Trump’s Farmer "Bailout," Explained

Last week, the Trump administration announced its plan to help U.S. farmers weather the economic fallout of Trump’s trade war. Ever since, there’s been a lot of discussion about this so-called farmer bailout, much of it focused on the political calculus of whether it's enough to shore up Trump’s support in rural communities.

Despite all the ruckus about the announcement, we still don’t have any real details about how the aid package will work. We do know that USDA plans to do three things: try to find new export markets for U.S. agriculture products that are subject to increased tariffs (in retaliation for U.S. tariffs on imported steel and other products); absorb some of the “excess” commodities in the U.S. by purchasing them to donate to food banks and other feeding programs; and give direct payments to U.S. producers of soybeans, corn, wheat, cotton, sorghum, milk and hogs.

It’s the last item – direct payments to farmers – that will likely have the biggest price tag and is generating the biggest controversy. But even Agriculture Secretary Sonny Perdue admits this is a short-term fix that probably won’t fully cover the losses that many U.S. farmers will suffer when the prices for their crops drop due to lost export markets. And it’s definitely clear that this one-time payment won’t make up for the fact that U.S. farmers are suffering through the fifth consecutive year of low prices.

So how did we get here? The war of words about the U.S. balance of trade (often delivered via presidential tweet) started many months ago, but got real for U.S. farmers in early July when increased tariffs essentially closed critical export markets like China for many U.S. agriculture exports. U.S. trade policy does need a lot of help, but crude responses like tariffs (and the totally unsurprising retaliation from other countries towards U.S. exports) probably aren’t going to cut it.

How Did We Get Here?

Beyond the question of whether or not the tariff war will work, we need to ask why U.S. farmers are so dependent on export markets that can close virtually overnight. A big part of the answer is broken farm policy that drives U.S. agriculture to constantly produce more. This endless drive to overproduction creates many of the disturbing trends in our food system:

• Factory farms that feed animals cheap corn and soy (including a wave of factory farm expansion in places like Iowa that are being built produce meat for export);
• An ever-expanding lineup of processed foods to use up ingredients like corn syrup, soybean oil and milk proteins;
• And an endless search for export markets, with several decades of trade deals designed to ease the flow of U.S. corn, soy, wheat and meat to other countries, often at such a low price that farmers in those countries can’t survive the influx.

This emphasis on overproduction isn’t an accident – it’s the result of decades of corporate influence over our farm policy that means that farmers sell into corporate-controlled markets that don't have enough competition to ensure they can get a fair price. Big Ag companies have mastered the process of using this oversupply to pit farmers in the U.S. against farmers in other countries, driving prices down in a race to the bottom that only benefits the companies’ bottom lines.

So, no – simply ending these tariffs isn’t going to fix what’s wrong in the U.S. farm economy. But fixing our broken farm policy and ensuring a functional marketplace where farmers are paid fairly would.

We Must Fix the Farm Bill

Congress is working on the Farm Bill right now. Tell them they need to:

• Create a Real Safety Net for Farmers: Instead of relying on subsidized crop insurance, we need to restore supply management programs that create a price floor for commodity crops and establish grain reserve programs that could be used to provide stability for farmers and rein in overproduction.
• Stop Propping Up Factory Farms: If U.S. farmers are suffering from low prices because of there’s too much product on the market, why does the Farm Bill subsidize the growth of new factory farms? The Farm Bill should stop corporate factory farms from exploiting taxpayer-funded conservation programs, such as the Environmental Quality Incentives Program, and the taxpayer-funded guaranteed loan program to build even more factory farms.