Congress' relief money another 'unprecedented' aid package for farmers
This could be the most expensive year yet for farm aid from President Donald Trump.
The administration for the third year in a row will infuse an unprecedented amount of money into the farm economy after Congress authorized more than $23 billion as part of the just-enacted stimulus package to blunt the economic harm caused by the coronavirus pandemic.
And once again, the Agriculture Department has broad discretion to decide how to divide up the funds among farmers — a constituency the president has gone to great lengths to sustain support from throughout his term.
Congress was under pressure to pass a relief package quickly last week as the economy reeled, and there is concern that payouts from the latest aid package could be motivated by the strongest lobbying forces rather than by the most in need.
Trump’s two trade bailouts in 2018 and 2019 totaled about $14 billion and $16 billion, respectively. Some Democrats and advocates of underserved farmers have criticized that program for disproportionately benefiting large and wealthier operations and some corporations like meatpacking giant JBS USA. They worry that history is about to repeat itself.
“There is no historical comparison for what the administration did in 2018 and 2019,” Jonathan Coppess, who directs the agricultural policy program at the University of Illinois at Urbana-Champaign, said in reference to the size of the trade-related bailouts. “You add the economic fallout from Covid-19, and we really don’t have anything comparable. Prior to the Great Depression, these programs didn’t even exist.”
What the numbers show
In the latest legislation, groups including the American Farm Bureau Federation, National Cattlemen's Beef Association, National Corn Growers Association and United Fresh Produce Association pressed Congress to make sure their industries were eligible for USDA's newly created $9.5 billion coronavirus emergency response fund.
Congress also restored $14 billion to a Depression-era financial institution known as the Commodity Credit Corporation, which the administration used to fund its trade aid programs. There are few restraints on how the secretary of Agriculture can dole out money from the CCC, except for a $30 billion annual borrowing cap that USDA could have breached without the new infusion of money from the latest bill.
Some of the direct harm to farmers' bottom lines from the pandemic is obvious. The volatility in the commodity markets has depressed the price of corn, dairy products and cattle. Farmers who rely on large orders of their fresh fruits, vegetables and specialty goods from local and regional food systems, such as schools and restaurants, are watching those customers dry up.
However, a spike in demand for bread and pasta products has lifted wheat futures. Meat processors like Tyson Foods are seeing record sales, prompting the company to pay ranchers a one-time premium, Reuters reported.
Senate Agriculture ranking member Debbie Stabenow (D-Mich.) is among the lawmakers who worry the latest aid package will again reflect regional disparities that her office analyzed in the trade relief programs.
A spokesperson for Stabenow told POLITICO that because of the concerns about the equitable distribution of money, the senator fought to ensure sectors that have been shorted in the past — such as dairy, fresh produce, nuts and local food — are eligible for the coronavirus response money.
“We’ll be monitoring implementation to hold USDA accountable to distributing aid fairly and encourage USDA to follow the bipartisan payment limits set by the farm bill,” the spokesperson said.
The new relief package does set aside $750,000 for USDA’s inspector general to investigate how the funds were spent, but Congress did not request any specific inquiry or remedy.
Lawmakers also did not direct USDA to apply any income limits in the latest relief package. Stabenow's spokesperson said the senator would encourage the USDA to use restrictions in the farm bill, which are set at $125,000 a year per farmer or business as long as they don’t earn more than $900,000 in annual adjusted gross income.
Last year, however, Congress expanded those limits for the trade relief package, allowing them to be waived entirely if at least 75 percent of a farmer's income is from agriculture or forestry-related activities.
A review of trade aid by the Environmental Working Group, a nonprofit group that has long criticized many farm subsidies, found that overall, the top 1 percent of recipients collected 13 percent of all payments.
Scott Faber, EWG’s senior vice president for government affairs, said USDA should make sure that only farmers who have been financially harmed because they lost money from declining sales or prices due to the pandemic should be compensated under the coronavirus stimulus fund.
“This is important, because we don’t want to funnel money only to the most successful farmers,” he said in an interview.
That could prove challenging, said Joseph Glauber, senior research fellow at the International Food Policy Research Institute, and former USDA chief economist.
“Both the 2018 and 2019 [market facilitation] programs were ostensibly designed to reflect trade damages suffered because of the China tariffs. But with the phase one deal, that rationale no longer is relevant," Glauber said, referring to the partial agreement that the U.S. and China signed in February.
"I am not sure how you would separate out price impacts from Covid-19 versus other market factors. My guess is that the distribution and amounts will look a lot like 2019,” Glauber added.
Election year politics at play
There are some indications that the relief money will flow to some previously ignored sectors of the food economy. The coronavirus stimulus package is the first time that the local and regional food markets are being explicitly recognized in a disaster relief fund, said Ferd Hoefner, senior strategic adviser at the National Sustainable Agriculture Coalition.
The organization last week highlighted research estimating $1.3 billion in economic losses to those markets between March and May of this year. The vast majority, or 85 percent, of farms supplying them are small, while one in four have recently entered the business, USDA data shows.
Before Congress passed the stimulus, the United Fresh Produce Association had requested more than $6 billion in aid to make up for lost sales and outstanding expenditures that food service distributors owe growers and shippers, as well as boost a federal program allowing schools to buy fresh produce.
Still, political considerations may still be at play in an election year, even as Trump has maintained widespread support from farm country despite his drawn out trade wars with China, Mexico, Canada and other countries that led to retaliation against U.S. farm exports. In January, the president got an 83 percent approval rating in a poll of more than 1,200 producers by the trade publication Farm Journal.
Agriculture Secretary Sonny Perdue recently said the administration won’t offer any more trade aid this year because it was meant to offset disruptions in relations with China and other major buyers — not intended to be a commodity price support program.
But the president has tweeted several times this year that he may roll out another round of assistance to farmers hurt by trade.
Glauber noted that combined, the coronavirus stimulus funds for agriculture, already approved trade relief and traditional farm subsidies could total $50 billion in payments in fiscal 2020 alone.
USDA already predicted that government payments accounted for 24 percent of all farm income in 2019, the largest share in more than a decade.
“Unprecedented to say the least,” Glauber said, adding that it reminded him of how a former USDA administrator described the disaster programs deployed during the farm crisis of the 1980s.
The subsidies then were "akin to shoveling dollars out of the back of a big flatbed truck. There was so much of them you didn't care where they landed,” Glauber said.
Ryan McCrimmon contributed to this report.
