The politics of producer payments

Inside D.C.

The politics of producer payments

Farmers and ranchers, who face a tariff war/COVID 19-fueled 3% drop in farm income this year to $90.6 billion, and a forecast 21% crash to $79.4 billion next year, will take in about $32.8 billion in federal direct payments in 2020, a whopping 36% of their farm income, says the University of Missouri’s FAPRI economic think tank.  And while farmer payments may have been initially made with the purest of motives, namely to help keep folks on the land and food on the shelves, the more aid producers receive, the more political those payments become, especially as the November election draws nigh.

House Agriculture Committee Chair Collin Peterson (D, MN) is not happy his panel does not have more to say about how USDA spends the $25-30 billion already appropriated as economic stimulus payments in the wake of COVID 19, and its impact on production and marketing of everything from fruits and vegetables to livestock, dairy and poultry.

“I am concerned that the Ag Committee has basically been neutered in this whole process, and we don’t have really anything to say about anything,” Peterson told one Capital Hill newspaper this week.  He’s transmitted to Agriculture Secretary Sonny Perdue his frustration, along with his list of needed department program fixes and constituent complaints.  He wants to hold some form of hearing – virtual or in-person if a large enough room can be found to socially distance members – to look at the “top to bottom” impact of the COVID 19 pandemic on agriculture.

Some Democrat lawmakers, while sympathetic to agriculture and rural America’s plight, are increasingly peeved over first, the 2018-2019 Market Facilitation Program (MFP), spawned by the ongoing U.S.-China tariff tussle.  MFP earmarked the $28 billion spent by the Trump administration, mostly on direct producer payments, but also surplus commodity purchases and overseas market development.  Now, with another $30 billion in CARES Act stimulus money heading out the door — $1.4 billion in checks mailed this week – some Democrats decry a lack of congressional oversight of USDA when it comes to how the money is allocated and to “guard against partisan abuse of the program.” 

Critics contend trade war/pandemic checks are just President Trump’s way of keeping farmers and ranchers happy given it’s assumed most of them voted for him in 2016, but they also allege there are regional, product and farm size disparities when it comes to where the money goes.  Prominent criticisms include big farms are paid at the expense of small contract/direct sale producers, mainstream crops at the expense of specialty growers and checks are going to non-farmers, including recipients who are tax-shelter investors, rather than farmers “who have dirt under their fingernails.”

USDA says this is bunkum.

The political battles will only get more intense given there’s a “phase four” economic stimulus bill coming this summer.  The American Farm Bureau Federation (AFBF) this week laid out its plan to offset the “food system shockwave” that is COVID 19 by sending congressional leaders this week a 4 ½-page letter outlining what it wants for farmers, ranchers, their suppliers and their customers.  Many are policy/spending goals AFBF has pursued unsuccessfully in previous stimulus packages.

AFBF wants to see, among other things, “relief funding” for losses incurred after April 20; it wants the Commodity Credit Corp.’s (CCC) lending/spending cap set at $68 billion; it wants money for state and local ag departments; it wants support for biofuels producers; it wants independent and contract poultry growers to get checks; it wants overtime pay for federal meat inspectors waived for small/medium processors; it wants increased funding for rural health care centers; it wants the Small Business Administration’s (SBA) popular Paycheck Protection Program (PPP) to expand eligibility and spending, including covering H-2A workers, and the list goes on to cover other small business, rural broadband and labor and worker safety priorities and fixes.

Democrats, eager to win over those Trump fly-over state voters — as well as retain House control and win a Senate majority — will doubtless see wisdom in some of AFBF’s recommendations.  However, the trick is getting credit for the federal largesse.

With China’s status still in flux, police reform and civil rights issues dominating legislative agendas on both sides of the aisle, and no crystal ball to tell Congress what will happen with COVID 19 and when, there’s only one given:  As November 3 looms, the game gets louder and nastier. 

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