$28 billion farm bailout an effort to compensate farmers for trade war fallout - Entrepreneur Generations

U.S. Department of Agriculture chart; click the image to enlarge it.

President Trump has dispensed billions of dollars in aid to American farmers in hopes that the bailout money will placate some of his most loyal voters while he carries on the trade war with China. "American farmers … have become more dependent on government money than they’ve been in years. At $28 billion so far, the farm rescue is more than twice as expensive as the 2009 bailout of Detroit’s Big Three automakers, which cost taxpayers $12 billion," Mario Parker and Mike Dorning report for Bloomberg.

Illinois soybean farmer Stan Born told Bloomberg: "The aid package that has come in is a relief, and it softens the landing, but it’s not a solution, it’s a Band-Aid." When reporters asked him if the trade relief made him whole, he said "Of course not," and said he'd rather have free trade.

"Farmers became collateral damage in Trump’s tit-for-tat tariff war with China, which is being waged primarily for the benefit of such sectors as manufacturing and tech," Parker and Dorning report. "Agriculture is actually one of the rare U.S. industries that consistently runs a trade surplus, and not just with China—testimony to the gains that have accrued to American farmers from globalization."

The ag sector's success on the global market is the main reason many farmers are at a disadvantage now. Until the trade war, China was the nation's biggest soybean customer (exceeding $12 billion in 2017), and a major purchaser of many other ag products like pork, Parker and Dorning report. Though China has made a few soybean buys as a goodwill gesture during trade talks, it's not purchasing anywhere near what it used to.

"For American producers, the hit to exports has further strained finances that are at a breaking point because of a six-year slump in prices for agricultural commodities," Parker and Dorning report. "Net farm income is projected to be down 29% this year from 2013 levels, and debt to total $416 billion."

Many corn farmers have also complained that President Trump has not fulfilled a campaign promise to increase the amount of corn-based ethanol that must be mixed into the nation's gasoline supply, Bloomberg reports. Instead, the administration has given dozens of hardship waivers to smaller oil refiners, allowing them to ignore the renewable fuel standard and not mix ethanol into their gasoline.

The record wet weather has added to farmers' financial pressure, preventing farmers from planting about 11.4 million acres of corn and 4.5 million acres of soybeans. "The bailout funds won’t cover all of farmers’ losses," Parker and Dorning report. "Producers in Iowa received $973 million in direct payments from the first round of trade aid covering a period in which Iowa State University estimated the trade war cost them $1.7 billion."

Though farmers shouldn't be conflated with rural residents, it's worth noting that rural support for Trump remains consistently about 12 percentage points higher than the national average. "In August, 52% of rural residents approved of Trump’s job performance, vs. 40% of Americans overall, according to Gallup polling including 1,258 self-identified rural respondents," Parker and Dorning report. "Support among farmers is even higher: 67% back Trump, up from 60% a year ago, according to a Farm Futures survey taken from July 21 to Aug. 3."

from The Rural Blog https://ift.tt/2mSqDfn $28 billion farm bailout an effort to compensate farmers for trade war fallout - Entrepreneur Generations

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