Cotton Farming

U.S. Department of Agriculture (USDA) Secretary Sonny Perdue visits Pugh Farms cotton operation., in Halls, Tennessee, October 18, 2019.

Public Domain photo

The Trump administration’s $23.5 billion in trade aid often exceeded farmers’ short-term losses and was particularly generous to cotton growers, according to a new study from Kansas State University.

For most commodities, payments from the Market Facilitation Program were higher than estimated price declines from retaliatory tariffs imposed by China and other countries, according to ag economists Joseph Janzen and Nathan Hendricks.

In the first round of payments, payments to corn growers fell short of actual losses because of the effect soybean markets had on corn value.

But corn was an exception, and the degree to which compensation outstripped actual losses was particularly notable for cotton.

In the second round of payments, the cotton compensation was 33 times higher than the estimated effect of retaliatory tariffs.

This set of payments was based on exports from 2010 to 2012, when world cotton prices were higher and U.S. exports to China were twice what they were in the years immediately before the trade war, the economists say.

As a result, payments in the South often exceeded cash rental rates and provided more than $150,000 for an average-size farm.

Senate Democrats in November released a report saying that Market Facilitation payments went disproportionately to Southern farmers, even though they had suffered less than those in the Midwest.

The Trump administration has given conflicting accounts of the program’s effects, with Ag Secretary Sonny Perdue saying that farmers have not been made whole by the program and the president saying that they have.

Despite the short-term largesse, the payments may not cover long-term losses from the trade disputes, such as increased difficulty accessing foreign markets, Janzen and Hendricks say.

The findings are published in the May edition of the journal Applied Economics Perspectives and Policy.

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