Bailouts to favor corn, cotton
The Trump administration's new $16 billion round of trade-war aid for farmers will dramatically shift bailout money toward corn and cotton growers, according to an analysis by the U.S. Department of Agriculture's former chief economist.
The department didn't provide details of compensation for individual commodities — which some grower groups criticized as inequitable last year — when it announced this year's trade assistance plan last week.
Instead, the USDA released payment rates for each U.S. county, with all farmers in a county to receive the same rate per acre planted with an eligible crop. The department didn't disclose its assessments of trade damage each commodity sustained from the tariff wars or other details of how the local rates were determined.
Joseph Glauber, the department's former chief economist, was able to estimate payment rates for each commodity by comparing trade aid paid out in 2018 with what would have been paid out had the 2019 county payment rates been in effect. He used countylevel planting data available by crop for 2018 to develop the simulation.
He cautioned the results are only approximations of assistance by commodity type in this year's trade aid because there may be some some differences in how much of each crop is planted in a county in 2019 versus 2018.
Payments to cotton growers will double to $1.1 billion from $ 554 million last year, while corn growers will get $5.1 billion, surging from $192 million last year, Glauber projected. Soybean growers' payments will drop to $5.6 billion from $7.3 billion last year, according to the simulation.
"It goes more toward corn and cotton, but the payments are bigger this year so it doesn't take that much away from soybeans," said Glauber, now a senior research fellow at the International Food Policy Research Institute in Washington. The Trump administration announced plans for $16 billion in overall trade assistance this year, up f rom $ 12 billion last year.
In much of the Midwest, farmers grow both corn and soybeans so the increase in payments for acres planted with corn would more than offset a decline in aid for soybeans in many cases, Glauber said.
Corn growers he avi ly criticized last year' s trade payments, based on crop production. Corn received a penny per bushel in 2018 versus $1.65 per bushel f or soybeans. The county payment rates the USDA announced last week clouded such direct comparisons.
Wheat farmers this year will receive $1.6 billion, a major increase from $238 million last year, Glauber found. Payments for sorghum would drop to $300 million from $314 million last year.
Alfalfa growers, who received no trade aid last year, will be paid about $387 million, the simulation shows. Rice farmers receive $210 million, peanut farmers $143 million and barley farmers $ 24 million — all crops that received no trade aid last year.
Agriculture incomes have been depressed in the wake of China' s retaliatory tariffs, which hurt demand for everything from cotton to pork to soybeans. For Trump, appeasing his ruralvoter base has become crucial ahead of 2020 elections.
This year's trade aid sets a per-county rate based on the blend of crops grown in the area, with payments ranging from $15 to $150 an acre.
Glaub er said he used data on 2018 crop planting by county reported by the USDA's Farm Service Agency, which administers the separate annual farm subsidy program. Producers who received federal subsidies are required to report the data to the agency.
USDA spokesmen didn't immediately respond to a request for comment on the simulation.