In Case You Missed It
Pitiful Subsidy Adds Insult To Trump Tariff Injuries For Corn Farmers
August 31, 2018
Agriculture is facing tough times. Farmers across the country are confronting their fifth consecutive year of declining farm incomes.
Farm income is now half of the record $123 billion earned in 2013, according to the U.S. Department of Agriculture (USDA). Something needs to give, or we could be on the brink of a significant farm crisis.
Trade is a major driver of economic opportunity for corn farmers. Building new markets and expanding existing markets for corn is key to building a stronger agriculture economy, but right now most of our major markets are facing some sort of threat because of U.S. trade policy.
Agriculture products have been frequently targeted with retaliatory tariffs by foreign countries hit with the Trump administration’s tariffs. This has slowly chipped away at our markets and created growing unease across the countryside, especially as farmers are facing their bankers, seeking loans to put in next year’s crop.
While farmers welcomed the administration’s progress on North American Free Trade Agreement (NAFTA) negotiations, a trilateral deal with the United States, Canada and Mexico, as well as access to new markets, is what we really need if we are going to inject some certainty back into the farm economy.
Earlier this summer, the administration recognized the harm tariffs and trade uncertainty have caused to agriculture and announced it was developing a plan to provide assistance to farmers. At the time, I noted that this could be welcome aid, but the fine print would be important.
Unfortunately, when the plan was unveiled Tuesday, it became strikingly clear that corn farmers would receive virtually no relief.
Under the USDA proposal, the payment rate for corn farmers is just one cent per bushel, an insufficient figure that would not even begin to address the serious damage done to the corn market as a result of the administration’s actions.
As the administration began to pursue its trade agenda and it became clear agriculture would be significantly impacted, the National Corn Growers Association (NCGA) commissioned an economic analysis that found trade disputes to have lowered corn prices by 44 cents per bushel for crop produced in 2018.
This amounts to $6.3 billion in lost value on the 81.8 million acres projected to be harvested in 2018. One cent only adds insult to injury.
NCGA provided this analysis to both the USDA and the Office of Management and Budget, along with constructive suggestions for making the program equitable and effective for corn growers, including those impacted by losses due to extreme weather, all to no avail.
To be clear, corn farmers were under no illusions that this package would make farmers whole or offset long-term erosion of export markets. NCGA members engaged in a lengthy debate at the prospect of trade aid.
They ultimately decided that while the preference was for trade over aid, they would be supportive of relief if it could help some farmers provide assurances to their local bankers to get through another planting season.
It’s also not lost on me, or other farmers I’ve talked to over the summer, that this is an aid package created for a situation that could have been avoided in the first place.
But, even with lowered expectations, it is insulting that USDA’s plan sells corn farmers so short. As history has shown, once you lose a market, it is very difficult to get it back. Our global competitors are aggressively pursuing every opportunity we miss and our margin for error is shrinking.
Corn farmers direly need a win.
In 2016, agriculture and rural America overwhelmingly cast their vote for Donald Trump. By and large, his support across the countryside remains strong. He has repeatedly voiced support for farmers, often referring to us as patriots, donning a green hat with the words: “Make Our Farmers Great Again.”
It’s time to put those words into action and there are immediate, no-cost steps the administration can take today to remove barriers to agriculture’s success.
Rescinding tariffs, securing NAFTA’s future and pursuing new trade agreements would go a long way to providing some certainty to farmers, as would stabilizing the ethanol market.
The president has stated his commitment to allow for year-round sales of higher blends of ethanol like E15, reiterated just this week by USDA Secretary Sonny Perdue, but the Environmental Protection Agency has yet to take the necessary steps to make this a reality.
The time is now. Mr. President, corn farmers and our communities need a win.
Kevin Skunes is the president of the National Corn Growers Association.
To access the op-ed, click here.