In Trump Farm Bailout, Top 1% Reaped Nearly One-Fourth of Aid
(Bloomberg) -- The Trump administration’s farm bailouts steered an expanding share of subsidy payments to the nation’s biggest farms, according to an analysis by an environmental advocacy group that highlights issues of equity as the Biden administration designs potential new climate-related financial incentives for farmers.
Just 1% of farm aid recipients collected 23% of subsidy payments in 2019, up from 17% in 2016, as former President Donald Trump’s trade bailout swelled payments to farmers. Their portion crept up to 24% in the first half of 2020, the most recent period covered in the data, as farm aid hit a record level with coronavirus relief payments, according to the Environmental Working Group analysis.
That is the largest share of federal farm subsidies going to the top 1% -- the 7,873 subsidy recipients who got the highest payments -- since 2007, according to the analysis. The average payment for that group was $497,907.
The findings follow criticism from Democrats that Trump’s farm bailouts were skewed toward large farms and academic studies concluding the trade aid payments were greater than farmers’ actual losses from Trump’s tariff conflict with China. A General Accountability Office report issued in September found the top 25 recipients of trade aid in 2019 received an average of $1.5 million per farm.
“This certainly adds to the questions about the way that program was designed,” said Jonathan Coppess, a University of Illinois professor who ran the federal agency that administers farm subsidies during the Obama administration and wasn’t involved in the advocacy group’s analysis. “Why all of a sudden did you see this big a shift?”
American farmers in 2020 had their most profitable year since 2013, largely because of federal aid, which accounted for 38% of their net income, the U.S. Department of Agriculture reported earlier this month. Crop prices also rose late in the year as China stepped up agricultural imports.
“The largest and wealthiest farms should not be getting most of the money, because they have large assets to fall back on in times of trouble,” said Anne Schechinger, a senior analyst with the group. “We’re at a time when so many Americans have lost their jobs, are struggling to put food on the table or keep their businesses open, it makes you wonder why so much money is going to farmers, especially the largest, wealthiest farmers.
She said the shift in subsidy payments toward larger farms in 2019 likely was driven by Trump’s adoption of a more generous formula for computing trade losses that year and a decision to double the maximum trade aid benefit per person. Large operators sometimes increase their subsidy payments by including relatives, even ones who live in distant cities, as actively engaged in management of the farm, multiplying the benefits they are allowed.
Trump administration officials defended the program against criticism that too much money went to large farms, arguing that they tend to be more productive and so suffer larger losses from trade-related commodity price drops.
Schechinger said the Environmental Working Group, which advocates re-directing farm subsidies to smaller operators and conservation programs, released the findings in part to focus attention on inequities in aid distribution as the Biden administration considers financial incentives to encourage farmers to adopt climate-friendly practices.
Administration officials have floated ideas including a carbon bank to finance payments to farmers who take steps to sequester additional carbon in soil and other measures to reduce greenhouse gas emissions. Schechinger said her organization wants the USDA to avoid advantaging larger operations over smaller ones when it makes proposals. The Senate on Tuesday confirmed Tom Vilsack as Biden’s agriculture secretary. Vilsack also held that post during the Obama years.
USDA spokesman Matt Herrick said the department under Biden is determined to avoid skewed distribution of farm aid.
“Whether it is Covid-19 market disruptions, trade disputes or extreme weather, it’s the department’s responsibility to provide support to as many producers as possible without focusing on one group or geography at the expense of another,” Herrick said in an emailed response to the analysis. “We must create a more level playing field for small and medium producers and a more balanced, equitable economy for everyone working in food and agriculture.”
The Environmental Working Group regularly obtains data on federal farm subsidy payments through the Freedom of Information Act. Its analysis covered total farm subsidy payments, which includes both one-time programs under Trump and continuing farm programs authorized by Congress.
©2021 Bloomberg L.P.