Senate Democrats Slam Trump's $16 Billion Farm Bailout, Allege That It Favors Southern Farmers Over Midwest
A report released Tuesday by Senate Democrats harshly criticized President Trump's $16 billion farming bailout amid the ongoing trade war with China. The report alleges that the Market Facilitation Program (MFP) helps wealthy farms and foreign companies over poor farms and that it favors Southern farmers over those in the Midwest and Northern Plains.
"Over the past two years, President Trump has pursued a chaotic trade agenda that has created unprecedented uncertainty for American agriculture," the report says. "In the bipartisan 2018 Farm Bill, Congress provided balanced support to help farmers manage market instability across the country. The administration upends this careful compromise, replaces income from markets with government payments, create vast inequalities, and does not address the actual trade damage to farmers who have been hit the hardest."
The report claims that farmers in the South have received the most in payments from MFP, but that the money should instead go more toward farmers in the Northern Plains and Midwest region, who have been hardest hit by Trump's tariffs.
The trade war with China has caused farmers to have trouble selling their goods to the Asian country. Mental health experts say that suicides are rising among farmers, with more phone calls to the suicide hotline coming from mostly rural states such as Wisconsin.
Michigan Sen. Debbie Stabenow, the ranking member on the Senate's Committee on Agriculture, wrote a letter to Agriculture Secretary Sonny Perdue accompanying the report. "This Administration's chaotic trade agenda has irreparably harmed farmers, on top of the market instability and extreme weather changes they already face," the letter said, which was signed by 14 other Democratic Senators.
"While we appreciative feedback on this program, the fact of the matter is that the USDA has provided necessary funding to help farmers who have been impacted by unjustified retaliatory tariffs," the Department of Agriculture said in a statement.
Trump and China are currently negotiating on "phase one" of a trade deal which would involve Trump rolling back on tariffs in some form in exchange for China buying U.S. agricultural goods.
Trump on Tuesday told the Economic Club that China is "dying to make a deal" to resolve the trade war.
The trade war with China is part of Trump's "America First" policy, which seeks to implement tariffs on China in order to ultimately bring back American manufacturing. The tariffs have had unexpected consequences on the economy, not only on agriculture but also on the American consumer. Large retailers such as Walmart have said that they would be forced to raise prices during the trade war due to the higher cost of goods.
Top Democrat assails Trump's $16B trade bailout for farmers
MINNEAPOLIS — President Donald Trump's $16 billion bailout package for farmers hurt by the trade war with China unfairly benefits the South at the expense of the North and wealthy producers over smaller farms, Democratic senators concluded in a report released Tuesday.
The report, one of the sharpest congressional critiques yet of the Market Facilitation Program, said five southern states receive the highest average payments per acre under the program — Georgia, Mississippi, Alabama, Tennessee and Arkansas. The analysis by Democratic committee staffers concluded that farmers in the Midwest and Northern Plains have been hurt the most.
It also asserted that the U.S. Department of Agriculture has done nothing to target the assistance to vulnerable small, medium and beginning farmers. Instead, it said the agency doubled the payment limits, directing even more money to large, wealthy farming partnerships.
The USDA said in a statement that payments are based on trade damage, not regions or farm size.
"While we appreciate feedback on this program, the fact of the matter is that USDA has provided necessary funding to help farmers who have been impacted by unjustified retaliatory tariffs," the statement said. "While criticism is easy to come up with, we welcome constructive feedback from any member of Congress with recommendations as to how the program could be better administered."
Sen. Debbie Stabenow, of Michigan, the top Democrat on the Senate Agriculture Committee, said the program also lacks any plan for rebuilding or replacing the markets that farmers have lost since they became caught up in the trade war last year. She leveled the charges in a letter to U.S. Agriculture Secretary Sonny Perdue that accompanied the 12-page report.
"This Administration's chaotic trade agenda has irreparably harmed farmers, on top of the market instability and extreme weather challenges they already face," Stabenow wrote in the letter signed by 14 other Democratic senators, including Senate Minority Leader Chuck Schumer, of New York.
The agency has set aside nearly $16 billion under MFP for the current crop year, up from the $12 billion inaugural edition for 2018 crops. The agency has paid farmers over $6.8 billion so far in first installments. According to the USDA, the states collecting the highest overall totals as of Tuesday — more than 60% of the total funds — are Iowa, Illinois, Minnesota, Texas, and Kansas.
A separate analysis by the American Farm Bureau Federation released later Tuesday backed up the USDA's assertion the dollars have flowed mostly to the Midwest, even though the per-acre rates are higher in parts of the South. The Farm Bureau report said that's because most of the acres planted in crops that are eligible for MFP payments are planted in the Midwest. The group did not address the Democratic senators' claim that the formula is unfair.
The USDA is expected to approve second installments in the next few weeks and could release a final round in January if trade woes persist.
An Associated Press analysis in July found that many large farming operations had no trouble circumventing the program's payment caps. A separate AP analysis last month showed how a farming business owned by West Virginia Gov. Jim Justice — a billionaire who's the richest man in his state — collected the maximum of $125,000 then allowed under the program.
While the senators called on Perdue to "improve" the program before more payments go out, they proposed few specifics.
Until now, Congress had been relatively muted in its criticisms of MFP. Democratic Rep. Collin Peterson of Minnesota, who chairs the House Agriculture Committee, sent a less-sharply worded letter to Perdue earlier this month, pointing out several "inequities" and urging him to consider fixes.
The 2018 and 2019 versions used very different formulas for allocating aid. The program originally was based on a farm's production of certain crops. About 83% of the money went to soybean producers because they had suffered the most from China's retaliatory tariffs.
For 2019, farmers get fixed per-acre payments based on their county, varying from $15 to $150 per acre, based on how much the USDA calculated that each county had been hurt. Counties qualifying for the highest per-acre payments are concentrated in the South, the report noted. And the payment caps were doubled, from $125,000 to $250,000.
Roger Johnson, president of the National Farmers Union, said the report highlights "gross disparities" from region to region. He noted that producers in western and northern soybean country, who typically shipped their crops to the Pacific Northwest for export to China, suddenly took a big price hit because they had nowhere to send their beans. Yet, he said, it shows the money flowed disproportionately to southern farmers.
The USDA could have designed the program better if it had consulted with Congress, Johnson said, because the agriculture committees have experience in minimizing regional and other inequities.
Brooke Appleton, vice president of public policy at the National Corn Growers Association, said the Democratic senators' report, along with Peterson's letter, "raised important issues regarding the impact on northern state corn farmers who have faced additional hurdles due to limited export opportunities in the Pacific Northwest."
The administration has not said if it will extend MFP for 2020, when Trump will be counting on maintaining his base of support in rural America as he seeks re-election.