Farmers Say Aid Won’t Cover Tariff And Recession Damage (#GotBitcoin?)
USDA has begun making payments to farmers affected by trade conflicts. Farmers Say Aid Won’t Cover Tariff And Recession Damage (#GotBitcoin?)
The Trump administration has started compensating U.S. farmers for damage tariffs are doing to their business.
Many farmers say the payments won’t make up for lost sales to China and other foreign markets they were counting on to buy the huge amounts of crops and meat being produced across the Farm Belt.
Bumper corn and soybean harvests and record pork production have pushed down prices for agricultural commodities. U.S. farm income is expected to drop 13% this year to $66 billion, according to the Department of Agriculture, extending a yearslong slump in the agricultural economy.
The USDA in August said it would pay farmers nearly $5 billion to offset losses from global trade disputes. Major U.S. trade partners including China, Canada and Mexico have applied tariffs to billions of dollars’ worth of U.S. agricultural exports in retaliation for tariffs imposed by Washington. The U.S. and China vowed last week to put more tariffs on each other’s goods.
The USDA said it has paid $35 million to farmers so far, especially in Iowa, Kansas, Illinois, Indiana and Wisconsin. Nearly 49,000 farmers have applied for the aid.
Mike Paustian, an Iowa pork producer who sells some 30,000 pigs annually, expects to receive about $40,000. Depending on the size of his crops, Mr. Paustian said he could receive another $20,000 for his 1,400 acres of corn and soybeans. In recent years, a farm of that size could make some $4 million in annual sales on the livestock alone.
Mr. Paustian said he appreciates what he sees as a goodwill gesture from the Trump administration. But he said he worries the trade fights will close doors to American pork and other farm goods while the world’s appetite for meat is growing.
“This payment isn’t going to save anybody’s life,” Mr. Paustian said. “It’ll soften the blow a little bit.”
Prices for lean hogs have fallen 19% since the end of May.
Mike Haag, an Illinois hog farmer who raises roughly 17,000 pigs each year, estimates he is eligible for roughly $32,000 in aid, enough to pay for a few weeks of animal feed, he says. An additional $20,000 he expects to get for his corn and soybeans will cover a tractor payment.
“I think most farmers are trying to support the president and what he’s doing but it is painful,” said Mr. Haag. “There’s a lot of extra pork out there.”
Trade-related losses to the U.S. pork industry are expected to total more than $2 billion this year, said Iowa State University economist Dermot Hayes.
The Trump administration is making payments to U.S. farmers to help soften the blow of damaging tariffs.
The USDA has pledged direct payments of $290 million to pork producers to offset those losses. The agency has also promised to purchase $559 million worth of pork under a related program that farmers and economists say could boost prices in the pork market. USDA officials have said a second wave of payments to farmers could be announced in December if trade disruptions persist.
During a Senate hearing on trade earlier this month, U.S. lawmakers criticized the aid package and pushed the Trump administration to make progress on trade agreements.
“It’s nothing more than a Band-Aid,” said Sen. John Thune (R., S.D.). “We need to open up markets.”
Gregg Doud, chief agricultural negotiator for the Office of the United States Trade Representative, said during the hearing the administration is working hard to renegotiate the North American Free Trade Agreement, seeking to improve bilateral trade with Japan and exploring potential partnerships in Southeast Asia and Africa.
The White House referred a request for comment to USDA, which has said the aid isn’t intended to make farmers whole, but rather to provide short-term relief while the Trump administration works to secure long-term trade deals that benefit the entire economy, including agriculture.
Adding to concerns is the likelihood that Congress will miss a Sunday deadline to pass a new five-year farm bill, which funds agriculture and nutrition programs. Without new legislation, major programs governing food stamps and crop insurance remain intact, but funding will lapse for dozens of smaller programs, including those that promote U.S. farm goods overseas.
Farmers applying for federal relief payments must certify the size of the crops they raised this season, their hog herds this summer, or annual milk production for a recent year. Local USDA offices will audit some of those claims, USDA Under Secretary Bill Northey said in an interview.
“We tried to make this easy and straightforward,” said Mr. Northey, adding that many farmers won’t be able to apply for the aid until the fall harvest is finished.
Trouble is particularly acute in the dairy industry. U.S. dairy farmers will see their incomes slide $1.5 billion this year due to tariffs from China and Mexico, according to a forecast by agribusiness-consulting firm Informa Economics.
