Trump’s Second Bailout for Farmers is Coming

Written by SK Ashby

Trump's first bailout for farmers harmed by his global trade war distributed aid to farmers based on crop, with soybeans farmers netting a much larger share of the pie than corn farmers, for example.

Trump's second bailout will also divide farmers into different subgroups, but it will be based on geographic location rather than crop, and the areas that will receive the most money may surprise you.

WASHINGTON/CHICAGO (Reuters) - The U.S. government will pay American farmers hurt by the trade war with China between $15 and $150 per acre in an aid package totaling $16 billion, officials said on Thursday, with farmers in the South poised to see higher rates than in the Midwest. [...]

Farmers in the cotton-growing Mississippi Delta states stand to be the greatest beneficiaries of the program, according to a Reuters analysis of the payment rates posted online.

The average county payment rate is about $95 per acre in Alabama, $87 in Mississippi and $70 in Louisiana. Payment rates were lower in the Midwest, with a $69-per-acre county average in Illinois, the country’s top soybean producer, and a $66 average in Iowa, the top corn- and hog-producing state.

I scratched my head upon first reading that southern farmers will receive more money than Midwestern farmers because it's not as if Trump needs to buy votes in the south, right?

But then I realized the scope of Trump's trade war has expanded since his first bailout for farmers was unveiled. China was forced to impose higher retaliatory tariffs on American goods after Trump raised his own tariffs on Chinese goods from 10 to 25 percent. And on top of that, India also joined the list of countries imposing retaliatory tariffs on American goods including agricultural goods.

Trump second, bigger bailout will begin taking applications for acres planted before August 1st with payments following in November and January, and if you feel like you've just experienced Deja Vu -- you did. Trump's first bailout was implemented along the same schedule and it did not fundamentally alter the economic landscape. Farm income dropped by more than the value of Trump's first bailout during the first quarter of this year.

“These payments are enough to make a difference, kind of get us to the harvest,” said Tim Bardole, an Iowa corn and soybean farmer. [...]

Such federal financial support, the Illinois Farm Bureau said in a statement, “is not a long-term solution.” The National Cotton Council said there had been significant cancellations and deferrals of U.S. cotton sales to China over the past year.

Trump's bailout will 'get them to the harvest,' and then what? What about next year's harvest?

Trump is setting up a second bailout because farmers began the year with no idea what to do, what to plant, and with no end in sight for the trade war. The next planting season in 2020 could be no different, but the good news for farmers is that a third bailout is not out of the question.