How The Agency That Gave Us 'Government Cheese' May Aid U.S. Farmers

Jul 2, 2018
Originally published on July 3, 2018 12:35 am
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Trade disputes with China, Mexico and Canada threaten to slash U.S. food exports by billions and hit farm income hard. President Trump has promised to protect farmers from the fallout. It's not clear how the administration would do that. As Frank Morris of member station KCUR reports, it could involve an infusion of taxpayer money and the same agency that gave the world government cheese.

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FRANK MORRIS, BYLINE: Out in the Kansas Flint Hills, farmer Glynn Brunkow is fixing a hay mower that's hit some rocks.

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MORRIS: Brunkow is facing a rocky patch himself because the value of the corn and soybeans he's growing has nosedived since President Trump launched the trade dispute with China.

GLYNN BRUNKOW: Prices are really bad. We're looking at some of the lowest prices we've had in quite a while, a decade or more.

MORRIS: Soybeans have plunged about 20 percent, corn about 15 mostly under threat of tariffs. Farmers love free trade, and exports are crucial. About half the soybean crop goes overseas, most of that to China. It's a lucrative-but-fragile system. And Brunkow says if China slaps new tariffs on soybeans and other row crops, some farms will fail.

BRUNKOW: This could be catastrophic. We could see a lot of producers not make it through to pass this fall.

MORRIS: Midwestern farmers voted heavily for Donald Trump in 2016 despite his protectionist bent. And this spring, Trump made farmers a promise.

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PRESIDENT DONALD TRUMP: We'll make it up to them. And in the end, they're going to be much stronger than they are right now.

MORRIS: The federal government already shores up farmers in lots of ways - taxpayer-subsidized crop insurance and other programs designed to compensate for natural disasters or falling prices. But Chad Hart at Iowa State University says the normal farm safety net won't protect farmers from the devastation of a trade war. He thinks the administration will dust off an old model for boosting prices, one that generated headlines and punch lines in the 1970s.

CHAD HART: The government cheese program - dairy prices were very low. The government was trying to support dairy farmers. The way they did that was by purchasing milk. They did it through this Commodity Credit Corporation.

MORRIS: The Commodity Credit Corporation came out of the Great Depression. Hart thinks the Trump administration is going to ramp it up now.

HART: This is a relatively old program that sits in the shadows until it's needed for something like this.

MORRIS: Hart says the CCC can borrow up to about $30 billion. Joe Glauber with the International Food Policy Research Institute says it's not clear whether the USDA would use that money to buy up farm commodities or find a way to just pay farmers directly. Either way, Glauber says taxpayers are on the hook.

JOE GLAUBER: As a consumer, I'm going to have to pay higher prices because of this and, on top of it, higher taxes because of a bailout through the CCC Charter Act.

MORRIS: Trade disputes are already costing U.S. hog farmers hundreds of millions of dollars in sales. Crop farmers aren't really feeling it yet. This time of year, they're busy growing stuff, not selling it. But if trade barriers persist, Glauber says the pain could soon be very real.

GLAUBER: I think U.S. agriculture has a much, much bigger problem if you lose a big share of these markets just because of a trade war that spirals out of control for a while.

MORRIS: Back on the farm, Glynn Brunkow worries about the very same thing - long-term damage to vital trading relationships depressing commodity prices. Restoring free trade soon could make the difference between a bad year and a bad era, one potentially costly for taxpayers and brutal for American farmers. For NPR News, I'm Frank Morris. Transcript provided by NPR, Copyright NPR.