USDA's Trade Aid Payments Raise Questions About Fairness, Transparency | WGLT

USDA's Trade Aid Payments Raise Questions About Fairness, Transparency

Nov 21, 2019

Illinois’ two senators are calling on the USDA to rework its massive trade aid program to fix what they see as inequities and a lack of transparency into how payments are doled out.

U.S. Sens. Dick Durbin and Tammy Duckworth joined 15 other Democratic senators in a letter to U.S. Agriculture Secretary Sonny Perdue. They claim the $25 billion in trade aid payments to help farmers has been distributed unevenly across the country, benefitting some regions more than others. They claim 95% of top per-acre payment rates have gone to southern farmers, who have been harmed less than those in the Midwest and Northern Plains.

“The numbers don’t match,” Durbin told WGLT. “If we see that our farmers growing soybeans have been hit the hardest when it comes to exports to China, let’s give them the most compensation, as opposed to some farmers growing cotton who may not have even noticed the trade war is going on with China.

“I just don’t get it. Frankly, I think these southern states are receiving more than they can justify.”

The USDA planned to send $14.5 billion in direct payments to farmers for 2019 to help offset losses as a result of trade disputes. Most of that money has already gone out, with farmers receiving the second round of payments this month. The rest would arrive in January.

The stakes are high for central Illinois. McLean County farmers got $33 million between September 2018 and May 2019—the most for any county in the U.S., according to the Environmental Working Group. McLean County has some of the most productive farmland in the country, and a lot of it.

The inequities were flagged in a report this month from Democrats on the U.S. Senate Committee on Agriculture, Nutrition, and Forestry. County payment rates for 2019 payments equaled or exceeded $100 per acre in only 193 counties. Of those, 184 of these counties, or 95%, were in southern states. Payments in more than 35 Alabama and Mississippi counties far exceed the top Illinois payment, with some cotton growers receiving $150 per acre, double the Illinois average. (McLean County’s rate is $82.)

Others see inequities too.

“It leaves you with a lot of questions that aren’t answered. And in this political environment, those things tend to show up as pretty big red flags,” said Jonathan Coppess, a professor and federal policymaking expert at the University of Illinois at Urbana-Champaign.

There are other areas of concern about the USDA’s trade aid program, formerly called the Market Facilitation Program, or MFP, Coppess said. It’s not a congressionally approved program like, say, the farm bill, meaning less transparency and oversight for how it works.

Coppess said he sees “very obvious regional disparity.” Cotton exports have been increasing the last couple years, and prices went up, Coppess said. So if the payments don’t seem to be completely tailored to trade damage, he said, what’s the point of the program in general?

“Is there a noncynical reason for this? If there is, then it’s on the USDA to make that clear to people. Because they’re the ones that generated the payments,” Coppess said.

The National Farmers Union (NFU) has also raised concerns, saying the USDA’s county payment rates “arbitrarily have helped farmers in some counties much more than others.”

The very nature of the program adds to uncertainty for farmers, said Rob Larew, NFU’s vice president of public policy and communications. This year’s payments were announced as farmers were making planting decisions, which could distort the market one way or the other, he said.

“These questions just continue to rise,” Larew said. “Ad hoc trade disaster payments are not the way to go. We need to have a more reliable, certain program that farmers and bankers understand.”

The USDA has pushed back on the Senate report, claiming that the Midwest has received more than 60% of MFP funds and that the Top 5 recipient states are Illinois, Iowa, Kansas, Nebraska, and Minnesota. That directly refutes the claims made in the report, a USDA spokesperson said. (The USDA is citing total dollars received, while the senators were attacking per-acre payment rates.)

“While we appreciate feedback on this program, the fact of the matter is that USDA has provided necessary funding to help farmers who have been impacted by unjustified retaliatory tariffs,” the USDA spokesperson said. “While criticism is easy to come up with, we welcome constructive feedback from any member of Congress with recommendations as to how the program could be better administered.”

Durbin said yes, Midwestern states are getting the most money because there are more farmers and more acreage. But their per-acre payment rate criticism still stands.

“So even going beyond the crops—which I believe should be the starting point—the actual losses if you look at the number of recipients, they’re really not telling the story straight,” Durbin said.

Durbin and the other senators have called on the Trump administration to pursue a more “focused, consistent trade strategy.” As for the trade payments?

“Make some sense of it,” Durbin said.