Reeling Midwest Farmers Look for Lawmakers’ Plan B as Aid Stalls

  • Trade wars, pandemic, derecho create a triple whammy
  • Commodity Credit Corp. replenishment may ride on spending bill

Lawmakers from Midwest farm states, thwarted by a congressional stalemate over additional coronavirus stimulus legislation, are turning to federal agencies to rescue agricultural producers hit by trade wars, the pandemic, and devastating storms.

“We’re in trouble out here,” said Mike Rosmann, an Iowa farmer and psychologist. “It looks pretty bleak unless some kind of financial assistance is available in guaranteed amounts to farmers who cannot break even.”

The House will stay in session until congressional leaders and President Donald Trump‘s administration agree on another stimulus package, Speaker Nancy Pelosi (D-Calif.) announced Tuesday. The chamber’s bipartisan Problem Solvers Caucus unveiled its own Covid-19 relief plan the same day, which would dedicate $25 billion to agriculture and aquaculture producers and processors.

Lawmakers up for re-election on Nov. 3 in contests where Democrats are trying to pad their majority in the House and take control of the Senate are still searching for alternatives in case stimulus talks backslide. The Midwest is a critical battleground in Trump’s effort to fend off Democratic challenger Joe Biden and in downballot races, as well.

Several Midwestern lawmakers want to use the Commodity Credit Corp., a government-owned and government-operated entity created during the New Deal to support and protect farm income and prices.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act (Public Law 116-136) allotted $14 billion to the credit corporation. Efforts are underway to pass a continuing resolution for the federal fiscal year starting Oct. 1 that includes the standard replenishment of the corporation’s funds, Senate Appropriations Agriculture Subcommittee Chairman John Hoeven (R-N.D.) said in a statement. House leaders are planning to vote on a continuing resolution next week.

Photographer: Daniel Acker/Bloomberg via Getty Images
Soybeans are unloaded from a semi-truck during harvest at a farm in Wyanet, Ill. on Oct. 19, 2019.

Other Republicans, including Reps. Jim Hagedorn of Minnesota and Rodney Davis of Illinois, point to tapping foreign trade opportunities. Additional market access in the United Kingdom, Kenya, and Indonesia, along with progress on existing trade deals with China and Japan, would present long-term benefits to agriculture producers, Rep. Dusty Johnson (R-S.D.) said in a telephone interview.

“We need to expand markets for farmers that were lost during this Administration’s trade wars,” Tina Smith (D-Minn.), who’s running for a full Senate term in November, said in a statement Monday.

Stronger antitrust enforcement, supply management to prevent overproduction and maintain fair crop prices, and aggressive approaches to combat climate change also would “ensure the financial viability of family farm agriculture,” Mike Stranz, vice president of advocacy at the National Farmers Union, said in a statement. “Money alone isn’t the solution.”

Signs of Duress

Midwestern farmers were pulled into Trump’s trade disputes with China years ago, leading in June 2018 to the imposition of about $46 billion of tariffs on targeted Chinese products. China, the top market for Minnesota soybeans and importer of other Midwestern crops, countered with 25% tariffs on $44.9 billion of U.S. goods.

That dealt a blow to Midwestern farmers: Agricultural products made up about 38% of the items on China’s tariff list. The top states in soybean production last year were Illinois, the No. 1 exporter of soybeans ($3.1 billion) and soybean meal ($556 million) among states, followed by Iowa, Minnesota, and Nebraska, according to the American Soybean Association.

“The biggest losses were going to be in soybeans because that is by far the largest agricultural product that the U.S. historically has sold to China,” said Chad Bown, senior fellow at the Peterson Institute for International Economics.

Those tariffs also triggered European Union trade sanctions on U.S. agricultural goods, placing about one-fifth of all such U.S. exports at risk, according to Peterson analyses.

