The Trump Administration announced a $12 billion plan to provide emergency aid to farmers who are struggling under an escalating trade war with China and other trading partners. While the groups were grateful for the aid, they all pointed out that this is a short-term fix to a long-term problem.
I’ve been an agricultural reporter for well over 40 years. In that time, I’ve seen several government subsidy programs designed to bring relief to commodity producers. They rarely work as planned by Congress, or Administration officials, in Washington, D.C.
No farmer or livestock grower is going to turn down a subsidy, but most would rather have market certainty than a hand out. The problem is the growers are virtually powerless to control their own destiny.
The Carter Grain Embargo destroyed years of market development because the U.S. became an unreliable supplier. The Reagan Payment in Kind Program caused farmers to cut production in 1983 and prices went up, but the next season prices plunged because everyone planted their full acreage.
Turning surplus farm commodities into food donations is a good idea, in theory, but it led to dumping grain in poor countries around the world to the detriment of farmers in those countries who were benefiting from growing more and receiving higher prices.
Milk subsidy programs remain a tragedy.
And another problem: Farmers have been singled out for payments. What about other economic sectors who are being hurt by tariffs, but receiving nothing? How is the after church conversation going to go with folks in your community who buy imported steel and pay a tariff that goes to you?
AUDIO: Profit Matters 7-25-18