Monday, October 19, 2020

Farmers remain loyal to Trump despite pain from trade wars and pandemic, thanks in part to hefty taxpayer subsidies

Some states (dark purple) received more in net farm subsidies than they lost from the trade war, but most states lost out. Map from The Conversation; click here for the interactive version.

Farmers overwhelmingly supported President Trump in 2016, and most plan to do so again, despite the economic pain caused by the trade war with China and the pandemic. One big reason for that is record-high government subsidies, which have made up the highest single source of farmer income for the past two years running, Wendong Zhang and Minghao Li write for The Conversation. Both are assistant professors of economics, Zhang at Iowa State University and Li at New Mexico State University.

"Just as some states were hurt more by the trade war than others, not all states benefited equally from the payments. The subsidies heavily targeted the Midwest, reflecting the political influence of rural constituents in these states. Most of the states that came out ahead – such as Iowa and Nebraska – tend to vote Republican and have relatively large agricultural sectors."

The Trump administration has also distributed almost $30 billion in aid to farmers hurt by the pandemic. "Again, a large chunk of the payments have gone to red Midwestern states such as Iowa, which alone received almost $1 billion of the first $10.2 billion disbursed," Zhang and Li report. "Payments have been accelerating as Election Day approaches. Combined with trade-related and pre-Trump subsidies, total payments this year are expected to reach a record $46 billion."

The agriculture sector may be hurting for a long time to come because of the trade war, which "may already have done long-term damage to American farmers," Zhang and Li report. "The tariffs on U.S. agricultural products led Chinese companies to seek out cheaper sources for food and feed. Brazilian farmers sold record amounts of soybeans to China in May and June and are now enjoying their highest profits from the crop in history."

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