Milk prices are lower than production costs for many farmers, said Jim Briggs, who milks 60 Jersey cows in Wisconsin. Mr. Briggs said the $700 check he is expecting from the USDA will pay one month’s electricity bill for his dairy barn. He is struggling to keep up with bills for feed and veterinary services.
Tom Giessel, a Kansas wheat farmer, said he fears the downturn will push older farmers to retire, continuing a trend toward consolidation in U.S. agriculture that has left fewer, bigger farms.
Mr. Giessel, 65, who farms 3,000 acres of wheat, corn and sorghum, said he should receive about $5,000 for his wheat—10% of the cost to fertilize the next crop he is planting this fall. He will get just $10 for his 41 acres of corn—less than a tank of gas.
“I could put that in my pickup and go a little ways, but it won’t get me very far,” he said.
Struggling U.S. Farmers Worry About a Resurgent Russia
Russian wheat exports are booming despite a crushing price slump, as the country’s farmers finally emerge from decades of neglect.
OTRADNAYA, Russia—Vladimir Mishurov transformed the remnants of the “Lenin’s Path” collective farm in this village into a profitable business. He also helped make Russia the world’s largest wheat exporter for the first time since the last years of the czars.
Over the past decade or so, Mr. Mishurov replaced his aging Russian equipment with a dozen high-tech machines from John Deere and other makers, and started using powerful new fertilizers and seeds. He bought and rented more acres from neighbors and family, eventually reaching about 3,600, taking advantage of Russia’s overall low prices for land.
And as many farmers do in the U.S., he often worked days on end with little sleep, especially during the harvest.
The major difference between Mr. Mishurov and a farmer on America’s Great Plains: The Russian’s costs are lower, and mostly in rubles, making his overseas sales—priced in dollars—immensely more valuable.
Amid a multiyear, brutal slump in grain prices, Russian agriculture is thriving. The country exported more than 40 million tons of wheat in the year ending June, around 50% more than the previous year, and the highest level for any country in the past quarter-century. Russia overtook the U.S. as the world’s biggest exporter of wheat in 2016, and again beat the U.S. in 2018.
The growing Russian competition is one more pressure point threatening American farming, which is facing the biggest wave of farm closures in the U.S. since the 1980s. A global oversupply of grain has pushed prices down to around half the level in 2012, when prices peaked, making it difficult to turn a profit in dollars.
New Farm Power
Russia has overtaken the U.S. as the world’s largest exporter of wheat, as the overall global grain market has expanded.
U.S. trade disputes with China and other countries could make Russian wheat even more attractive, if big buyers apply retaliatory tariffs to U.S. grains. China has added a 25% tariff on U.S. wheat, but Chinese restrictions on imports from Russia have prevented Moscow from taking advantage yet, according to Swithun Still, director at Switzerland-based Solaris Commodities SA, which trades Russian grain.
For now, “it’s not the trade war, it’s economics” that is helping Russian wheat compete, even in places close to the U.S. such as Mexico, Mr. Still said. Russian “quality got better, and it’s cheaper.”
Russian farmers come out ahead when export earnings are converted into rubles. Since the Russian currency has depreciated, a dollar now converts to twice as many rubles as it did in 2014. Russia has a similar advantage against the euro and other currencies. Russian farmers can cover their costs at home to keep planting, and also undercut Western competitors on price.
Russia’s surge of agriculture exports, including grains, fish and meat, is part of an effort to diversify the economy away from crude oil. Oil and natural gas were once the source of half of federal budget revenues. With oil prices still down 25% from their high in 2014—recovering from a swoon of more than 60%—exports now account for around 40% of budget revenues.
“Given the fall in prices for oil, grain has come to the fore. Grain is our oil,” then-Agriculture Minister Aleksandr Tkachev said in 2016.
Less-expensive Russian wheat is pushing U.S. and European grain out of import-dependent countries in the Mideast and North Africa, where the Kremlin has made a military and diplomatic push for influence in recent years.
Agriculture exports, at $20.7 billion in 2017, have overtaken the arms industry as Russia’s No. 2 earner. Wheat makes up about a quarter of the total.
Russia harvested an area of wheat almost twice as large as the U.S. in the year ended in June, according to the U.S. Department of Agriculture. American farmers, seeing little opportunity to profit, planted the smallest area of wheat since records began a century ago. U.S. wheat production shrank 25% in the year.
Mr. Mishurov’s farm is on the fertile steppe of southern Russia. The area is the country’s biggest grain producer—a bread basket known for its mineral-rich black earth and mild climate.
