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Economist: New Trump farm aid may be distributed more fairly

July 26, 2019

BISMARCK, N.D. (AP) — The Trump administration’s decision to base new handouts to farmers hit by the trade war with China on how many acres they’ve planted might be a fairer way to distribute the cash than the previous system of payments per bushel heavily skewed toward soybean growers, an agricultural economist said Friday.

U.S. Agriculture Secretary Sonny Perdue announced Thursday that the administration will pay another $16 billion more in aid to farmers affected by the president’s trade war with China. It comes after an $11 billion bailout Trump gave farmers last year.

Scott Irwin, a University of Illinois agricultural economist, said the previous program heavily weighted toward payments to soybean growers and based on bushels, “didn’t make any sense.”

The new payments will shift from being calculated on a per-bushel rate to paying by acres planted and location. The payment rates range from $15 to $150 per acre on a county-by-county basis, and will be determined by how much each county has suffered from the retaliatory duties imposed by China, as well as previous tariffs put in place by the European Union and Turkey.

The payments are aimed at about two dozen crops, including soybeans, corn, canola, peanuts, cotton and wheat. Hog and dairy farmers also are included.

The bulk of the aid last year was aimed at soybean growers, among those hit hardest by China’s retaliatory tariffs. The formula last year paid soybean farmers $1.65 a bushel and corn growers only a penny per bushel.

“This year’s program is probably weighted more fairly to other commodities,” Irwin said.

Under the first round of aid last year, a review by The Associated Press showed that many large farming operations found legal ways around caps, with some collecting hundreds of thousands of dollars and one receiving nearly $2.8 milloin.

North Dakota farmer Joe Ericson said the aid won’t go far enough to make up for his losses due to the ongoing dispute.

“It’ll help but it doesn’t cover everything,” said Ericson, who raises an equal amount of soybeans and corn on his 5,000-acre farm near the eastern North Dakota town of Wimbledon. “But I think I’ll be better off than last year.”

Ericson said he would have needed at least $2 more a bushel on his soybeans to break even. This year, he and other farmers in the county will be paid $55 per acre.

John Newton, the chief economist for the American Farm Bureau, said it’s too early to determine the impact of the latest payout to farmers, but it will help them “service that mountain of debt” that has come from years of poor crop prices.

National Farmers Union President Roger Johnson said the latest bailout is welcomed and “desperately needed. But this sort of ad hoc policy is confusing and is really not a predictable policy for farmers to follow.”

“Some farmers will probably be better off and some farmers will probably be worse off,” Johnson said of the aid package. “Overall, it’s far better that we have this than not have it.”

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