US Agricultural Producers Assert Trump's $12 Billion Aid Plan Falls Short to Undo Trade War Damage

Notwithstanding a vowed $12 billion assistance program, a great number of American agricultural producers contend the assistance falls short to avert a wave of projected farm bankruptcies this calendar year.

Increasing Economic Pressure for Row-Crop Producers

Row-crop producers, especially soybean growers, have been hardest impacted by international tensions originating from the administration's trade war. China, which bought over half of US soya bean exports recently, slashed buying during the dispute.

But, farm advocates point out that the lump-sum payments do little to alleviate deeper fiscal problems. Elevated operating expenses and weak commodity values have plagued farmers for the past few seasons. According to industry groups, US row-crop producers have suffered tens of billions in net losses prior to any aid is factored in.

"This assistance that supplies about $50 an acre will not save the numerous of independent farms that will go bankrupt before the end of the calendar year," said one regional agricultural association leader.

Wider Industry Impact

The financial strain is not limited to the farm gate. Leading agricultural equipment companies have also warned sizable financial hits due to the trade environment. This marks the second time in recent years that large-scale government assistance has been used to the farming community during trade-related disruptions.

At the same time, farm lending availability have deteriorated, per central bank data. Lower farm income has reduced financial flexibility and raised the need for credit as farmers plan the spring planting season.

Tough Decisions for the Spring Planting Season

Facing bleak market forecasts, many producers are facing planting decisions based on limiting deficits rather than achieving profitability. For some, this means choosing commodities like soya beans, which are less expensive to plant and demand less resources, even if export demand is soft.

"It's just nearly a repeat of the previous season, only with tougher circumstances," noted one longtime farmer from a major agricultural state, whose farm has not been profitable for a few harvests.

Future Avenues for Improvement

Going forward, agricultural economists suggest that the agricultural sector might recover under specific major scenarios:

• Stronger Chinese Demand: A major return of agricultural exports by key trading partners.
• Boosted US Biofuel Use: Expected regulatory changes that would boost consumption for agricultural feedstocks within the US.

A component of the government's proposed long-term safety net could be an boost in renewable fuels under existing standards. Such a move would create a more stable domestic market for agricultural commodities.

"In the event those two things take place, then I think that we could begin to repair the ag economy and move in a favorable trajectory," added one lead agricultural expert.