Now 46 years old, he spent his late teens and early 20s driving a bone-rattling tractor that needed its motor refurbished every year and left his hands callused. A lack of cash meant workers were paid in sacks of flour, wheat or sugar, and drunkenness was pervasive.
At the start of the 20th century, Russia had been the world’s largest exporter of wheat. The Soviets killed and imprisoned millions, including many of the most-successful farmers, as part of an effort to install a system of collective farming that proved inefficient. By the 1970s, the Soviet Union had to import grain.
Collective farms stumbled on after the Soviet Union collapsed in 1991, often still managed by the same bosses without business smarts or cash to invest.
“No one was in charge,” said Mr. Mishurov. “They couldn’t adapt to the market economy. They were accustomed to unthinkingly following instructions.”
Farmhands worked “to pass the time of day until they could go home,” said Andrei Burdin, a farmer from a nearby village who works land that was once part of the “Dawn of Communism” collective farm. “Farming was at a dead end.”
Russia opened the land market at the end of the 1990s, but new investors and their managers tended to be far from the land and averse to risks, farmers said.
Mr. Mishurov, who worked as chief agronomist at a large farming conglomerate, recalled telling an executive in the early 2000s that using pesticide could increase the barley crop by around a quarter.
“ ‘No, Vova, it’s enough already,’ ” he said the executive replied, using a nickname. “Why should I persuade someone to earn more money?” Mr. Mishurov said.
He struck out on his own in the mid-2000s. At first, he pooled land with relatives and used whatever equipment he could lay his hands on. Today, he grows wheat, barley, beets, corn, sunflowers, peas and other crops.
Gains in Output
Russian wheat farmers have modernized techniques and added higher-quality machinery to improve yields, coming close to those on U.S. farms. With vastly more acres under cultivation, overall Russian production beats U.S. output.
Mr. Burdin, 43, started farming around 250 acres in 2005 with a dilapidated tractor and planter. He invested early profits into more-efficient vehicles and better fertilizer, and expanded territory by renting from neighbors.
“When we made the first money, I didn’t buy a Mercedes or an apartment,” he said. “I put it into the next season.”
At first, he bought Russian equipment, but later upgraded to John Deere tractors and combines, which the Russians call zelyonaya tekhnika, or “green machines.” Mr. Burdin said he tested a John Deere combine against a Russian one and found it produced about one-third more grain from the same area.
He also added a planter from Sweden’s Vaderstad AB that shoots seeds into the ground at the optimal depth and intervals, improving yields. He now farms about 3,700 acres.
In April, while loading the planter with seed, Mr. Burdin joked with farmhands about equipment in the old days. He recalled working with a pesticide sprayer that would soak him with chemicals. He said he could only work for about four hours at a time before giving up, out of fear for his health. Now, his sprayer can measure how much pesticide to spray and where, keeping costs down.
The price of land in the region where Messrs. Mishurov and Burdin live is significantly lower than for many foreign rivals. On average, farmland in Romania, a European Union member on the Black Sea, is nearly three times the price, while farmland in Iowa and Kansas is more than five times the price, according to a 2017 survey by Moscow-based SovEcon, which provides consulting services, analysis and forecasts on Russian agriculture.
Mr. Burdin said Russian seeds and fertilizers still cost less than Western brands, even though they have improved significantly in recent years. He buys wheat seeds from a state-run agricultural institute, and can plant the seeds produced from those plants the next season. Many American farmers use expensive, high-yield, patented seeds from companies such as Bayer AG or DowDuPont Inc., which don’t allow the produced seeds to be planted, requiring farmers to buy fresh seeds annually.
Transport costs are also low for the region. It is close to Black Sea ports, and gasoline costs are much lower than in Western Europe. Mr. Burdin and Mr. Mishurov run their own fleets of trucks that move grain to the Novorossiysk port some 200 miles away by road.
Private and state-owned companies have modernized grain terminals in recent years and increased their capacities. Farmers can use an app on a smartphone to book a slot for their trucks to deliver grain, rather than the old system of having trucks wait in line for days.
Bumper harvests are stretching infrastructure. Windows for unloading grain are snapped up quickly, and farmers are often assigned slots several days after a requested time, Mr. Burdin said.
Exports “could be even higher if they could figure out how to load more,” he said.
Russia has made it a priority. President Vladimir Putin ordered officials to tackle infrastructure bottlenecks that are holding back exports. In inland areas, large distances and a lack of train cars and storage silos hamper grain from reaching external markets.
