Farmers in the US are in line for record handouts from Washington this year, sparking accusations that Donald Trump is trying to buy the agricultural vote ahead of the November election.

Direct federal payments to farmers are forecast to hit $37.2bn in 2020, the US Department of Agriculture said on Wednesday, the bulk of which will come from ad hoc disaster programmes including a scheme to provide relief during the coronavirus pandemic.

“It looks as if we will have the largest level of government payments in history,” said Pat Westhoff, director of the Food and Agricultural Policy Research Institute at the University of Missouri.

The surge in government support for farmers comes as Mr Trump’s presidential campaign attempts to pull off a string of victories in November in farm states such as Iowa, Ohio and Wisconsin, which helped propel him to the White House in 2016.

Neil Hamilton, a professor specialising in agricultural law at Drake University in Iowa, said: “It’s an amazingly egregious example of vote-buying.”

Column chart of $bn showing Government payments surge to US farm sector

As of Monday, $9.4bn of payments to farmers had been approved from the $16bn Coronavirus Food Assistance Program, which was launched in April, government data showed.

More than $900m of the CFAP funding is set to go to farmers in Iowa, the leading pork and corn producing state, while Wisconsin, a major centre for milk and cheese, is on course to receive just over $500m.

The extra funding from government will help to drive total farm income up 23 per cent to $102.7bn this year, according to the USDA’s Economic Research Service — the highest amount since the end of a grain price boom in 2013. That means direct government payments will account for 36 per cent of farm income.

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Median income for farm households has increased by 24 per cent since 2018 to $89,674, reversing a trend of declining income, “largely because of increases in government payments to farm operations”, the ERS said.

The surge in direct payments to farmers has sparked accusations that Donald Trump is trying to buy the agricultural vote © AP

The surge in handouts comes as some of the Trump administration’s policies have created challenges for agricultural producers.

When China imposed retaliatory tariffs on US agricultural goods in 2018, the administration sent cash to farmers to compensate for lost sales.

Beijing and Washington reached a truce in January that included commitments from China to purchase $12.5bn worth of extra farm goods compared with 2017 levels, implying an annual target total of $33.4bn, according to the Peterson Institute for International Economics. 

China’s imports of farm goods covered by the trade deal were $7.6bn at the end of July, according to US export data, compared with a year-to-date target of $19.5bn. 

Still, the International Food Policy Research Institute’s Joseph Glauber, a former USDA chief economist, said sales of US farm goods to China were on track to return to 2017 levels this year.

Dave Walton, a corn and soyabean farmer in Iowa, acknowledged that Mr Trump’s battle with China had hurt him. 

“I think the trade war damages are somewhere in the neighbourhood of a $20,000 to $30,000 a year revenue hit for me personally,” he said. “But I think that goes away if we can get free and open trade again with China.” 

In mid-August, a survey of 1,500 farmers by the trade publication Farm Journal found that 82 per cent of respondents would vote for Trump if the election was held that day. 

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Direct government payments are set to account for 36 per cent of farm income this year © Daniel Acker/Bloomberg

In addition to direct payments, the USDA estimated that farmers would receive $5.4bn in insurance payouts from government-backed crop insurance policies, net of premiums.

After a storm with winds of more than 100 miles an hour flattened corn fields and toppled grain bins in Iowa last month, the USDA encouraged farmers to take advantage of insurance and other federal assistance.

Bill Lapp, president of Advanced Economic Solutions, a food and agriculture consultancy, noted that government payments had trebled since 2017.

“Ever-rising dependence upon federal support in a low-price environment is highly problematic for the farm sector,” he said. “US agriculture has been painted into a corner, where the government payments keeping rising, production continues to rise, and prices remain weak. A solution [to] this challenge is not readily apparent.”

Via Financial Times