Chairs of both the House and Senate Agriculture Committees are looking at farm aid through a Farm Bill 2.0.
House Agriculture Committee Chair G.T. Thompson says a framework is already underway with the goal of committee action in September.
Senate Agriculture Committee Chair John Boozman is also considering aid, but through the Commodity Credit Corporation. He says the other solutions will take too long. This comes after hundreds of farmers in his home state of Arkansas met with lawmakers to ask for help.
Market Facilitation Program 2.0?
The trigger is historically low grain prices, combined with tariffs of up to 23% on U.S. soybeans, keeping China out of the export market.
Steve Censky, chief executive officer of the American Soybean Association, says unless China buys soybeans soon, they may be looking at aid similar to the Market Facilitation Program used back in 2018-19 during the last trade war.
“I think unless we can get things turned around with China, we’re going to be in that position again,” Censky says.
Farmers in the Dakotas and Minnesota are already seeing $8 soybeans with no China business.
But whether MFP is warranted is tied to the timing of a possible China deal, according to Frayne Olson, crop economist and marketing specialist with North Dakota State University.
“Even if harvest is already started — if we can get the wheels moving — it will be a lot better than what we saw in 2019. So, I think it’s a little bit early to be talking about MFP payments,” Olson says.
ASA Holding Out for China Deal
And the American Soybean Association echoes that position.
Censky says: “We have not been publicly calling for another MFP-type program. Our priority has been to get a deal with China on soybeans — because having that market is what soybean farmers want.”
In fact, Censky says MFP payments are just a Band-Aid to help farmers survive for another year.
“No farmer wants to be dependent on getting his or her income from the government or from the mailbox rather than from the marketplace.”
Farm Aid Has Unintended Consequences
Plus, the payments have had — and will have — unintended consequences. Censky says, longer term, any form of government assistance gets capitalized into land rents and land values. That has consequences for farmers as well.
The tariff on U.S. soybeans going into China also incentivizes Brazil to increase acreage more quickly, according to Censky.
“That expanded production will be here to haunt, basically, U.S. soybean farmers for years to come — not only in the China market, but in other markets around the world,” Censky says.
Need for Farm Aid Greater Than in 2018
Still, both House and Senate Ag Committee chairs agree farm aid is needed.
Boozman is looking at the CCC rather than tariff revenue, saying it’s more immediate. Censky agrees there’s more urgency than in 2018.
“I think it’s more serious today. That’s because prices were higher back in 2018 and 2019,” he says. “Farmers were starting out from a better position. Not only did you have prices higher, but your inputs were not as expensive.”
Farmers may not be able to withstand the pain of a trade war like they did back then.
