We'll be diving deeper into the data when our satellite internet returns after the monster storm leaves Northeastern South Dakota. In the meantime, we're pausing to read a Washington Post story reprinted by Willmar's West Central Tribune,Trade aid brought big help, but big farms benefited more than small ones.
WAPO staffers Andrew Van Dam and Laris Karklis report:
The trade war and wet weather should have blown them out of the water, but some farmers had their best year in half a decade thanks to government bailouts.
In 2019, the farm belt felt about as hospitable as the asteroid belt. Record rainfall turned fields to sludge and made it nigh-on impossible to plant corn and soybeans until long after the typical window had passed. President Donald Trump's long-running trade war cut off farmers' access to China's enormous market. Across the farm sector, commodity prices remained in the doldrums.
Yet the Agriculture Department now estimates 2019 was farmers' most profitable in five years. What happened?
Three words: Market Facilitation Program. Or, as it's more commonly known, the farm bailout.
Without government assistance, U.S. farm income would have fallen about $5 billion from its already-low 2018 level. So the $14.5 billion in bailout funding announced so far represents a substantial reversal of fortune. About three-quarters of the funding already has been distributed.
"If you look at the prices, the weather and the trade imbalances, you'd expect the farm sector to be in a terrible spot," Montana State University economist Eric Belasco said. "It's not."
That's the sector overall, however - the total income earned by all 2 million farms and ranches in the United States. The top-line figure obscures profound differences.
Most farmers benefited from the bailout, Belasco said, but because bailout money is distributed based on acreage and not farmer's need, about half of the money (47 percent) went to the largest 10 percent of operations. The numbers come from an analysis by Belasco and his colleague, Vincent Smith. (Both men are also affiliated with the right-leaning American Enterprise Institute.)
The disparity runs too deep to be solved by a government bailout, Belasco said. According to 2018 data, more than 70 percent of farm households had a high level of financial risk in 2018. But of those that qualify as very large (median income $756,000), only 25 percent fit into that same category.
"The philosophical question is: Should we have trade aid for farmers who are at a low risk of losing their farm?" Belasco asked. "Most other safety-net programs are income-adjusted," he added later. "Farm policy doesn't do that at all."
Indeed, the past two years have been marked by a sharp rise in bankruptcies in the nation's deepest farm country. A quarter of the nation's farms sit in super agriculture-dependent areas - places where more than 1 in 7 people live on farms. Among them, the rate of farm-specific bankruptcies (Chapter 12) has more than tripled since 2015. . . .
Even with help from the federal government, U.S. farm profits are only two-thirds of the inflation-adjusted $136.6 billion farmers pocketed in 2013, the best year in recent memory. This year's total is almost directly in line with average profits since 2000, adjusted for inflation. The bailout alone can't make up for the collective hammering farmers took from four straight subpar years.
"Ag policy has this long history of mixing politics with ad hoc disaster programs," Montana State's Belasco said. "These programs continue in spite of efforts to formalize disaster relief through programs like crop insurance."
Read the whole article. Food for thought as the new year approaches.
Graphic: By The Washington Post. We'll be trying to unpack the county MFP dollars via the EWG's database of farm subsidies.
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