(Bloomberg) -- Senate Democrats attacked President Donald Trump’s $28 billion farm trade aid program for “vast inequities” favoring Southern farmers at the expense of their counterparts in the Midwest and Northern Plains, growers of cotton over soybeans, and large producers over smaller ones.
“The Trump administration is using a flawed formula that helps big, wealthy farms and billion-dollar foreign-owned companies, while small farms get left behind,” said Senate Democratic Leader Chuck Schumer of New York. “The USDA must stop picking winners and losers, and ensure all of America’s farmers get the help they need -- not just a lucky few.”
The U.S Department of Agriculture defended the program in a statement issued through a spokesman, saying the payment formula is “based on trade damage, not based on region or farm size.”
Rural voters are a key constituency for Trump as he heads into the 2020 election, and government aid has become an increasingly important source of income for America’s farmers amid the financial stresses of the trade war with China, a commodity glut and wild weather.
Almost 40% of projected farm profit this year will come from trade aid, disaster assistance, federal subsidies and insurance payments, according to an American Farm Bureau Federation report, based on Department of Agriculture forecasts. That’s $33 billion of a projected $88 billion in net income.
Farm bankruptcies nonetheless are rising, this year hitting the highest levels since 2011.
Democrats on the Senate Agriculture Committee, led by Debbie Stabenow of Michigan, issued a report Tuesday accusing the administration of “extreme disparities” in the way it calculated the trade aid payments.
Five heavily Republican southern states -- Georgia, Mississippi, Alabama, Tennessee and Arkansas -- received the highest payment rates per acre under this year’s market facilitation payments, according to the Democrats’ study. Ninety-five percent of counties that have a payment rate of at least $100 an acre are in the South.
Yet farmers in the Midwest and Northern Plains have been hurt most by the trade war, the Democrats said.
The USDA said in its statement defending the program that more than 60% of overall payments has gone to the Midwest and the top five recipient states are all large Midwestern farm states: Illinois, Iowa, Kansas, Nebraska and Minnesota.
The payments “overcompensate” cotton growers, said the Democrats, citing U.S. Department of Agriculture data showing a 3.9% increase in the price of upland cotton for the 2018 crop compared with the prior year.
Democrats also criticized the program for making commodity purchases from large, foreign-owned agricultural conglomerates, including $90 million paid to a subsidiary of Brazilian-owned JBS SA.
More than half of the Trump administration’s first-year market facilitation payments went to just 10% of the recipients in the program, according to an analysis by the Environmental Working Group of records obtained through the Freedom of Information Act.
Democrats complained the Trump administration nonetheless doubled payment caps for this year’s trade assistance program.
Last year’s trade aid made payments based on crop type. This year’s assistance sets a per-county rate based on the blend of crops grown in the area, with payments ranging from $15 to $150 an acre. The administration hasn’t released details on how it calculated financial damage from the trade war for the aid program.
Fifteen Democratic senators signed a letter to U.S. Agriculture Secretary Sonny Purdue urging him to address “gaps and inequities” in the trade aid program before the next tranche of payments is made. Perdue has said he expects the next payments to be ready in late November or December.
(Updates with USDA response beginning in third paragraph)
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