The trade war for farmers began de-escalating in February when the first phase of a new U.S.-China trade agreement took effect. China committed to buying $36.6 billion of covered agricultural goods in 2020 based on 2017 trade levels. However, through July, China purchased only $9.9 billion in goods. While the country could meet its obligations, Bown said, “it’s largely a political question of whether they want to get there.”

The U.S. Department of Agriculture paid $14.5 billion to farmers affected by foreign retaliatory tariffs, including those growing corn and soybeans. Iowa, Illinois, Texas, Minnesota, and Kansas topped the list of aid recipients.

Hits to Dairy, Meats

The Covid-19 pandemic afflicted the Midwest’s livestock economy in the spring as infections spread among food workers. Some of the nation’s largest food companies, including Tyson Foods Inc., Perdue Farms Inc., and Upper Iowa Beef, cut production because of sickness absences.

Workforce reductions meant slowdowns in animal slaughter, a process that takes months of planning. Pork production this year was projected to total 28.985 billion pounds, according to USDA estimates. Animals that couldn’t be accepted for slaughter by plants were euthanized.

At least 783 meatpacking and food-processing plants had confirmed Covid-19 cases as of Sept. 9, with 42,805 U.S. meatpacking workers testing positive for the virus, according to Food and Environmental Reporting Network data. At the height of the Covid-19 outbreak, production of U.S. beef and pork each declined almost 40%, according to the Agriculture Department.

The production decreases caused politicians across the political spectrum, including Iowa Gov. Kim Reynolds (R) and Minnesota Gov. Tim Walz (D), to worry about the safety and reliability of the poultry and pork supply chain.

Tyson Foods launched Covid-19 testing at more than 40 U.S. facilities, including in Iowa, Illinois, Missouri, and Nebraska. Between March and June, the company tested almost 40,000 workers, installed about 150 walk-through temperature scanners to check workers upon arrival, and put in place physical distancing on production floors.

Perdue Farms and Upper Iowa Beef didn’t respond to requests for comment.

Additionally, Iowa’s corn and soybean growers saw as many as 14 million acres of crops flattened in August by a derecho—thunderstorms accompanied by hurricane-like windstorms. Reynolds sought $3.78 billion in federal aid for agricultural recovery.

The Agriculture Department “needs to clearly communicate how crop insurance coverage will be executed for derecho damage and what disaster assistance is available,” U.S. Sen. Joni Ernst (R) said in a recent Iowa Farm Bureau column. Ernst is in a close race for re-election this year.

Federal Responses

The agency took another avenue to help farmers and families nationwide, launching the $19 billion Coronavirus Food Assistance Program in April. It includes $16 billion in direct support to agricultural producers hurt by the coronavirus, and $3 billion to buy produce, dairy products, and meat for food banks and other nonprofits.

The funds stem from the second coronavirus stimulus law (Public Law 116-127) and the CARES Act, with an additional $1 billion boost to the Farmers to Families Food Box program by Trump on Aug. 24.

Still, farmers and ranchers fret about losses piling up. Without government relief, “the problems will probably just get worse,” said Jason Grimm, owner of Grimm Family Farm in North English, Iowa.

The latest Covid-19 relief U.S. Senate Republicans proposed earlier this month included $20 billion in extra agriculture industry assistance, but was rejected. The House Democrats’ coronavirus package (H.R. 6800) in May targeted the needs of dairy, livestock, and poultry producers, along with specialty crop growers and other hurting agriculture producers, but stalled in the Senate.

“We could lose some farms—people just calling it quits,” Grimm said in a telephone interview Monday.

With assistance from Michael Hirtzer

To contact the reporters on this story: Stephen Joyce in Chicago at sjoyce@bloomberglaw.com; Megan U. Boyanton in Washington at mboyanton@bgov.com

To contact the editors responsible for this story: Sarah Babbage at sbabbage@bgov.com; Katherine Rizzo at krizzo@bgov.com; Robin Meszoly at rmeszoly@bgov.com; Tina May at tmay@bloomberglaw.com

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