U.S. Sen. Tina Smith: USDA Shortchanged MN Farmers When Distributing Billions to Compensate for President’s Damaging Trade War

Washington, DC [09/15/2020]– U.S. Senator Tina Smith (D-Minn.), a member of the Senate Agriculture Committee, said findings from a newly released investigation by the non-partisan Government Accountability Office (GAO) found that the Trump Administration shortchanged farmers in Minnesota and several other states outside of the South when it distributed billions of dollars in aid to partially compensate producers for the significant losses they suffered under the President’s damaging trade wars.   

Senator Smith said the report, released Monday, found that the U.S. Department of Agriculture (USDA) not only funneled more money to farmers in southern states, but also favored large operations over smaller farms, and compensated producers of certain crops better than others.  The report also found that USDA left out many small farmers completely.  The funding is part of USDA’s Market Facilitation Program (MFP), which was established when farmers in Minnesota and across the country saw their income drop and overseas markets for their farm products disappear under President Trump’s trade policies.  

“Producers in Minnesota and other non-Southern states were hit just as hard – if not harder – by the President’s chaotic and harmful trade war,” said Sen. Smith. “This non-partisan report shows that when the USDA distributed payments to compensate farmers for the loss of important markets, it favored Southern cotton and sorghum producers to the detriment of Minnesota corn, dairy and hog farmers.  That is unacceptable, especially when many struggling producers are hanging on by their financial fingertips due to the loss of trade opportunities and the disappearance of markets they relied upon for decades to sell their farm products.” 

The GAO Report Found:

Inequity Between Regions – with clear regional inequities that benefitted Southern farmers over other regions. GAO found that average payments per acre ranged from $119 in Georgia to only $15 in five states outside the South. Eight of the top nine states with the highest payments per acre were in the South.

Unfairness Between Crops USDA set payment rates for crops like cotton and sorghum, which are primarily grown in the South, that far exceeded payment rates for other crops. For example, GAO found that cotton farmers received payments that equaled 40% of their expected value. A separate study from Kansas State University economists earlier this year found that cotton payments were 33 times more than the estimated trade damage to cotton.

Large Farms Benefitted Over Smaller Farms – The GAO analysis shows that when USDA made changes in the program in 2019 and doubled the payment limit farmers could receive from $125,000 to $250,000 per person, it ignored small and beginning farms and concentrated payments to the largest farms. This discretionary change funneled an additional $519 million to about 10,000 of the largest farms – the top 1.3% of payment recipients. While USDA chose to send over a half billion dollars to the largest farms, they did nothing to provide targeted assistance to small farms or beginning farms.

You can access the full report here.