The Trump administration has sent $10.5 billion in cash to producers since mid-August to mitigate the impact of the Sino-U.S. trade war, aid that comes on top of $8.6 billion paid for 2018 crops and livestock. “Yes, [the payments] are helpful,” said a Kansas banker on Wednesday — and the government should keep writing the checks.
Between a weather-delayed harvest and uncertainties about the demand for their crops, farmers have been slow to sell corn and soybeans this fall. One consequence is tighter margins and revenue pressures on country elevators, said a report from ag lender CoBank.
Fueled by $14.5 billion in Trump tariff payments, U.S. net farm income will climb to its highest total since the commodity boom crested in 2013 and a dramatic rebound from the plunge that accompanied its collapse, the USDA estimated. When crop insurance indemnities are added to "direct farm program payments," a category that includes trade war aid, land stewardship payments and traditional crop supports, the government will provide an unusually high 31 percent of farm income this year.
Low commodity prices and high costs are tightening the credit squeeze on the farm sector, with little expectation of improvement in the near term, according to ag bankers in the Midwest and Plains. Some farmers and ranchers will liquidate assets during the winter to stay afloat, and some highly leveraged operators will be forced out of business, they said.
Rural America was hit harder by the Great Recession than metropolitan areas and has not recovered fully, said the Center for American Progress on Monday. Although rural communities face unique challenges, they have assets for growth that include immigration, natural resources, agriculture, manufacturing and community social capital, the social bonds and civic engagement that create a resilient spirit in a town, the think tank said in an issue paper.
A comparatively small portion of the U.S. population, roughly 60 million of the nearly 330 million residents, lives in rural America. But that portion is spread across 97 percent of the nation's land. A new report from the American Communities Project at George Washington University says the immense diversity of rural America defeats the usual approach of a "one size fits all" policy for rural economic growth, even with adjustments for geographic regions or economic sectors.
Agricultural bankers are lending a markedly larger amount of money to farmers and ranchers, with loan volume up 11 percent from April, May, and June of last year, said the Federal Reserve on Thursday. It was the highest rate of growth in loan volume in the spring quarter since 2011.
The Obama administration’s increase in food stamp benefits during the Great Recession “had a positive average impact on county-level employment” in rural areas, says a USDA report.
On Thursday, hours before the second-largest U.S. farm group said producers “are in desperate need of a lifeboat to keep them afloat,” the House Agriculture chairman said that fiscal constraints would preclude Congress from a multibillion-dollar bailout for farmers.
Farm income weakened in much of the Midwest and Plains during the opening months of this year, said reports from regional Federal Reserve banks on Thursday, with ag bankers telling the St. Louis Fed that an adverse trade outcome is clearly the most significant threat to agriculture in 2019. On Friday, the Trump administration increased the tariffs on $200 billion worth of Chinese goods.