One of Russia’s largest terminals in Novorossiysk is completing a three-year modernization this year that will nearly double its capacity. Other companies have announced plans to build or expand terminals on the Black Sea, the Baltic Sea in the north and in the Far East. Officials said expansions at ports could increase export capacity of grains by 50% to 7.5 million tons a month by 2020.
Government officials tout the importance of state subsidies, including inexpensive loans to help farmers replace old equipment. Analysts and farmers say the state’s efforts to support agriculture have been hit and miss. Subsidies often make their way to well-connected companies, investment in infrastructure has been slow and bureaucrats and other officials often expect bribes.
“Farmers received the freedom to do business in the way they thought most efficient,” said Andrei Sizov Jr., managing director of SovEcon. “The role of the state was quite muted in the last 10 years, and that was good for the industry.”
Giant agroholdings, conglomerates often created by wealthy tycoons or people close to top federal and regional government officials, have built up spreads that dwarf Western farms. Individual farms larger than 250,000 acres, or nearly 400 square miles, account for around 13% of all land farmed in Russia, according to Mr. Sizov.
Mr. Mishurov can now afford to collect and restore a half-dozen vintage Soviet cars and vacation in the Maldives and Thailand, although he said he prefers staying home.
The poor villages here depend on the generosity of wealthier farmers. Mr. Mishurov funded renovations to his village’s statue of Lenin and a monument to locals who died in World War II, while Mr. Burdin paid to fix up his village’s kindergarten.
Mr. Mishurov employs 10 farmhands, three guards and a cook who prepares meals for the workers. “It’s a lot for our acreage, but we try to preserve jobs in the village,” he said. One recent morning, a man dropped by Mr. Mishurov’s farmyard office to cadge a bucket of corn for his hens. It was a former collective farm boss.
Trump Vowed To Help Small Farmers, But Here’s Where The Aid Is Really Going
‘America’s farm safety net is broken. Instead of helping small farmers that have been hurt by the Trump administration’s trade war, Trump’s Agriculture Department is wantonly distributing billions of taxpayer dollars to the largest and wealthiest farms.’
It’s the “fat cats” who are benefiting most from President Trump’s taxpayer bailout to farmers hurt by his trade war, according to Anne Weir Schechinger, a senior analyst with Environmental Working Group.
According to a recent study from the group, “the richest of the rich” — the top 1% — received 13% of the federal payments, or more than $177,000 each. The bottom 80%, on the other hand, got an average payment of $5,136. Three of the “fat cats” received more than $1 million each, while 45 got more than $500,000.
Our great Farmers will recieve another major round of “cash,” compliments of China Tariffs, prior to Thanksgiving. The smaller farms and farmers will be big beneficiaries. In the meantime, and as you may have noticed, China is starting to buy big again. Japan deal DONE. Enjoy!
— Donald J. Trump (@realDonaldTrump) November 17, 2019
The EWG pointed out that the top 10% of recipients — the biggest and most profitable industrial-scale farms in the country — have received half of the $6 billion in aid given since August.
“The administration’s MFP policies stack the deck against small farmers in favor of the big guys,” Schechinger and her colleagues wrote, adding that, “laughably lax eligibility rules allow cousins, nieces and nephews and far-flung relatives living in cities, with no real connection to farming, to cash government bailout checks. Even Trump 2016 campaign advisors and billionaires are cashing in.”
The U.S. Department of Agriculture, in a statement cited by Bloomberg last month, defended the program, saying that the Trump administration “is committed to helping all farmers, regardless of their size, deal with the economic impacts of retaliatory tariffs and unfair trading practices.”The USDA estimates that the $14.5 million will help U.S. net farm income climb to its highest total since the commodity boom in 2013.
Billionaire West Virginia Governor’s Family Business Gets Taxpayer-Funded Subsidy
Loopholes have allowed many large, moneyed farming operations to go past the $125,000 subsidy cap.
A family business of West Virginia’s billionaire governor has maxed out a taxpayer-funded subsidy program meant to help farmers through the U.S. trade war with China.
Records reviewed by The Associated Press show Justice Farms of North Carolina, which is owned by the family of Gov. Jim Justice, hit the program cap of $125,000 earlier this year and was the biggest recipient of soybean subsidies in West Virginia.
