What Trump's Latest Aid Package Means For U.S. Farmers

May 31, 2019
Originally published on May 31, 2019 5:55 pm
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Last week, President Donald Trump announced a huge aid package for farmers affected by the trade war with China. Sixteen billion dollars will go toward farmers who have lost money as a result of fewer Chinese imports. Stacey Vanek Smith, co-host of The Indicator From Planet Money, spoke to one Ohio farmer about the impact of the trade war on his farm and how he feels about the president's latest aid package.

STACEY VANEK SMITH, BYLINE: Brian Watkins is a sixth-generation farmer in northwest Ohio. He raises corn, soybeans, wheat and pigs. So Brian, when the trade war with China went into effect, what did that mean for you?

BRIAN WATKINS: We saw, you know, immediate market reaction and lowered prices. On the hog side, I would say you're looking at probably a 5 to 10% obvious market reaction. On the soybean side, it was more like 20%.

SMITH: Whoa.

WATKINS: The price of soybeans just tanked.

SMITH: What did that mean for your business? I know that farming typically doesn't have giant profit margins.

WATKINS: No, we don't have a 20% profit margin. I mean, if the price goes down 20%, that's the difference between profit and loss. The administration brought out their first aid package last fall. Most of that money went to soybean farmers.

SMITH: Did you see any of it?

WATKINS: We did see a payment on our farm; my farm got a payment. They paid $1.65 per bushel, for every bushel of soybeans you grew in 2018.

SMITH: Said you think you lost money because of the tariffs and the effect that they had.

WATKINS: Right.

SMITH: I mean, did this make up for it, entirely? Or...

WATKINS: For soybeans, for most of it, it did. Yes, quite frankly, it did. So this is where we get into the interesting thing. So now - what? - two weeks ago, they broke off the talks with China.

SMITH: Yeah.

WATKINS: And it looks like both sides are entrenching.

SMITH: I know.

WATKINS: And they're both talking about changing supply chains and all this stuff. So now we're in a mode of China, as a market, is gone. Well, from a farmer standpoint, that's - you know, that's really not good because they've been such a big market for us. And so I think because of that, the administration has - they're scrambling, right? And there's farmers who are a very important constituency to them. So this latest package has been put together very quickly.

But here's the rub, Stacey. I've got to decide, OK, am I going to plant corn? Am I going to plant soybeans? Well, this subsidy package, if they say, well, we're going to pay whatever - let's say they're going to pay another $1.65 for soybeans, that suddenly becomes this big incentive for me to try to plant soybeans to get more of the payment.

SMITH: So I mean, how do you feel about all this? Are you - how do you feel about the farm aid?

WATKINS: (Laughter) Well, I'm not really sure what I think. I think many farmers understand that there are legitimate issues in the - this trade battle between the U.S. and China. But in the long run, I don't want subsidies to be a part of my income. I want to have a market, and I want to be able to react to it. I would like for them to work it out (laughter), you know, to the point where we can still sell things to China - so yeah.

SMITH: If China goes away as a market for at least, let's say, the foreseeable future, how big of a deal is that?

WATKINS: It's a big, big deal. It shrinks our business. I mean, it means that prices will be lowered. Something like 40% of our soybeans were going to China. This is not just business as usual. I mean, the loss of China - that's a big deal; that's a big, big deal.

SMITH: Stacey Vanek Smith, NPR News.

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