More than a third of U.S. farm income in 2019 will come from the U.S. government in the form of the trade war bailout, crop insurance payouts and other federal assistance.
While farm income is projected to rise almost 5%, the share of that coming either directly from the government or from government-subsidized crop insurance is way above normal.
“It is up significantly, and the big reason for that is the trade assistance package from the administration in 2018 and 2019,” said John Newton, chief economist for the American Farm Bureau Federation. “Those aren’t things that farmers expect to happen on a normal basis. What we’ve seen this year is more of an anomaly.”
The U.S. Department of Agriculture projects farm income to be $88 billion. Of that, $19.5 billion will come from direct farm payment programs and another projected $10.5 billion will come from crop insurance indemnities. Farmers help pay for federal crop insurance, but the premiums are more than 60% subsidized.
In the past decade, farmers’ best year was 2013, when income reached $124 billion and government accounted for only 19% of that.
But now the trade war with China, which shut down the largest market for U.S. soybeans, deepened a four-year slump in grain prices. Poor weather in May and June delayed planting enough to keep millions of acres in the U.S. fallow.
The weather struggles continued through to harvest, with snow blanketing soybean fields in northwest Minnesota and a hard frost hitting cornfields before maturity.
Crop prices have not risen, and only payments through the USDA’s Market Facilitation Program — $6.8 billion through May and up to another $14.5 billion in a second round announced in May — have kept farmers close to breaking even.
Brian Thalmann, speaking from a combine as he harvested corn near Plato, Minnesota, earlier this month, said any projection of farm income going up this year doesn’t make sense.
“You go around through farm country, and everyone would say, ‘What?’ In practical reality, income is not up,” said Thalmann, president of the Minnesota Corn Growers Association. “The market facilitation payments — that is not true income — that is income replacement for dollars that farmers did not receive in the market.”
Minnesota was the third-largest recipient of aid in the first round of payments, getting $681 million. Much of the trade aid has gone to soybean farmers.
Newton, the Farm Bureau economist, said crop insurance payouts should be their highest since drought-impacted years of 2012 and 2013, in part thanks to the payments farmers receive for deciding not to plant crops on ground that was too wet in the spring and early summer.
Farmers are just ready for 2019 to be over, and they want free trade restored, said Thalmann, though they aren’t complaining about the help they’ve gotten to get through the trade war.
“There is not a farmer out there that would want to get income from a government payment versus having it come from the market where it should come from,” he said. “But if there’s going to be continued outside forces beyond what the farmer can control, if part of that loss is going to be made up by market facilitation payments, so be it.”