How the Trump administration's 2018 trade aid package works

Soybeans field / Photo: Mlabar / Wikipedia / (MGN)
Soybeans field / Photo: Mlabar / Wikipedia / (MGN)
Published: Jul. 3, 2019 at 1:21 PM CDT
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The Trump administration's Market Facilitation Program is meant to compensate farmers for income they've lost due to the U.S. trade war with China. Data provided to The Associated Press from the U.S. Department of Agriculture under the Freedom of Information Act gives some insights into where the money goes.

Here's how the program works: Farmers didn't have to prove their losses on their 2019 crops and livestock, just their production. The program sets a $125,000 cap in each of three categories of commodities: one for soybeans and other row crops, one for pork and dairy, and one for cherries and almonds. Farmers can claim payments in more than one category. Individual farmers who produce both soybeans and hogs, for example, could collect up to $250,000 if their production of each was high enough.

Older, bigger farm subsidy programs also contain $125,000 caps - with similar ways to get around them. Large-scale farming operations do that by structuring themselves as partnerships, in which each family member or "legal entity" gets their own cap.

USDA rules specify that each member must be "actively engaged in farming," but the rules are vague, said Anne Weir Schechinger, senior economic analyst at the Environmental Working Group, which has long tracked where subsidies go and has been studying similar data on the program it obtained through its own open records request.

Many relatives are exempt from the "actively engaged" requirement- including parents, spouses, siblings and children who can each qualify for their own $125,000 cap. First cousins, nieces and nephews were added to the list in the 2018 farm bill.

"When the Trump administration created the MFP they did not have to apply the same broken rules to MFP payments that they had applied to other payments," said Scott Faber, senior vice president of government affairs at the group. "The administration could have chosen to say we're going to have a 125,000 dollar cap with no loopholes, and we're going to have a real means test to ensure that millionaires and billionaires aren't receiving trade bailout payments."

But farm law attorney Robert Serio of Clarendon, Arkansas, whose business is focused on helping large farming operations structure themselves to maximize their ability to collect federal farm subsidies, called payment limits "pure political nonsense." If the purpose of the program is to compensate farms for their losses caused by the government's trade policies, he said, it shouldn't make a difference whether a farm is large or small.

When President Donald Trump's administration announced a $12 billion aid package for farmers struggling under the financial strain of his trade dispute with China, the payments were capped. But many large farming operations had no trouble finding legal ways around them, records provided to The Associated Press under the Freedom of Information Act show.

The government paid nearly $2.8 million to a Missouri soybean operation registered as three entities at the same address. More than $900,000 went to five other farm businesses, in Indiana, Illinois, Tennessee and two in Texas. Three other farming operations collected more than $800,000, and 16 others collected over $700,000.

Recipients defended the payouts, saying they didn't cover their losses from the trade war and they were legally entitled to them. Department of Agriculture rules let farms file claims for multiple family members or other partners who meet the department's definition of being "actively engaged in farming."

But U.S. Sen. Charles Grassley, an Iowa Republican who has long fought for subsidy limits, and other critics say it's the latest example of how loopholes let large farms collect far more than the supposed caps.

Grassley said in a statement to AP that some of the nation's largest farms are receiving huge subsidies "through underhanded legal tricks. They're getting richer off the backs of taxpayers while young and beginning farmers are priced out of the profession. This needs to end. The Department of Agriculture needs to re-evaluate its rules for awarding federal funds and conduct more thorough oversight of where it's funneling taxpayer dollars."

USDA officials said they believe its rules are being followed and that procedures are in place to audit recipients.

USDA data provided to AP through May 31 show that nearly 578,000 Market Facilitation Program applicants had received aid payments, with 83% of the dollars - $7 billion - going to soybean producers. The second most-subsidized commodity under the program was cotton, nearly 6% of the total at $480 million.

Most payments were not large. The average for soybeans was $16,976; for cotton, $13,637; and for corn, $385. But the averages were pushed up by a number of high payments. The median payments paint a better picture of what most farmers got because half got more and half got less. They were $6,438 for soybeans, $3,194 for cotton and $152 for corn. Nearly 60,000 applicants received less than $200, while nearly 5,000 received less than $10.

Five states -all top soybean producers - accounted for nearly half the total payments: Illinois, Iowa, Minnesota, Nebraska and Indiana.

The data also show that 91% of the payments, or $7.7 billion, went to counties that Trump carried in the 2016 election - not surprising since Trump fared much better in rural America than in urban areas.

For row crops the payments ranged from $1.65 per bushel for soybeans to 14 cents per bushel for wheat, to just 1 cent per bushel for corn. Other payments were $8 per head for hogs and 12 cents per hundredweight for milk.

Details of who will qualify for payments under the $16 billion 2019 edition of the Market Facilitation Program have not been announced.