American farmers already receive billions of dollars in federal aid every year to protect them when prices fall due to weather or market fluctuations.
The Trump administration juiced this long-standing safety net by pledging an additional $12 billion in aid Tuesday – but this time, it’s to compensate some farmers and ranchers from the fallout of President Donald Trump’s widening trade feuds. The nation’s agriculture sector has seen prices drop and supplies pile up as other countries impose tariffs to counter Trump’s actions.
The effort is unusual because of its magnitude and because it originates from the executive branch, not Congress.
It’s also notable that it comes in reaction to a “self-inflicted disaster,” said Joseph Glauber, senior research fellow at the International Food Policy Research Institute in Washington, DC.
The U.S. Department of Agriculture announced Tuesday that it will utilize a Great Depression-era law to send payments to producers of dairy, hogs and certain crops. It will also purchase surpluses of commodities including fruits, nuts, rice, beef, pork and milk and distribute them to food banks and other nutrition programs. And the agency will work with the private sector to develop new export markets for farmers.
The new funding, which some Republican lawmakers slammed as “welfare,” comes on top of federal backstops that have been authorized by Congress through farm bills that date back to the 1930s. Spending on farm safety-net programs has been about $16 billion, on average, over the past 20 years, according to the Congressional Research Service.
Farmers can receive payments if their prices or revenues fall below a certain level, or they may get support to farm in a way that’s friendly to the environment, such as constructing terraces to prevent soil erosion. Also, the Agriculture Department may buy their products to help soak up excess inventory. Think the government cheese program from the 1970s, when the agency helped support dairy farmers.
These protections were originally implemented to guarantee the nation had adequate food and feed supply, which was crucial to growing the economy, said Chad Hart, an agriculture economist with Iowa State University.
Now, however, the United States has a booming agriculture export business, which has made trade even more important to farmers. China is the largest market for American farmers, while Canada and Mexico are also substantial buyers of U.S. agricultural goods.
“Most producers were very happy with the way trade was going,” Hart said, noting that many farm sectors run a trade surplus.
Many experts and farm groups see the administration’s plan as an immediate fix for the industry’s losses. But it doesn’t address the long-term pain that farmers will feel if the tariffs remain in place.
“The $12 billion package of agricultural assistance announced today by the administration will provide a welcome measure of temporary relief to our farmers and ranchers who are experiencing the financial effects of the trade war,” said Zippy Duvall, president of the American Farm Bureau Federation, a trade group. “This announcement is substantial, but we cannot overstate the dire consequences that farmers and ranchers are facing in relation to lost export markets … We will continue to push for a swift and sure end to the trade war and the tariffs impacting American agriculture.”