Justice, the richest person in the state, owns a complex business empire of coal and agricultural entities that are perennially mired in litigation, often over unpaid bills. The farming company is no different. It is named in a long-running lawsuit that alleges the Justice businesses transferred assets between them in an effort to avoid paying a debt.
The company took in $121,398 in subsidies for soybeans and $3,602 for corn for farms on property it owns in West Virginia, according to records provided to AP under the Freedom of Information Act. Both figures far exceed the program’s median payments: $6,438 for soybeans and $152 for corn.
President Donald Trump’s administration set up the Market Facilitation Program to help offset losses caused by tariffs, basing the payouts on bushels produced. The program does not require farms to demonstrate their operations have been damaged by the trade war.
Loopholes have allowed many large, moneyed farming operations to blow past the $125,000 cap, according to an AP analysis of the payments. Critics, including U.S. Sen. Charles Grassley, an Iowa Republican, have called for tighter oversight on where the taxpayer funds are funneled.
“We really think you should be subsidizing people who need the help. It doesn’t make a whole lot of sense for taxpayers to be providing billions of dollars to wealthy farmers who do not need the subsidies,” said Anne Weir Schechinger, a senior economic analyst at the Environmental Working Group, which tracks federal farm subsidy programs.
More subsidies for the Justice family company could be on the way. The administration has rolled out another $16 billion in aid for farmers hurt by the president’s trade policies but made some changes after criticism that large farming organizations were finding ways around the caps. Officials have increased the cap to $250,000 for the second round and payment calculations are based on acres planted and location instead of production.
Information on how the trade war has affected the Justice farms wasn’t available. Officials in Greenbrier County, home to the subsidized farms, declined to release the company’s agriculture data to the AP, as did the United States Department of Agriculture’s regional National Agricultural Statistics Service.
Justice’s government spokesman referred questions and an interview request to a representative for Justice’s companies, who issued a statement saying tens of thousands of farms and ranches with products “directly impacted” by Chinese tariffs received money under the subsidies.
“Justice Farms of North Carolina was one of more than 3,000 farms in that state alone, and nearly 40,000 farms and businesses nationwide, that received support from this program. It’s absurd for anyone to use this important program as the basis for cynical political attacks,” said Brian Walsh, a spokesman for the Justice companies.
Walsh did not detail losses suffered by Justice Farms of North Carolina in the U.S. trade war.
West Virginia property records show the company owns three farming properties and one residential building not far from a lavish resort the governor owns called The Greenbrier. The properties have a combined value of $1.87 million and span nearly 700 acres, with one including a full-size tennis court, according to state records.
The sprawling farms are nestled into a relatively flat stretch of land between sections of the Appalachian Mountains. On a recent visit, the farms were covered with rows upon rows of tall, dry stalks of corn.
County deed records in North Carolina, where the business is registered, show a dizzying series of property transfers between a Justice-owned entity, the James C. Justice Companies, and Justice Farms of North Carolina without any meaningful payment. The transactions, some involving just $10, are the subject of a federal lawsuit brought by a set of businesses that accuse the Justice companies of violating the RICO Act and masking their worth so they can skirt a debt. The suit seeks to force the companies to pay almost $17 million.
The business structure of Justice’s many companies has perplexed litigants as well as federal prosecutors. In June, the U.S. attorney for the southern district of West Virginia asked a judge to hold the Justice family accountable for a more than $1 million court-ordered sanction against one of their companies after deeming it a shell corporation. One of Justice’s other businesses quickly moved to pay the bill.
With a net worth estimated at $1.5 billion, Justice lists more than 100 business interests on his most recent financial disclosure form. When Justice became governor, he said he wanted to put his businesses in a blind trust but has not done so, causing criticism when his private and public roles intersect.
A prominent Republican state senator called for Justice to resign this summer after the U.S. government sued nearly two dozen of his coal businesses for failing to pay safety fines. Federal prosecutors in a public corruption unit have sent three subpoenas to his administration requesting information about his businesses and resort.
Justice has tried to put some distance between himself and his companies, saying his children control them. He has said the process of putting his businesses in a blind trust “has been slowed down by the multitude of financial institutions that work with my family’s companies.”
In the case of Justice Farms of North Carolina, the governor was listed as a manager in North Carolina business registry filings up until 2018, when his daughter’s name replaced his. The company has not been included in his financial disclosures filed with the ethics commission in West Virginia.
More Farmers Declare Bankruptcy Despite Record Levels of Federal Aid
Coronavirus pandemic adds strain to agricultural economy already reeling from trade fights, commodity glut.
