Via Zerohedge

Introduced earlier this month in a disjointed stream of tweets from President Trump, the White House is finally ready to release more details about its second bailout for American farmers.

This year’s package could cost as much as $20 billion, nearly double the $12 billion from last year.

And at first glance, it appears that farmers will be better compensated by the new plan – a sign that the administration doesn’t see an immediate resolution for the trade crisis – though it still is cold comfort for farmers in the American heartland who have been hammered not only by China’s tariffs, but by record flooding in the Midwest and five years of falling agricultural commodity prices.


Rates currently under discussion include $2 per bushel for soybeans, 63 cents per bushel for wheat and 4 cents per bushel for corn growers to compensate them for their losses (whether the White House truly intends to distribute as aid to struggling countries remains to be seen). Though the final details of the plan are subject to change. 

Bloomberg‘s sources said farmers will also receive payments for other commodities, just like they did last year.

In a departure from last year, the administration is reportedly considering basing payments on the acreage planted for the coming season, rather than farmer’s current production levels. This has spurred questions from some economists.

While the payments last year were based on farmers’ current production, the basis will be modified, the people familiar with the plan said. The administration is considering basing payments on the acreage farmers plant this year and their historic yield of crops per acre, the people said.

Former Agriculture Department officials and economists have warned that a decision to base payments on current acres planted risks skewing farm production decisions and adding to the rising stockpiles of crops, particularly soybeans. That risks depressing commodity prices even after the current trade dispute is resolved.

The combination of a disparity in payments favoring soybeans over corn and rainy weather in the Midwest could encourage farmers to change plans and decide to plant soybeans rather than corn. Soybeans have a shorter growing season, so they can be planted later.

American farm income dropped by 16% last year, and increasingly desperate farms are increasingly turning to suicide to escape their financial troubles. As of Sunday, farmers have planted only 49% of the corn they had said they intended to plant this year, according to Department of Agriculture data. That compares with 80% from the same period last year.

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Department of Ag Secretary Sonny Perdue said last week that the aid package could be as large as $20 billion (which would be $5 billion more than President Trump had said). Most of the money will be directly distributed to farmers based on the system for compensation, though some agricultural goods will be purchased directly by the federal government under the plan.

Unless a trade deal is reached between now and then (extremely doubtful), the White House is expected to release the plan, which will offer Trump some important political cover during the 2020 race, by Thursday.