Dreaming of a USDA Christmas

This Week In Ag #146

‘Tis the season when farmers wait anxiously for an old man with a white beard to deliver their gifts. I’m talking about Uncle Sam, of course.

Last week USDA announced a much-anticipated $12 billion relief package for US farmers. This is touted as a “bridge” program until the promised price supports contained in next year’s Big Beautiful Bill take effect. The package provides single payments, depending on the size of the farming operation, to serve as relief due to the heavy burden farmers have had to bear due to tariffs and other factors.

As with most policy issues regarding US agriculture, the majority of these funds – $11 billion – are going to growers of row crops such as corn, soybeans and wheat. The remaining $1 billion will be dispersed among specialty crop producers. Livestock producers won’t even get a lump of coal.

Sadly, most farmers will have already spent their checks before they even arrive. These funds will go towards paying off crop production expenses from this past season. Even with these relief funds, most farmers will still be plenty short. Due to rising crop input costs, equipment and labor costs, interest rates and trade wars, commodity crop producers are expected to experience $44 billion in net cash income losses.

USDA has already doled out $40 billion in farm payments this year prior to this latest round. This year should mark the second time in history, and the second time during a Trump presidency, that farm subsidies have eclipsed $50 billion. In that record year of 2020, farm subsidies comprised over 37% of net farm income. Typically, subsidies make up about 13% of farm income.

While farmers welcome any relief, relying on subsidies is not how most prefer to operate. But as TWIA mentions frequently, politics and farming are as tied together as holly and ivy. A case can be made that generous government subsidies are a form of socialism. They unfairly benefit large farmers. They also place a hefty burden on taxpayers: this century, farm subsidies have totaled nearly $600 billion. On the other hand, food is a matter of national security. US consumers continue to demand low food prices. And with so much government meddling in issues such as foreign trade, fiscal policy, environmental regulations and more, farmers are often unduly impacted.