More U.S. farmers are filing for bankruptcy, as federal payments projected to reach record levels this year fall short of compensating for the coronavirus pandemic and a yearslong slump in the agricultural economy.
About 580 farmers filed for chapter 12 bankruptcy protection in the 12-month period ended June 30, according to federal data.
That was 8% more than a year earlier, though bankruptcies slowed slightly in the first half of 2020 partly because of an infusion of federal aid and hurdles to filing during the pandemic, according to agricultural economists and attorneys.
The pandemic has pressured prices for many commodities, squeezing farmers who raise crops and livestock, and prolonging a six-year downturn in the Farm Belt.
The Trump administration is expected to dole out a record $33 billion in payments to farmers this year, according to the University of Missouri’s Food and Agricultural Policy Research Institute.
The funds, including those intended to help farmers hurt by trade conflicts and the coronavirus, would push government payments to 36% of farm income, the highest share in nearly two decades, the institute said.
“Agricultural markets have been horrible, and the pandemic exacerbated it, big time,” said Paul Swanson, an Oshkosh, Wis.-based attorney. He said he has 40 open farm-bankruptcy cases, about a third more than last year.
Mr. Swanson said some clients who received federal coronavirus aid still wound up in bankruptcy. “The cash came in, the cash came out,” he said.
Before the pandemic, a global grain glut and foreign competition had pushed down agricultural prices. Trade disputes deepened the pain, drawing retaliatory tariffs from top buyers of U.S. farm commodities, such as China and Mexico.
Then the coronavirus hit, upending the U.S. food-supply chain. As restaurants closed, farmers plowed under thousands of acres of vegetables and dumped milk into manure lagoons.
Corn prices plummeted as Americans stopped driving, cutting demand for ethanol, a corn-based biofuel blended into gasoline. Prices for slaughter-ready cattle and hogs dropped as meatpacking plants that became virus hot spots slowed or halted production.
Hog farmers have lost nearly $5 billion in actual and potential profits for 2020, according to the National Pork Producers Council, a trade group. In California, agricultural businesses stand to lose as much as $8.6 billion, according to a study commissioned by the California Farm Bureau Federation.
Wisconsin dairy farmer Art Steffen filed for bankruptcy in January, before coronavirus arrived but after years of low milk prices and mishaps on his farm left him with $3 million in unpaid bills, including $400,000 for animal feed and $2,000 for cattle semen and other breeding supplies.
Mr. Steffen, who sells the milk from his 300 cows to a string-cheese plant, said filing for bankruptcy made him feel he had failed as a steward of the farm that has been in his family since the 1860s.
Mr. Steffen withdrew his bankruptcy filing in June to qualify for a forgivable loan under the federal government’s Paycheck Protection Program. He received roughly $40,000, enough to pay his four employees for less than three months. He also received $97,000 from the administration’s coronavirus-relief program.
Mr. Steffen spent those funds on animal feed and electricity. In July, he refiled his bankruptcy case. “The mission is to survive and pay people what you owe,” Mr. Steffen said.
Chapter 12 bankruptcy, created during the 1980s farm crisis, allows distressed family farmers or fishermen to devise a plan to repay creditors over three to five years. Farms with debts that don’t exceed $10 million may file for the protection.
Lynn Hicks, who milks 70 cows on a farm 200 miles northwest of Mr. Steffen’s, said she hasn’t secured government aid because she is also in bankruptcy. As funds dwindled, Ms. Hicks and her husband, Nick Hicks, appealed to suppliers to wait until they were paid for their milk to cash their checks.
They became a grass-fed dairy to eliminate grain costs. Ms. Hicks opened a furniture-refinishing business to supplement the family’s income.
“A lot of tears have been shed,” she said.
Trouble for many farmers extends back to a commodity boom beginning in 2006 that encouraged them to borrow heavily, said Patrick Westhoff, director of the Food and Agricultural Policy Research Institute.
U.S. farm debt has grown steadily since then to more than $425 billion this year, the U.S. Department of Agriculture estimates. That is the largest sum since a farm crisis in the 1980s that pushed many farmers and lenders out of business.
“There are a lot of people that have been hanging on for a long time that needed a positive development, and this year hasn’t provided that,” Mr. Westhoff said. “It’s been just the opposite.”
Buoyed by $16 billion in direct payments to farmers to mitigate pandemic-related losses, farm income might tick down just 3% this year to $90.6 billion, the Food and Agricultural Policy Research Institute predicted in June. As of this week, less than $7 billion of the funds had been distributed, according to USDA.
