The Plan is No Plan
Posted on October 16, 2019
You know you’re deep in the rabbit hole when bad news—say, a government report that shows steep cuts in anticipated 2019 crop yields—is good news because it will hopefully boost prices. Conversely, when good news arrives, like an unexpected week of perfect September weather, it’s actually bad news because it just drags already low prices even lower.
But that’s where we find ourselves in agriculture these days; a rabbit hole called 2019.
Worse, none of the Big Ag players or our current policymakers want to do things any differently in 2020. All seem quite content to rely on the same farm programs, principally crop insurance, for another year or two even though the programs have delivered nearly every segment of U.S. agriculture to an ever deeper price dungeon for three years running.
That’s not a plan; that’s purgatory.
Equally disheartening is how farmers and Big Agbiz now seem ready to accept tariff-based MFP, or Market Facilitation Program, payments—$12 billion last year, another $16 billion this year—as the new normal instead of what all clearly are, the objectively abnormal.
Indeed, a recent “Ag Economy Barometer” poll, released by Purdue University Sept. 4, showed that “58 percent of farmers in the August survey said they expect another MFP payment to be made… for the 2020 crop year, suggesting a majority of farmers are counting on payments from USDA helping to make up future income shortfall.”
That majority has one very good reason to expect more billions in the upcoming election year and, maybe beyond: President Donald J. Trump has already told them it’s in the bag.
In a mid-August tweet, President Trump, exclaimed, “As they have learned in the last two years, our great American Farmers know that China will not be able to hurt them in that their President has stood with them… And I’ll do again next year if necessary!”
Each year, though, the payments have become a larger portion of actual farm income. In 2019, they will total nearly 14 percent, or one in every seven dollars, of net farm income, according to recent estimates from the U.S. Department of Agriculture (UDSA).
Getting them next year, however, may not be the slam-dunk both farmers and the President currently presume.
“Senior government officials,” explained a lengthy Sept. 9 Washington Post story, “including some in the White House, privately expressed concern that the Trump Administration’s multi-billion dollar bailout for farmers needed stronger legal backing, according to multiple people who participated in the planning.”
Translation: If a taxpayer or two filed a federal lawsuit to stop the MFP scheme, USDA and the White House would have trouble defending the legal authority either assumes it has to spend $28 billion in taxpayer money on “the White House’s trade war with China.”
But don’t expect anyone in Congress to step in to protect that taxpayer, Joseph Glauber, USDA’s chief economist under presidents Bush and Obama, told the Post.
“‘Congress likes being off the hook,’” he explained, “‘since now they don’t have to take action…’” Besides, he added, farmers and the White House are both happy because one has “‘a lot of money’” and the other “‘doesn’t have to worry as much about the fall-out of the trade war.’”
True, but it all reeks of failure, now and in the coming year: a White House using the U.S. Treasury as an ATM to paper over its policy failures; Congress happily clueless on what to do with either the Trump tariffs or the ballooning MFP payments to farmers; and farm leaders who quietly hope the MFP gravy train continues running well into the future.
That means the only plan is more of the same, and the same hasn’t been any plan at all.
© 2019 ag comm