Government

Trade bailout sends millions to Iowa farmers

As trade wars linger, new round of checks starts soon

Bob Ryan, photographed Wednesday, finishes about 1,200 hogs a year, farms on rented land and helps on the family farm outside of Coggon. He received about $4,000 in Market Facilitation Program payments in 2018 for soybeans. He missed out on another $3,200 for pigs because the period of time the government chose for counting. Ryan said he doesn’t trust Chinese companies that own hogs in the United States to not attempt to profit from the bailout. (Liz Martin/The Gazette)
Bob Ryan, photographed Wednesday, finishes about 1,200 hogs a year, farms on rented land and helps on the family farm outside of Coggon. He received about $4,000 in Market Facilitation Program payments in 2018 for soybeans. He missed out on another $3,200 for pigs because the period of time the government chose for counting. Ryan said he doesn’t trust Chinese companies that own hogs in the United States to not attempt to profit from the bailout. (Liz Martin/The Gazette)
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Farmers with operations in Iowa received $321 million in Trump administration subsidies in the first four months of this year specifically to stave off financial woes of the trade wars, but several producers said they’re worried the prolonged disputes are on the verge of causing lasting damage to overseas markets for agricultural commodities, especially for soybeans.

The Trump administration launched a $12 billion “Market Facilitation Program” in 2018 to counter the impact on farmers from the president’s increased use of tariffs. It included about $8 billion in direct payments to farmers who got caught in the cross hairs of retaliatory tariffs, especially from China.

With the trade wars continuing, the administration launched a $16 billion follow up — with nearly all of it earmarked for direct payments to producers — and President Donald Trump indicated in a recent tweet the subsidy could continue if China does not capitulate soon.

Using government data obtained under a Freedom of Information request, the Environmental Working Group conducted an analysis showing how the first segment of the trade aid program worked out.

From when the program began in 2018 until April 30, Iowa producers received nearly $979 million in payments in all.

Iowa-specific data for only the first four months of this year — Jan. 1 through April 30 — from the Washington-based nonprofit shows:

• $321 million in direct payments flowed to Iowa, second only to Illinois.

• The aid flowed to more than 23,000 Iowa producers, but the top 1 percent of recipients got 9.5 percent of the money.

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• Linn County producers received $3.52 million (about 1 percent) and Johnson County producers received $2.73 million (less than 1 percent.)

• The top programs getting payments in both counties were soybeans, corn and livestock. Soybean payouts went to 207 producers in Linn County and 180 producers in Johnson County.

Twenty-nine percent of farms in Iowa did not collect any of the trade-aid payments, according to the U.S. Department of Agriculture.

Bob Ryan, 36, of Ryan, received about $4,000 in Market Facilitation Program payments in 2018 for soybeans. He missed out on another $3,200 for pigs because the period of time the government chose for counting pigs for an $8-a-head payment was when Ryan already had sold one batch and had not restocked.

He doesn’t like that Trump has touted himself as the savior of farmers.

“I don’t think anything could be further from the truth,” Ryan said. “He started this trade war with really the only leverage being farmers, particularly soybean farmers.”

Ryan said he doesn’t trust Chinese companies that own hogs in the United States to not attempt to profit from the bailout, or to avoid tariffs by routing hogs through Canada or South America for export.

Last year, Chinese owned pork producer Smithfield said it wouldn’t take any trade bailout money after critics, including Iowa Republican Sen. Chuck Grassley, complained.

Smithfield, owned by Chinese company WH Group, would have qualified for $240,000 in pork payments, the Washington Post reported.

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Brazilian-owned JBS, the world’s largest meat processing company, won $78 million in a previous program, the USDA’s Trade Mitigation Program, which made direct payments to farmers and $1.2 billion in food buys from farmers and ranchers who would normally use international markets, according to an analysis from the Midwest Center for Investigative Reporting.

Jason Schildroth, 39, and his brother, Tyler Schildroth, grow corn and soybeans on Gen3 Farms near Reinbeck.

“We’re farming some ground that our grandpa farmed,” Jason Schildroth said.

Soybean prices were $1 to $1.50 per bushel below profitable levels last year because the local grain cooperative wasn’t able to sell to Chinese markets, he said. Gen3 participated in the Market Facilitation Program to avoid losing money.

The Environmental Working Group’s data shows the farm received $125,000 from Jan. 1 to April 30 from it.

“Without the MFP help, it (soybean crop) would have been sold at levels below our break even,” Schildroth said. “We don’t have on-farm storage that would allow us to keep a whole crop until prices rebound.”

Schildroth agrees the United Sates needs to get tough with China, which has been accused of stealing intellectual property and even Iowa-grown corn seeds.

But the longer the trade war lasts, Schildroth fears the foreign market will dry up.

“China is getting its soybeans from Brazil right now,” Schildroth said. “You read that they can’t fulfill their entire need from South American production. As a U.S. soybean farmer, you hope that’s a true statement, but you don’t know. Will they start buying soybeans from us again or is that market just gone?”

Total U.S. soybean exports in the 2018-2019 growing season dropped about 20 percent to 46.3 million metric tons from the previous year. At the same time, Brazil and Argentina’s combined soybean exports rose almost 10 percent to 86 million metric tons, according to the USDA.

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Farmers in Brazil are converting more land from sugar cane and pastureland to soybean production to satisfy Chinese demand.

Still, the trade wars hit at the right time for Brazil, which was coming off a bumper soybean crop. Brazilian inventories now are dwindling and the next harvest still is months away. And farmers in Argentina may cool to more sales to China and decide to hold on to their beans as a hedge against economic uncertainties at home.

Yet even if China faces trouble meeting its huge demand for soybeans, the trade dispute between it and the United States may persist.

The USDA has authorized the next round of trade aid — $16 billion, with as much as $14.5 billion going directly pay farmers for their losses.

The first payments will come later this month, the USDA said, although farmers have until Dec. 6 to apply.

• Comments: (319) 368-8664; grace.king@thegazette.com

Bloomberg contributed.

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