Trade aid and coronavirus-relief payments are due to end this year. Agricultural economists say more farms could fold next year without additional support. Slow purchases from China and the pandemic’s persistence continue to weigh on demand for agricultural products.
If more aid isn’t extended, farm income is expected to fall 12% to $79.4 billion in 2021, according to the Food and Agricultural Policy Research Institute. Government payments would drop by half to less than $17 billion.
Congress is debating further financial support for farmers, and USDA could offer more aid from the $14 billion earmarked earlier this year to replenish the Commodity Credit Corp., a funding mechanism for agriculture. A spokesperson said USDA is evaluating the impact of Covid-19 on agriculture as it considers a second round of payments.
“It’s hard to pinpoint the damage when you’re in the middle of the hurricane,” said John Newton, chief economist at the American Farm Bureau Federation. “Sure, half the house is still standing, but this thing is not past us yet.”
Trump Announces A New Round Of Farm Aid In Battleground Wisconsin
President promises $13 billion more in aid to farmers hit by coronavirus.
President Trump unveiled $13 billion in new aid to farmers facing economic harm from the coronavirus pandemic as he aimed to boost support among rural voters at a campaign rally.
“I’m proud to announce that I’m doing even more to support Wisconsin farmers,” said Mr. Trump, speaking outside an airport hangar with Air Force One parked behind him, as he announced the agriculture aid.
Wisconsin, whose economy is heavily reliant on agricultural production, is seen as a key battleground in the coming presidential election. Mr. Trump narrowly beat Hillary Clinton in Wisconsin in 2016 and polls show he is trailing former Vice President Joe Biden, his Democratic rival, in the state.
The president used the event to draw a contrast with Mr. Biden, arguing that the former vice president would hurt the state’s farmers and loggers.
“If Joe Biden gets in, the radical left will shut down Wisconsin’s timber production for environmental reasons,” Mr. Trump said. Mr. Biden hasn’t outlined plans to eliminate timber production.
Thursday’s event was the latest in a series of Trump campaign rallies in crucial states. Mr. Trump went to Nevada last week and is scheduled to travel to Minnesota, North Carolina, Ohio and Pennsylvania in the coming days.
The newly announced aid would be the second tranche of money issued as part of the Trump administration’s Coronavirus Food Assistance Program. In April, the administration unveiled $19 billion in relief for the agriculture sector, including $16 billion in direct payments to farmers and ranchers and $3 billion in mass purchases of dairy, meat and produce.
The funds came from coronavirus-relief legislation passed by Congress earlier this year as well as from the Department of Agriculture’s Commodity Credit Corp., a Depression-era program designed to stabilize farm incomes.
This time, the USDA said up to an additional $14 billion dollars would be available to farmers and ranchers facing continuing market disruptions and costs from the pandemic, including producers of row crops, livestock, specialty crops, dairy, aquaculture and other commodities.
Farmers can apply for the aid at USDA’s county offices between Sept. 21 and Dec. 11 of this year. It couldn’t be determined why there was a discrepancy between the amount announced by Mr. Trump and the sum given by the USDA.
The second round of direct payments likely supplements an already historic cash infusion into the nation’s Farm Belt. Projections released by USDA earlier this month showed government payments are set to surge 66% this year, to an annual record $37.2 billion.
Even before taking the new tranche into account, those payments would push U.S. net farm income 23% higher to $102.7 billion, the highest since 2013, according to the USDA. They would comprise 36% of that total income, the highest share in nearly two decades.
Many American farmers and ranchers are still dealing with the fallout from the pandemic, which upended the food supply chain, sapping demand and pressuring prices for some commodities. Left with goods they couldn’t sell as restaurants, schools and hotels closed nationwide, farmers plowed under vast fields of vegetables and poured milk into manure lagoons.
Livestock producers scrambled to make room in barns, and some euthanized animals as meatpacking plants became virus hot spots, slowing or halting production. Futures prices for corn plunged as Americans stayed home, cutting demand for ethanol, a corn-based biofuel that is blended into gasoline. Other countries’ struggles with the virus have also slowed some export sales of U.S. farm goods.
Demand for some products has rebounded, though farmers’ cash income from sales of their products is still expected to drop more than $12 billion, or 3% this year, according to the USDA.
