USDA facing fund cuts

Trump proposes cuts as farmers grapple with their worst crisis in decades due in part to the tariff wars

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Washington | Reuters – United States President Donald Trump’s 2020 budget has proposed a 15 per cent cut for the U.S. Department of Agriculture, calling its subsidies to farmers “overly generous” at a time when farmers are going through the worst crisis in decades due to depressed commodity prices and trade tariffs.

The president’s budget released March 11 requested US$20.8 billion for the USDA, a $3.6 billion or 15 per cent cut from the 2019 estimate, according to the proposed budget text. It proposes reducing premium subsidies for crop insurance, limiting the number of producers who would be eligible and tightening commodity payment limits.

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Why it matters: Farmer planting intentions, supply-demand estimates and current commodity prices can all swing wildly depending on farm programs offered by USDA.

“The budget also proposes that USDA responsibly and efficiently use taxpayer resources by making targeted reforms to duplicative programs and overly generous subsidy programs,” the document said.

The move comes at a time when the U.S. agriculture industry is going through its worst crisis since the 1980s, triggered by depressed commodity prices and deepened by Trump’s trade dispute with key trading partners such as China.

The American rural heartland had helped carry Trump to victory in 2016 and remains largely supportive of his hard line on trade, but is urgently calling for a deal with China to end the trade dispute.

Crop insurance and commodity programs serve as a safety net for farmers, shielding them from the financial damage of unforeseen natural disasters and helping them better manage their risk.

The budget proposes to reduce the average premium subsidy for crop insurance from 62 per cent to 48 per cent and limit subsidies to those producers that posted an adjusted gross income of half-a-million dollars or less.

It also requests tightening commodity payment limits, including eliminating an “unnecessary and separate” payment limit for peanut producers and limiting eligibility for commodity subsidies to one manager per farm.

Trump’s budget is expected to be rejected by Congress, where Democratic leaders on March 10 warned him against what they called a “repeat performance” of last year’s funding war, which led to a five-week partial shutdown of the federal government.

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