With signup underway for $16 billion in coronavirus payments, farmers overwhelmingly say more federal aid to agriculture is needed this year, according to a Purdue University poll released on Tuesday. Farm spending is headed for a record this year and could exceed $30 billion from an amalgam of crop subsidies, land stewardship programs, disaster relief and stop-gap Trump administration initiatives.
Farmers and ranchers have plenty of company in their call for additional aid. Agriculture Secretary Sonny Perdue has said that farm sector needs will exceed the $16 billion now available and the chairman of a key Senate Appropriations subcommittee has said he wants to boost USDA’s spending power by $20 billion, so more assistance can be offered.
Market prices for major agricultural commodities, such as soybeans, corn, cotton, cattle, hogs, dairy, and fresh fruits and vegetables, plummeted as the coronavirus gripped the United States and the economy slowed. The pandemic has dashed hopes of a speedy rebound by ag exports from the China-U.S. trade war and could puncture the slow recovery of farm income from the collapse of the commodity boom six years ago.
By a 2-to-1 margin, producers taking part in Purdue’s monthly Ag Economy Barometer poll agreed “it will be necessary for the president and Congress to pass another bill to provide more economic assistance to farmers.” The telephone survey of 400 large-scale operators, conducted from May 18-22, coincided with the administration’s announcement of payment details for the coronavirus payments. Asked when payments would begin, the USDA said on Monday “payment details will be forthcoming shortly.” Enrollment began on May 26.
Additional aid is a longstanding expectation in farm country. Two months ago, before the coronavirus became the dominant topic, Purdue said 62 percent of farmers expected a new, multibillion-dollar round of trade war payments. The USDA gave $23 billion to producers to mitigate the impact of trade war on 2018 and 2019 crops and livestock.
The Trump payments for trade war and coronavirus account for more than half of likely farm payments this year; the USDA released $3.6 billion in trade-war payments in February and plans to distribute quickly the $16 billion in coronavirus aid. The CBO says crop subsidy and land stewardship programs are running at $4 billion each annually. Dairy and disaster programs could add another $2 billion. Some assessments of farm supports include the $6 billion in premium subsidies paid yearly by USDA to reduce the cost of crop insurance policies for producers.
Beyond that, $14 billion will become available to USDA after it submits a June 30 financial report for the Commodity Credit Corp, the agency that is the conduit for USDA spending. Some of that money could be used for coronavirus relief.
Federal payments “will be at a record level in nominal terms” for this calendar year even if there are no additional rounds of spending, said Pat Westhoff, head of the FAPRI think tank at the University of Missouri. He declined to suggest what this year’s tally would be.
In the Ag Barometer survey, farmers and ranchers commonly expected worse financial performance this year than last on their operations and 71 percent said they were worried about the impact of the coronavirus pandemic on their farm’s profitability. “The results didn’t change a lot from the previous two months,” said Purdue economist Jim Mintert, who oversees the barometer.
Purdue describes the barometer as a gauge of farmer sentiment. Readings peaked in February, when China and the United States signed the “phase one” agreement to de-escalate the trade war. They plunged under the weight of the pandemic and are about 40 percent lower than in February.
Producers are less confident of a resolution of the trade war, according to the survey. Only 30 percent expect the trade war to end soon, compared to 61 percent in February. Some 58 percent say they expect the trade dispute to end in a way that benefits U.S. agriculture, compared to 80 percent early this year.
The Ag Economy Barometer is available here.