Trump subsidies make up a third of U.S. farm income

Administration has used trade wars, COVID-19 as reasons to boost subsidies

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Reuters – U.S. President Donald Trump is assuring a bumper year for farmers as the Nov. 3 election approaches, with record government subsidies projected to make up more than a third of farm income in 2020.

The aid programs could be key to Trump’s chances of success in swing states such as Wisconsin, Ohio, Iowa and Minnesota. Such states are hotly contested because their population can swing either to Republicans or Democrats and play a decisive role in presidential elections. Farmers favored the Republican president by a wide margin in the 2016 election.

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Trump has banked on that support to endure through trade wars that his administration fought with key U.S. commercial partners since he took office. Reprisals from China and other trade partners to Trump’s tariffs on imports led to the loss of billions of dollars in U.S. agricultural exports.

Government payments, ranging from longstanding crop insurance payments to new programs compensating farmers for lost sales during the U.S.-China trade war, have risen every year of Trump’s presidency.

Farmers also say they have suffered from Trump’s policy of exempting some oil refiners from requirements to blend ethanol into their fuel, which has reduced demand for corn used to make the biofuel.

“I feel that we have got the ear of the folks that are making policy decision on the farm side,” said Roger Hadley, who farms about 1,000 acres of corn and soybeans in northeastern Indiana. “I’m very much concerned that if Biden-Harris gets elected … I do not have the confidence that we will be taken care of as well, at least short-term.”

Farmers initially pleaded to Trump for “trade not aid” in 2018 but have since received repeated bailouts even as COVID-19 stimulus for millions of other Americans stalls in Congress.

With the latest $14 billion farm aid package announced in Wisconsin on Sept. 17, federal payments to farmers are expected to reach a record $51.2 billion this year. The government’s share of farmers’ net cash income will also rise to 39.7 per cent, the biggest in 20 years.

Net cash income is a closely watched indicator of farm health that calculates the amount of money a farmer gets to keep after expenses. The Agriculture Department forecast net farm income would rise four per cent in 2020 from last year even before the most recent aid announcement.

Vote buying?

The latest COVID-19 aid package came at a time the farm economy was improving.

The Environmental Working Group, a health and environmental advocacy group, called the program “old-fashioned vote buying,” saying it did not send money to groups truly at risk. But USDA Secretary Sonny Perdue said the government talked to farmers and ranchers to design a plan that met the needs of those impacted by the pandemic.

Though China’s purchases of U.S. agricultural goods remain below the $36.5 billion promised this year in a Phase 1 trade deal, its increased purchases of corn and soybeans in recent months have benefited farmers and helped push up commodity prices.

Prices of corn, soybeans and wheat were also supported by U.S. weather concerns in August and have been rising since then.

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