When President Trump tore up trade agreements and slapped tariffs on farm products, America’s farm economy suffered. To mollify farmers, a big part of his base, the president announced billions of dollars in aid to farmers.
There were supposed to be caps on how much each farm could collect in subsidies, but an Associated Press analysis shows big farm operations easily skirted the caps.
It’s a gaping loophole that does a disservice to the taxpayers funding the subsidies.
The program sets a $125,000 cap in each of three categories of commodities: one for soybeans and other row crops, one for pork and dairy, and one for cherries and almonds. But each qualified family member or business partner gets their own $125,000 cap for each category. Farmers who produce both soybeans and hogs, for example, would have separate caps for each and could collect $250,000. But there are legal ways around those caps, and the data show that farmers are using them, according to the AP.
One Missouri soybean farm got $2.8 million in subsidies by using a number of family members who were “actively involved” in the operation. Thousands more big farms collected more than the cap.
While Americans support “family farms,” the ever larger mega-farms often look and operate more like corporations rather than what Americans would view as a family business. In fact virtually every farm in the country is considered a family farm under USDA guidelines.
While the AP analysis pointed out problems in the trade war subsidies, the loophole on caps has been routinely abused in other farm programs. Farms, getting subsidized crop insurance under the farm bill, can make claims if their production is lowered by weather or other conditions. When collecting those payments, big farms also use multiple family member applications to go above caps.
Republican U.S. Sen. Charles Grassley of Iowa has long railed against the loopholes, saying the largest farm operations are using “underhanded legal tricks” to get more “while young and beginning farmers are priced out of the profession.”
More subsidies are on the way from the White House, with $16 billion more coming this year. The USDA should tighten requirements for the next round of payouts and Congress should close subsidy loopholes in the next farm bill.