Trade Aid: Democrats Charge USDA of “Picking Winners and Losers” – DTN

A group of Senate Democrats released a report Tuesday on the Trump administration’s agricultural trade aid program, charging USDA “is picking winners and losers in their attempt to aid farmers affected by President Trump’s turbulent trade agenda.”

Led by Senate Agriculture Committee ranking member Debbie Stabenow, D-Mich., and Senate Minority Leader Chuck Schumer, D-N.Y., the report stated Market Facilitation Program payments were unevenly distributed across the country.

The report states USDA’s MFP “has treated farmers unfairly by, among other things, sending 95% of the top payment rates to Southern farmers, who have been harmed less than other regions, and helping farms owned by billionaires as well as foreign-owned companies, including awarding $90 million in purchase contracts to a Brazilian company.”

The MFP was set up last year after the Trump administration vowed farmers would not be hurt by trade disputes with China and other countries that had sparked retaliatory tariffs.

Sen. Debbie Stabenow, D-Mich., ranking member of the Senate Agriculture Committee, spearheaded the report.

FARMERS NEED HELP

“Farmers need help to stay afloat as this administration’s erratic trade actions continue to harm our agricultural economy,” Stabenow said. “The problem is USDA’s flawed aid formula is a short-term solution that picks winners and losers, while failing to adequately help the farms hit the hardest.”

In a letter delivering the report to U.S. Agriculture Secretary Sonny Perdue, the senators wrote, “Instead of taking a careful approach like Congress did in the recent bipartisan 2018 farm bill, the USDA has replaced markets with short-term, inequitable payouts that lack transparency.”

The senators urged Perdue “to improve its trade assistance program to better support small farmers and pursue a focused trade policy to rebuild the markets American farmers have lost.”

The letter states farmers in the Midwest and Northern Plains were hit with lower national soybean prices and higher transportation costs to reach different markets after the Trump administration began its tariff disputes with trading partners, notably China.

HIGH PAYMENTS TO COTTON AREAS

The report states Southern crops such as cotton did not have a price decline, but they received much higher payment rates “and the top five states for 2019 MFP are in the South.”

Senate Democrats questioned the high payments to cotton-producing areas, noting, “During 2018, cotton prices and exports did not exhibit the sharp declines one would assume based on cotton’s payment rate.”

As of last week, USDA stated the MFP payments for the 2019 program had reached just under $6.7 billion to more than 564,000 farmers.

In a statement to DTN, a USDA spokesperson defended how the MFP payments for 2019 were set up and were being distributed. Payments were based on trade damage, not region or farm size, a USDA spokesperson stated. Further, payments were more weighted to the Midwest and not the South, USDA stated.

USDA RESPONSE

“To date, the Midwest region has received more than 60% of the funds and the top five recipient states from the 2019 MFP program are Illinois, Iowa, Kansas, Nebraska and Minnesota, which directly refutes the claims made in this report,” the USDA spokesperson stated.

“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. 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.”

The Senate Democrats’ report points out that farmers in 2,901 counties have received MFP payments, but there are 193 counties with payment rates of $100 an acre or higher. The vast majority of those counties — 95% — are in Southern states, according to the report. Another 402 counties received the minimum $15 an acre.

COUNTY DIFFERENCES

The Democrats’ report points out, “The disparities across county lines, even the Southern states, can be extreme.” Hancock County, Georgia, farmers, for example, received an average payment of $150 an acre, while farmers in neighboring Baldwin County got $15 an acre.

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Senate Democrats also called out “payments made to billionaires and foreign-owned companies,” which includes $90 million in pork sales for JBS, a Brazilian-owned packer with packing plants in several states. JBS was awarded those sales under a $1.2 billion food purchase program USDA created as part of its trade-aid package.

Along with that, the report highlights USDA did not take steps to help smaller or beginning farmers, but instead doubled the payment limit from $125,000 per farmer to $250,000. Limits on millionaires getting farm payments were also ignored, Senate Democrats said, citing that “The family-owned farms of the billionaire governor of West Virginia even earned the maximum payment under the 2018 MFP.”

The Senate Democrats’ report comes after House Agriculture Committee Chairman Collin Peterson, D-Minn., also wrote Perdue last week, raising some concerns about “inequities” in the MFP payments.

Peterson’s letter stated, “The current (MFP) has created winners and losers among neighbors who find themselves facing the same market situations, meaning that some producers may remain viable while others may be forced out of business.”

Peterson raised several issues with the payments. For instance, dairy farmers also question why MFP payments were based on established farm production history, while crop were based on actual production. The letter noted dairy farmers’ actual production is readily available via their milk checks.

The Senate Democrats’ report can be viewed here.

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

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