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Farmers Say Aid Won’t Cover Tariff Damage (#GotBitcoin?)

USDA has begun making payments to farmers affected by trade conflicts. Farmers Say Aid Won’t Cover Tariff 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.

Divvying Up

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.

Updated: 12-3-2019

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.

This, Schechinger Suggested, Doesn’t Line Up With This Trump Promise:

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.

 

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