It’s likely just a down payment on what promises to be another massive bailout by the federal government. Farmers are suffering as a result of disruptions in supply chains that leave them helpless in getting their products to market. Dairy farmers are dumping milk, others are plowing under their crops.
It’s a combination of customers buying less food because schools, restaurants, and other workplaces have shut down, and consumers having less money because they’re not working.
To help alleviate the problem, the Trump administration has promised $16 billion in direct aid to farmers and another $3 billion that will buy much-needed food for food banks and charitable organizations.
“It’s certainly going to be very helpful but that’s not as big as the potential loss,” Michael Langemeier, a professor of agricultural economics at Purdue University, told Yahoo Finance. “And so I think that’s important to keep in mind. Even though it sounds like a really big number, I’ve seen a national estimate recently that the reduction in net farm income for the U.S. farm sector could be as high as $20 billion.”
Travis Clark, a Wisconsin-based farmer who grows crops like corn, soybeans, and dairy, doesn’t know “how to answer” when asked if an aid package will help.
“How do I know how much will get to us dairy farmers?” he told Yahoo Finance. “How much of the aid will get eaten up by administration and not ever reach the industry feeding the world? No clear answer on that.”
Mr. Clark may be speaking from experience. Over the last two years, the federal government has doled out $28 billion to farmers to help them through the trade war with China. There was heavy criticism from the agricultural community that the cash wasn’t going to smaller, independent operators, only to large corporate farms.
But the coronavirus crisis is different.
“With [the trade deal and USMCA] approved,” he continued, “I think that was the right step and things were looking like we were heading in the right direction, but this coronavirus definitely switched gears again because we’re faced with something that we’re not sure how to handle. Government wise, farm wise, you do what you have to do but you try not to get out too much just in case. We’re rural here where it’s not a big problem but you don’t know where it might be.”
According to Clark, prices are a lot worse off now than they were amid the trade war/USMCA uncertainty.
“All the uncertainty of what is going to happen next month, next week, or even what will be announced tomorrow has impacted our prices for the worst,” he said.
Mike Stranz, vice president of advocacy for the National Farmers Union, thinks suggested that other measures would also help, including “loan forbearance, interest rate reductions, a break on interest rate increase, and a moratorium on farm foreclosures.”
Both parties in Congress have talked of a moratorium on foreclosures and most banks have already announced various forms of loan assistance, although a program by the federal government would help more.
It will be several years before American farmers fully recover from this crisis and they’re going to need more help down the road.