Fall 2019 Logan County
Farm Outlook Magazine

The impact of Trump Bucks, Donny Dollars
By Jim Youngquist

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[November 08, 2019]  The continued trade war with China has caused significant tariffs to be added to products on both sides causing a reduction in purchases due to higher prices. Agriculture, one of the largest U.S. export items, has been affected by Trump's partisan trade war, and China has gone elsewhere for supplies of soybeans and other U.S. Ag products like pork. The individual producer has been the one affected firsthand.

The U.S. government reacted, much the same as it did in the 2008 automaker bailout, for the same reasons. Some say that President Trump bailed out the farmers so they would vote for him again in the 2020 election, and the money dispensed to farmers, called the MFP program, did indeed enhance his chances of retaining their vote. But the real intent of the 2018 and 2019 program was to prevent producer failure and bankruptcy.

The trade war had depressed producer pricing to the point that the majority of farmers could not achieve sustainable sales. In addition to producer failure, the entire Ag supplier chain remains threatened. The 2018 and 2019 MFP programs were only similar to the automaker bailouts of 2008 in that their objective was to prevent bankruptcy (and unemployment). In the case of the automaker bailouts, the money was lent, the companies were nationalized (meaning the government owned a significant portion of GM, GMAC, and Chrysler), and the government stepped in to take part in the management of those companies. The $80.7 billion dollars lent to the automakers was largely paid back (all but $10.2 billion dollars), and the government was divested of their interests and management.

In the case of MFP, money was delivered to producers based on bushels produced (2018) and acres planted (2019). No farm takeover, no government management of farms, no government ownership of operations, and no expectation that the money will ever be paid back.

The MFP program of 2018 was done hastily, done late, and was somewhat confusing and ineffective. An early per bushel stipend was augmented by a later added stipend. Efforts on a more effective 2019 program changed from per-bushel to per acre planted and was announced in May 2019.

In much of the country, 2019 planting was delayed or cancelled by late season rains which caused flooding and kept farmers out of the field. So the offer of MFP dollars based on acres planted at first seemed like an empty promise. Farmers who were unable to plant only received federal crop insurance protection. Farmers who did get to plant received a substantial amount on every acre planted (about $76 an acre for soybeans in Logan County).

The MFP program had a whole host of critics who said that Trump was buying the 2020 election at the taxpayers' expense, and others who said that rich farmers benefited at an unfair rate from the program over poor farmers. The subsidy amount was the same, but small farmers planted fewer acres than larger farmers and received less money. The 2019 program capped the subsidy at $900k: only operations grossing $900k or less were eligible for this subsidy. The result was that $16 billion dollars were sent to producers in 2019, compared to $12 billion in 2018. Of the $685,483,316.15 amount appropriated for Illinois, the amount sent to Logan County producers was $20,489,701.

A number of Logan County producers commented (anonymously) on the impact of the 2019 MFP program to their operations:

One producer said that the MFP funds came at just the right time, when the bills were coming due and grain prices were skinny. That producer said, "We can't know if grain prices would have been better without the tariffs or not, but the MFP funds sure helped."

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Another producer said, "The MFP funds certainly helped offset some of the hit taken in the grain market from the trade disputes." That producer agrees with the tactics the U.S. is deploying in the trade war, saying that the feet of some of our trade partners, especially China, need to be held to the fire, and that if this is what it takes to bring about market equity, he/she is on board for now. "Hopefully the short term suffering will result in long term market growth."

Still another producer said that the MFP money was substantial, more than $70 an acre on beans. "Don't think that grain farmers got hurt by tariffs this year, depends on if they were able to hold on through earlier dips in the markets."

[several other producers were asked for comments but were either in the field, declined or were not able to respond in time for this article]

Some forward motion in the trade war with China was reported this week, saying they were close to finalizing part of a Phase One trade deal. No details were provided, and it was said that talks would continue. China announced that it was committing to the purchase of $20B of soybeans from the U.S. in 2020. And further news reports say that the two parties have reached a deal on tech trade. President Trump said that he expected to sign a significant part of the trade deal with China ahead of schedule but did not elaborate further.

Even with some positive news, there is no deal yet on the table that will benefit the American farmer, and it is not yet known if a 2020 MFP program will be offered. The funds dispersed in the 2019 MFP program were appreciated by Logan County producers. They continue to be able to achieve top production results, even in a bad year. Now if only they could get better prices for their products!

[Jim Youngquist]

 

Read all the articles in our new
2019 Fall Farm Outlook Magazine

Title
CLICK ON TITLES TO GO TO PAGES
Page
Introduction - The year that almost wasn't 4
Pictorial - The year that almost wasn't 7
Climate expectations for Logan County 13
Growing Hemp:  Profitable but challenging 17
The impact of Trump Bucks, Donny Dollars 24
Putting obstacles in the way of pests 27
Is horticulture a viable option for small farms in Logan County 32
Local farmer gets a piece of the pie - pumpkin pie 38
Farm Businesses qualify for low interest loans 42
Farm safety tips 44

 

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