The pandemic has deepened financial stresses that had already boosted farm debt to levels not seen since the 1980s farm crisis and pushed farmers into bankruptcy. Federal data for the 12-month period ended June 30 showed nearly 600 farmers had filed for chapter 12 bankruptcy protection as a prolonged slump in the agricultural economy carried into its seventh year.
“America’s agriculture communities are resilient, but still face many challenges due to the Covid-19 pandemic,” said Agriculture Secretary Sonny Perdue in an announcement of the additional aid on Thursday. He said the USDA had developed the second aid program with feedback from farmers and ranchers in mind.
Payments will be made for three commodity categories, the USDA said, based on price declines, sales or other methods. Payments are limited to $250,000 per farmer or entity, though certain applicants may qualify for additional payments.
Ben Moore, a sixth-generation farmer who grows crops and finishes hogs in Indiana and Ohio, said he would much rather farm for the market than receive a government check, though the recent aid has helped his farm weather disruptions from the virus.
“It stabilized our cash-flow from losses in the markets,” Mr. Moore said.
Biden Plan Would Limit Longstanding Tax Break Used by Farmers
Curb on provision allowing landowners to defer payment of capital-gains levies is seen as another burden on agriculture.
President Biden has said his tax proposals would make big business and wealthy investors pay their fair share.
His package would also likely deliver a blow to American farm owners by limiting a longstanding tax break. The provision allows landowners to defer paying capital-gains tax when they sell investment property and put the proceeds toward the purchase of other real estate.
Farmers for generations have used the tax break to cheaply and quickly relocate farm operations to lands with better soil, diversify the crops they grow and consolidate land holdings. Some have used it when exiting the farming business at retirement. Farm owners in 2012 held 915 million acres, about 40% of the land in the continental U.S.
Farmers were hit four years ago when the Trump administration narrowed the use of this tax deferment, known as a 1031 like-kind exchange. The provision, named for a section of the tax code, used to apply to many types of personal property, including farm equipment and livestock.
Farmers exchanged their old tractors and upgraded to newer and better ones without having to pay tax on their trade-ins.
The 2017 tax law under President Trump eliminated 1031 exchanges for everything but real estate.
“That has been a very hard change,” said Kalena Bruce, a fifth-generation cattle rancher near Stockton, Mo., where she and her husband oversee a 300- acre ranch. “We still have to make improvements to our herd, still have to make improvements to our machines.”
Farmers and land brokers said the latest proposal, capping the profits from land sales that can be tax-deferred at $500,000, would add another burden on farming.
Mr. Biden’s proposal would also raise the top capital-gains tax rate that land sellers would have to pay to 43.4% from 23.8%. It would impose capital-gains taxes at death on appreciated asset gains, a change farmers worry will make it difficult to keep land in the family. However, the Agriculture Department has said the plan would exempt farmers from those taxes at death, if the farm remains both owned and operated by family members.
Kristine Tidgren, director of the Center for Agricultural Law and Taxation at Iowa State University, said tax exceptions such as 1031 have allowed farmers, who often endure long periods without income between harvests, to retain as much cash on hand as possible for their operations. “Farming is very cash-poor,” she said. “Without a lot of these tools, you wouldn’t really be able to function in that sort of environment.”
Some aren’t convinced that land and real estate should enjoy primacy over other types of assets in the tax code.
“It’s a very special treatment,” said Chuck Marr, senior director of federal tax policy at the Center on Budget and Policy Priorities, a think tank.
He added that the case for removing land’s treatment in the tax code has historically enjoyed some bipartisan support. Dave Camp, a Republican, proposed eliminating the tax break in 2014 when he was a Michigan congressman.
On paper, 2020 looked like a good year for farmers. Net farm income topped $120 billion, the highest level since 2013, according to an estimate from the U.S. Agriculture Department.
Farmers last year received $46.5 billion in federal aid, which was a much higher than normal share of gross income on farms, according to an analysis from the American Farm Bureau Federation. Crop and livestock product sales decreased in 2020 from the prior year, according to the lobbying and trade group.
Ms. Bruce, the Missouri cattle rancher, said she has never used a 1031 exchange for land, adding that eliminating the ability to do so in the future is a serious concern. As urban districts encroach on farmland, local governments can sometimes change environmental or public-health regulations that hamper agricultural activity, she said.
Ms. Bruce might use a 1031 exchange to buy land where regulations are more conducive to farm activity. “To think about relocating, if we need to think about selling a piece of the farm because it’s now surrounded by a new subdivision…we need that tool in our toolbox.”
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