in the Midwest and in the Northern Plains, not the Southern states, are the ones who’ve been hurt the most by the trade war’s constraints on Chinese markets. Most soybean exports, for example, are shipped via Northwest ports to Asia. With that market restricted, Gulf ports became the alternative, which favors, not punishes, Southern farmers.

Perhaps worst of all, worse than funneling payments to the biggest and most profitable farmers, worse than rigging the system to disproportionately reward red states, worse than pretending that China is footing the bill for the multi-billions in farm aid is the lack of planning for market access recovery. The most troubling accusation from the Senate Ag Committee’s minority caucus report is that the administration is not providing any long-term investment nor creating a road map for rebuilding export markets.

At some point, these often-chaotic trade wars will cease.

Whether American farmers end up as winners or losers when that finally occurs is the operative question.

The opinions in this commentary are those of Dan Murphy, an award-winning journalist and commentator.

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