Inside D.C.

It’s not just about the money…

The White House seems to be figuring out rural America doesn’t blindly support any political candidate.  There are couple of critical criteria for support, as in the person holding or running for office espouses programs and policies that foster a strong agriculture, and then there’s that basic “he/she is better than the alternative.”

The second criterion is pretty much predicated on the first.  However, any candidate who forgets either standard does so at his/her peril.  Farmers aren’t stupid and they have long memories. 

The lack of fundamental understanding of how agriculture operates is increasingly apparent among all those – Republican, Democrat, Independent and Libertarian – seeking a seat in Congress or the Oval Office.  They all labor under the delusion that if you cut the farmer a check, he or she will go away happy because you’ve made them “whole.” 

Democrat White House hopefuls nearly unanimously talk about “paying farmers to be green” or whatever philosophy they embrace.  Interesting, when nearly all farmers and ranchers are the original environmentalists.  Stewarding land and animals is how they support themselves and their families. 

For the White House, it’s the $28-billion Market Facilitation Program (MFP) program to salve the wounds of government friendly fire in the U.S.-China trade wars, or last week’s declaration by President Trump that in the wake of Hurricane Dorian:  “We’ve taken in billions of dollars of tariffs from China and we will have a lot of money to be helping our farmers on the coast if they get hit,” adding later, “I’m making farmers more than whole.  The farmers are doing better than if China, frankly, were buying.”

There are about 2 million farms in the U.S. today, 2.6 million or so farmers or about 1.3% of U.S. workers.  USDA reports 175,000 farmers have applied for 2019 MFP payments so far and about $2.45 billion has been paid.  The government spent about $8.5 billion in 2018 based on 1 million producer applications, the department said.

It’s all a numbers game.  Farm income will hit $88 billion this year, predicts USDA, a 5% jump over 2018, but that income increase is attributable not to recovered sales but to a 43% increase in all federal producer program payments.  The biggest factor:  MFP checks.   Of the $19.5 billion in farmer payments USDA expects to shell out this year, about $10.7 billion will come from the $28-billion MFP account. 

That nugget leads us to Purdue University’s “producer sentiment” report released last week.  The land grant reports its August read of farmer/rancher optimism shows a 29% drop, 19% from a month before.  More than 70% of the 400 farmers surveyed contend 2019 MFP payments will “completely or somewhat” mitigate impacts from the ongoing U.S-China trade war, but still there’s nervousness over how quickly that trade war will be resolved – despite China’s recent lukewarm commitment to buy more U.S. ag products – and how positive any deal will be to the U.S. 

So, it’s no surprise nearly 60% of those surveyed expect a third round of federal MFP payments in 2020, as Trump hinted last week.   The checks are in or will be in the mail.